The lean startup idea is originally based on the ideas of lean management and lean production systems (see Kammel, A., 2018, p. 115). The basic idea here is the avoidance of waste and the establishment of lean and efficient processes/hierarchies. The lean startup approach follows a similar principle. The lean startup methodology can be applied to both company foundations and product launches, regardless of the industry. In the case of start-ups, the foundation usually goes hand in hand with the launch of a product or service. For this reason, only products will be referenced below. The aim of a lean startup is to launch a product with limited resources, in particular money, market access and knowledge as well as skills. The focus is not on lengthy preliminary planning and strategic decisions, but rather on “learning-by-doing” so that the idea is present on the market at an early stage (see Ries, E., 2014, p. 15).
By creating an early prototype that only includes core functionality, or rather an MVP (Minimal Viable Product), a company can position itself on the market with a product faster than others and learn in the process. An MVP usually only comprises around 20% of the product features/functionalities that roughly 80% of users request. This is why these companies launch new releases of their product on the market at regular intervals. These releases gradually contain more and more functions and become more and more mature. The company learns more and more with each iteration stage/feedback loop, as shown in the figure below (cf. Ries, E., 2014, p. 74). According to the figure, the company learns through each iteration step. An MVP is intended for early adopters. This target group acts as a test group, so to speak, and provides initial feedback. These people are focused on core functions and are able to put up with the odd error in the product. The company therefore receives feedback on the fundamental added value and necessity of a product at a very early stage. At the same time, this group acts as a multiplier for the product among friends and via social media.
Companies strive to be competitive against global competition, ideally in the medium to long term. However, the reality is different. Companies are increasingly concerned with securing short-term competitive advantages in order to remain competitive in the market. Then as now, it is of central importance to have a short “time to market” (see Reichwald, Ralf – Marktnahe Produktion, 2013, p. 6). This motto must be a guiding principle for new companies (start-ups) in particular. Established and especially large companies often only have a rudimentary grasp of this approach due to their size and associated inertia. Internal processes often paralyze established companies; they do not usually lack ideas or budget, but rather the dynamism and flexibility to bring their new ideas to market quickly. Addressing the right target group is one of the biggest challenges for both established and new companies. A tailor-made range of services plays a role here, for which companies need knowledge of the market, customers and their needs. New ideas and the new products generated from them must fulfill this need. But how can companies, regardless of size and budget, tackle these challenges? One approach is offered by Eric Ries’ lean startup concept (see Eric Ries – Lean Startup, 2014, p. 25).
In this context, this case focuses on regional energy suppliers whose traditional business model, which consists primarily of selling energy, no longer works as well as it did before the liberalization of the energy market in 1998 (see European Union (1998): EU directive on the internal electricity market for the amended Energy Industry Act of 1998). Furthermore, the traditional development of new business models is lengthy and complicated for a large number of regional energy suppliers. Established structures and bureaucratic hurdles often have to be circumvented in order to introduce new ideas into the corporate landscape. Successfully placing innovations with an energy supplier is an aspect of sustainability for its continued existence. Unfortunately, energy suppliers are often only innovative at first glance. The basic structures for a culture of innovation usually do not exist there. In addition to new and additional competitors, digitalization is also becoming increasingly important for energy suppliers. Not only does digitalization offer companies new opportunities, it also usually involves customer requirements, regardless of whether the target group comes from the commercial or private sector. Agile business model development with the Lean Startup concept for regional energy suppliers in the B2B sector is presented below.
One thing is certain: diversification is a key strategy for responding to fluctuating sales in a market or by customers (e.g. seasonal fluctuations). Diversified companies can react quickly and flexibly, especially when a market is doing badly or regulatory requirements are imposed. Different target groups are described below as diversification features. B2B customers have a different requirements profile than B2C customers. Furthermore, higher margins are generally possible in the B2B sector, which can be explained by more individualized services. The B2C market is also characterized as a mass market with sometimes rather low margins. Here it is important to offer products that are individualized but can be assembled from standard components. A so-called modular construction kit is one solution to this problem. German companies are facing increasingly fierce international competition. This means that not only personnel costs are of central importance, but increasingly also energy costs and the progress of digitalization. Industry 4.0 addresses these aspects as well as others.
