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Frost & Sullivan's Building Management Technologies Research and Consulting practiceoffers market analysis, business intelligence, global industry analysis, custom consultingand growth consulting (strategy consulting), and market research and forecasts that aredesigned to help grow your firm. Our global team of industry experts, consultants, marketanalysts, and research executives continuously monitor and evaluate the HVAC&R, Fire

& Life Safety, Building Automation Systems (BAS), Lighting Controls & Products,Performance Contracting, Facility Management (I-FM) Services, Security Controls, andHome Automation market sectors.Last update : 20 May 2011

More than 97% of all paths to growth occur through one of the 10 growth processesoutlined below. It is essential that you are aware of each of these processes and have all10 under consideration at all times. A diversified growth strategy comes with less riskand greater long-term potential. The trick is to select the right combination of processesfor your companys long-term growth strategy and empower your team with tools to getthe job done.

10 Growth Processes

Competitive Strategy Merger & Acquisition

Customer Strategies Product Development

Distribution Channel Optimization Product Launch

Geographic Expansion Strategic Partnering

Growth Sourcing (outsourcing)Technology Strategies (licensing,

applications)Frost & Sullivans series of Growth Process Toolkits explore in detail the key challengesassociated with each growth process and provide a collection of tools (e.g., weightedscorecards, checklists, presentation templates) to structure and inform your execution.These tools have been contributed by our leading consultants worldwide and areapplicable across industry. The Growth Process Toolkits save our clients time and moneyby focusing them on the right activities and tools from the start.

The facilities maintenance sector can be considered as the products, services and softwareneeded to maintain and operate buildings. It is an enormous industry approximately $250billion in size. This includes products used for maintenance, repair and overhaul (MRO),

janitorial-sanitation products (Jan-San), building maintenance and janitorial services aswell as the software used for tracking maintenance related activities known asComputerized Maintenance Management Systems (CMMS) and Enterprise AssetManagement Systems (EAM). MRO, Jan-San and related services are huge industries:- $125 billion - MRO and Jan-San Products (47.3%)- $138.5 billion - Building Maintenance and Janitorial Services (52.4%)- $617.6 million - CMMS / EAM Software (0.2%)MRO

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The MRO market is highly fragmented spread among more than 150,000 outlets. The top10 industrial distributors only claim about 13 percent of the market, while the next 80players collectively only control about another 10 percent. The roughly $125 billionfacilities MRO and Jan-San products segment can be broken down into the end usermarkets as shown below.

End User Market Size ($ billions): Manufacturing $78; Living Spaces $10; CommercialReal Estate $9; Education $4.8; Hospitals $1.7; Federal Government $0.1; Others $21.4;TOTAL $125.Major trends, issues and drivers include:- Cleaning up inefficient MRO purchasing processes and reducing costs of purchasingthrough product standardization and supplier consolidation.- The long-term trend of manufacturing moving offshore means that MRO suppliers mustlook to other markets for growth.- Downsizing and empowerment are reducing company hierarchies. As a result, more anddifferent people are involved in MRO buying.- MRO customers and product manufacturers are both trying to reduce the number of

MRO distributors with which they deal. In the large distributor channel, this will likelylead to a smaller group of distributors controlling a larger portion of the MRO productvolume.Building Maintenance and Janitorial ServicesThe main segments in building maintenance and janitorial services include:- Mechanical and Electrical- Janitorial and General Maintenance- Structural and Incidental Maintenance (roofing, pumps, valves, fittings, filtration, etc.)About 50,000 firms provide commercial janitorial and maintenance services in the U.S.,with combined annual revenues of about $75 billion. The electrical and mechanicalcontractor repair and maintenance services market represents an additional $63.5 billionmarket. This puts the total facility maintenance services market at about $138.5 billion.The following table shows the breakdown by end use markets.End User Market Size ($ billions): Commercial Real Estate $70.6; Healthcare $20.8;Hospitality $13.9; Education $6.9; Other $26.3; TOTAL $138.5.The main trends, issues and drivers for the building maintenance and janitorial servicesmarket include:- There has been a definite trend toward more outsourcing in recent years.- The most often outsourced function is custodial and housekeeping where as much as70% of companies outsource this function.- The two most important reasons for outsourcing are cost savings and the need forspecial skills, services or tools/equipment.- The increased level of complexity, sophistication and automation of building systemsare causing building owners and operators to put a stronger emphasis on preventivemaintenance.- Many of the smaller facility management, building maintenance and janitorial servicesdo not buy products from distributors, but instead purchase their supplies from localretailers such as Home Depot, Sam's Club, etc.Maintenance Software

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The global market for EAM software reached $1.6 billion in 2003 and is estimated togrow at the Cumulative Annual Growth Rate (CAGR) of 3.1 percent reaching $1.9billion in 2007. The U.S. market in 2001 was $617.6 million and is expected to reach$743.8 billion by 2006 with a CAGR of 3.8%. Growth in this market will not stem frompurchases of additional software licenses, but from services that focus on making the

software work.Major trends, issues and drivers in the EAM/CMMS software market include:- Consolidation is continuing in the EAM / CMMS software market. Vendors are allchasing the same customers and there is a limit to how many vendors it can support.- Mobile computing for EAM / CMMS has become a mainstream offering.- Virtually all vendors offer ASP solutions for EAM / CMMS systems as well as licensedsoftware.- Vendors are pursuing ancillary services because of the limited money available fromlicenses and connection fees.- The purchase of an EAM / CMMS system is usually driven by the need to reduce costs,regulatory actions, fines and/or safety.

- The number one problem with CMMS programs is that users still do not understandhow to fully utilize their CMMS or have the expertise to implement it properly.Distribution ChannelsThe main distribution channels for MRO products are:- Large distributors- Integrated suppliers- Regional, small and specialty distributors- Distributor buying groupsThe service providers themselves sell most maintenance services and software directly tothe customer.