Making the Cloud Work for HVAC OEMs and Installers

Cloud solutions are positioned to do more for HVAC OEMs and installers than just react to alarms. They are now offering tangible value-add and levels of scalability that promise to have a real impact on creating new business opportunities. But few OEMs have taken the essential step of connecting to the cloud. In fact, research shows that less than 8% of primary HVAC equipment sold in the EU is cloud enabled. Furthermore, the connectivity rate for most field device categories is less than 1%.[1]

How can this be explained at a time when, according to estimates, the number of cloud-connected IoT devices around the world rose 89% to 28 billion from 2015 to 2020? The number is set to grow to 75 billion by 2025.[2]

Overturning the cost over benefit question
Part of the reason OEMs have been sitting on the sidelines has to do with a cost over benefit equation – one that is no longer true. Getting data to the cloud was seen as an expensive effort that demands extensive cabling, access to a fixed-line network or use of a licensed spectrum IoT connectivity solution. Today, however, the high cost of cabling can be overcome by using gateways, sensors, and wireless connectivity instead.

Another answer is an overreliance on dashboards that present relatively raw data that needs to be interpreted by an expert. For example, typical facility efficiency efforts promise energy savings of 35% and reduced costs of ownership. These savings can be eclipsed, however, by the increase in personnel costs for the skilled engineers who are needed to do the diagnostics required to achieve these results.Siemens 225x125 V2

Codifying expert knowledge
Second-generation cloud solutions like Siemens Climatix IC have resolved the expertise issue. They have codified the expert knowledge involved in the diagnostics process for alarm categories known to have a critical impact on performance. The diagnostics process can then be automated, which leads to solutions that can scale across a product line while keeping additional headcount in check.

The recording of energy consumption and equipment efficiency levels can also be automated and collected via the cloud. OEMs can use the data to respond more flexibly to changing regulatory and compliance requirements. Helping companies meet these requirements and helping make energy savings sustainable are just two of the benefits that resonate with customers of both OEMs and installers.

Enabling new service offerings
Likewise, automated diagnostics, equipment optimization and asset reporting enable OEMs and installers to develop new, enhanced service offerings. For example:

  • Remote assisted commissioning can address the acute skills shortage already underway as experienced engineers retire.
  • Extended warranties can be supported more efficiently when operating data is monitored in the cloud to ensure equipment is running within design specifications.
  • Automated reporting can provide the customer with a quantified overview of benefits such as energy saved, SLA achieved and performance benchmarking.
  • Cloud-enabled performance contracting and virtual site visits can help the service provider keep costs in check while giving customers documented energy savings, extended equipment life and a significantly lower total cost of ownership. “Thanks to remote servicing, we are able to solve problems before the customer notices them,” according to Karl Ochsner, Managing Partner of Ochsner Wärmepumpen GmbH.

Creating single source of truth
As mentioned, factory workflow is another fruitful area for cloud-based activities. For example, not many HVAC OEMs know the exact equipment parameterization and versioning of the devices shipped to customers or have a central log of all service interventions. Aggregating all of this information in the cloud creates a single source of truth for a piece of equipment throughout its lifecycle – which can have positive ramifications for OEMs, installers, and customers. In addition, linking the equipment’s Bill of Materials to the cloud helps simplify parts ordering for all involved.

The future is bright for the HVAC market. Participants can look forward to healthy growth rates driven by long-term trends such as urbanization, increased expectations for user comfort and legislation promoting energy efficiency. At the same time, however, digitalization can be expected to challenge existing business models, as it has done in other markets. Those who leverage cloud technology to achieve step-increments in productivity gain and differentiated service offerings will be able to meet changing market demands head on.

To learn more about how digitalization and cloud connectivity are likely to transform the HVAC industry, turn to Peck’s recent whitepaper. “Commercial benefits of cloud solutions for HVAC OEMs and installers” can be downloaded at

[1] Trends in the Global HVAC&R Market: BSRIA Presentation at the ISH Fair in Frankfurt, March 2019.

[2] Building Management System Market Growing at a CAGR of 16.71% During 2017 to 2023