Currently interesting products in the energy sector for B2C customers are smart home applications, e-mobility solutions and systems with photovoltaic systems including storage. However, there is a lot of competition for these products from other companies, but especially recently from start-ups that are pushing into the market. A regional energy supplier can only achieve competitive advantages here through cooperation. One product segment for the B2B market that is currently growing strongly and will continue to do so in the future is Industry 4.0, which includes sensors, actuators, IoT (Internet of Things), automation and digitalization. Here, a regional energy supplier can act as a partner for companies and offer its own solutions in the field of IoT. Future technologies to leverage the potential of Industry 4.0 are strongly driven by hardware (sensors, actuators, data transmission technologies, etc.) and software (platforms, apps, etc.). Choosing the right components is difficult for users, either because they lack knowledge of the product range, the applicability in their own company is unclear or the configuration of the individual components is unknown. Data transmission technologies include ZWave, Zigbee, LoRaWan, WLAN, LemonBeat and Bluetooth, to name but a few. Wired solutions often prove to be too complex and cost-intensive. This important connectivity component is necessary for networking sensors and later actuators in order to guarantee stable, interference-resistant and responsive connections. The IT department often also stipulates that the systems must be separated from the existing IT infrastructure for security reasons. Network technology is the key factor here. Large bandwidths are not required as a first step. The most important aspects here are speed of response and range, so that systems can be controlled quickly and reliably. This is essential for fast production processes and in emergency situations. Another challenge for modern, regional energy suppliers in the B2B business is the identification of new business models and new incentives for sales. In future, it will no longer be the sale of energy that is “rewarded”, but savings, for example. Establishing this new pattern of behavior in a traditional company is a lengthy and challenging task. It is more expedient to (spin off) a company in order to generate a new, fresh culture. Customers are asking for solutions that go beyond the mere supply of energy, so-called “E+” solutions are the future. Attractive margins can still be generated here.
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First of all, it must be said that there is no universal realization/implementation strategy. The framework conditions, individual requirements and budget must be considered for each user in order to subsequently identify and implement joint solutions. Energy suppliers regularly receive inquiries about the possibility of energy optimization. In addition to traditional energy-saving offers, such as LED lighting and motion detectors, as well as switching off devices and systems that are not immediately needed completely and not putting them into sleep mode, more innovative approaches will be required in future. The first starting point for energy monitoring is the creation of transparency. Making the energy consumption of individual systems or production steps visible is already a significant added value for companies. For the most part, companies only have very large energy balance envelopes, primarily the building boundaries. As a rule, they know exactly how much electrical energy is consumed each year, but where the energy is consumed is at best a matter of conjecture or estimation. This is where the system/appliance-specific sensors, which are integrated into a central gateway via wireless technology, can help. The local gateway is installed on the company’s premises and the measured values are displayed graphically on a dashboard. In addition to energy consumption, the sensors can also record the ambient temperature, humidity and sound level. In order to meet all security requirements, data transfer between the sensors and the local gateway is encrypted and between the gateway and the cloud via a secure VPN connection (Virtual Private Network).
Diversification into different sectors also changes the use cases and the added value for energy monitoring. In addition to selling products and usage licenses, the regional energy supplier can also gain knowledge about the specific industry. This enables them to develop better, more tailored products for customers, which already represents added value. The modular construction kit represents a decisive solution approach. This approach strengthens the partnership. It prevents the migration rate of customers to other energy suppliers.
In the following sections, the various sectors and use cases are examined in more detail based on the following key points:
This case focuses on the manufacturing industry, but other use cases are also briefly outlined here as examples to illustrate the potential of energy monitoring.
The general conditions for users are always that there is no interference with the existing IT infrastructure, that ongoing operations or production are only minimally affected by the installation and that the business case is positive after approx. 3 years. These framework conditions can usually be met through early communication with the relevant departments.
In this context, the manufacturing industry includes all companies that produce physical products in their buildings and halls. Of course, these products can also contain digital components. However, customers of these companies are supplied/sold a tangible product.
The savings in terms of energy can be in the five-digit range, depending on consumption and customer utilization. Furthermore, the high consumers in the company can be identified and measures can be taken to find a solution. In some cases, only the operating parameters are usually set incorrectly, in other cases the machine is simply outdated and a new investment should be considered. In still other cases, however, the consumption is within normal parameters and the machine consumption corresponds to the consumption requirements of competing products/plants. However, this knowledge can be used to change the utilization of the machine in such a way that multiple idle and standby times spread throughout the day are bundled. This procedure increases the cycle time of the machine and avoids or reduces idle times. In the time intervals when the machine was not being used, it could be switched off completely.
A DIN SPEC on the topic of energy flexibility was also published in 2018, which addresses the topic in depth (DIN SPEC 91366., 2018). The DIN SPEC covers aspects for further applications, creating a consumption forecast, recognizing flexibility in production and offering your own flexibility on a platform.
In this context, service companies are all companies that offer their customers a service that is mainly created or provided through the contribution of personnel or the use of digital tools (computers, laptops, servers, etc.). For example, this category includes consulting firms, such as larger tax consulting firms and legal services and software companies. Furthermore, there is no need to differentiate between who owns the building. As a rule, a tenant only indirectly benefits from energy monitoring. However, operators (facility management companies) are definitely interested in monitoring. For example, additional data can be generated from the system via a central control room and the number of trips made by technicians or other personnel can be reduced. The following section takes a closer look at facility management companies. Furthermore, the system technology, such as air conditioning, elevator systems, lighting technology and hot water preparation, can be monitored via a central control station.
Sensors for measuring the electrical performance of elevators and air conditioning can be implemented directly in the building’s central plant room. Temperature and sound levels are measured directly on the units and, as already described, are connected to the gateway via radio. The corresponding sensors for the individual room occupancy can be attached to the ceiling. Temperature, humidity and sound level are measured in this way. This data can be used to control the lighting and air conditioning.
Offices that are not occupied during the day or offices in which the lighting and air conditioning are switched on after hours can be switched off. This saves the tenant money and the building operator can offer the tenant an additional service. Of particular interest to the facility manager is ensuring proper operation of the elevator and air conditioning technology. As a rule, damage to these units is indicated by a steadily increasing noise level. By measuring the noise level and the exceeding of noise thresholds, technicians can be informed of damage at an early stage or imminent maintenance intervals can be brought forward.
The monitoring of critical temperatures is also conceivable in the future. In this way, system components that are operated at night, for example, can be monitored at an early stage. Possible malfunctions and failures are detected in this context and it is possible to take measures to prevent the problem from spreading.
The term hotels also includes guesthouses and hostels. In other words, companies that offer overnight accommodation as a service from a commercial perspective. Hotels with a distinctive additional offer, such as a restaurant, swimming pool, whirlpool and sauna, are particularly interesting in this context.
Due to the different users of energy in the various areas such as hotel rooms, kitchen, restaurant, wellness (pool, sauna, etc.), to which one does not have unrestricted insight or access, energy monitoring is very interesting. The large consumers in particular, such as the sum of all rooms, the kitchen and the wellness area, have significant savings potential. Air conditioning technology and hot water preparation are particularly large consumers, although these consumers are generally already equipped with monitoring systems. However, significant savings can be achieved through intelligent control of these units. In particular, if the central air conditioning system does not heat or cool unoccupied rooms and the corresponding rooms are only air-conditioned shortly before a guest arrives. It was precisely these issues that were proposed to the management and subsequently implemented with the corresponding modules. Here too, the energy supplier can generate revenue through the sale of consulting services, components and usage licenses.
Due to the implementation in the building technology (smart building technology), the implementation extends over a longer period of time. Here too, wireless technology has an advantage and offers a quick and uncomplicated way of integrating new components.
This includes companies such as supermarkets, discount stores, car dealerships, DIY stores, furniture stores and other traditional retail companies. In this case, companies that offer products for sale/rent. Even in the case of manageable buildings, energy monitoring is very interesting in order to gain knowledge about individual large consumers, such as refrigerated counters, compressed air generation or lighting. Standby times, appliance status and atypical consumption patterns can be identified here. In this context, employees can optimally integrate maintenance, cleaning or repairs into the operational process. The main focus is usually on cooling appliances and lighting. The corresponding cooling appliances are therefore equipped with sensors. Aggregated measured values are of interest for lighting, which is why consumption is usually recorded on a room-by-room basis.
This measure makes it possible to identify cooling appliances that consume too much power compared to appliances of the same design. The energy supplier used the corresponding modules from the modular system and had the sensors installed by a partner company. The sale of the components and the use of the cloud solution generated revenue and the supermarket chain continues to purchase electricity from the energy supplier. It is also conceivable to integrate the supermarket’s own solar systems and make cooling services more flexible. For example, refrigeration units can be cooled again before sunset and closing time in order to consume as little energy as possible during the night.
Agile business model development based on the lean startup principle offers companies a unique opportunity to differentiate themselves from the competition and open up new business areas. The key success factors in the development of new products are precision, speed and resource conservation. These can be addressed by the Lean Startup approach. Energy monitoring is a service that enables companies to measure consumption in order to gain initial knowledge of where “power guzzlers” may be located in the company. The sector in which the company operates is irrelevant. Of course, the knowledge is more relevant for manufacturing companies than for accounting companies, due to the different consumption. The energy supplier forms the (electricity) interface to the customer and therefore also has direct contact with the customer. In future, the aim should no longer be to sell the customer as much electricity as possible. The energy supplier must convince the customer to obtain added value through energy monitoring. This can be multifaceted, especially since this topic has not yet been considered at all in many companies, except perhaps through the installation of energy-saving lamps and motion detectors for corresponding lamps. However, monitoring can achieve much more, such as observing the entire plant, finding weak points in production, monitoring wear and tear on plant and machinery and thus analyzing maintenance requirements. This in turn can be used to generate dynamic maintenance intervals that prevent machine failures. By implementing sensors in a corresponding IoT platform, a long-term partnership can be generated that creates trust. This in-depth plant knowledge puts the energy supplier in a position that cannot be substituted without considerable additional effort. This can lead to a trusting partnership and cooperation. The added value must be identified and developed individually for each customer. There will never be a blueprint that can be applied to all customers. Many parameters differ too greatly for this. However, it must also be mentioned that the introduction and operation of an energy monitoring system does not happen overnight and it can certainly be a process that extends over several months. The modular approach has proven to be a promising concept. However, energy monitoring/management is a continuous process. In order to recognize valid correlations, a longer observation period is required.
In a further step and as an outlook, actuator technology and data evaluation are of interest in order to leverage the full potential of Industry 4.0, or rather Energy 4.0. The measured values must be provided with corresponding actuators. Only then can the measured sensor values be analyzed using sound logarithms or intelligent computers and conclusions drawn from them. The actuator system converts the findings into appropriate measures for controlling the system technology. In future applications, the use of artificial intelligence to evaluate and optimize the system is also conceivable.
