In this podcast episode, we discuss the transformation of Merck Group towards ‘New Work’ and ‘Smart Building’. Merck Group, a leading company in the chemical and pharmaceutical industry, has decided to make its office spaces more energy-efficient and adaptable to new working models. With the help of IoT solutions from CREM SOLUTIONS, Merck saves space and energy without compromising the productivity of its employees.
Podcast episode summary
Daniel Mihaljevic, IT Manager at Merck Real Estate, talks about the challenges of effectively integrating large amounts of data and how they succeeded in implementing building automation using sensor data. We also discuss how Merck Real Estate utilizes an IoT-based smart building platform from CREM SOLUTIONS to efficiently manage spaces and organize workplace reservations.
Another guest in this episode is Artur Wiederkehr, Senior Consultant at CREM SOLUTIONS. He shares about the close collaboration between the project teams of both companies and how they ensured data security and sovereignty. He also discusses the different user data and how it is analyzed and processed into various levels of complexity.
In this episode, we also take a look at the achieved results, particularly how the Merck Real Estate team is now able to make better-informed decisions, optimize processes, and simultaneously save energy and rental costs.
Episode 99 at a glance (and click):
- [06:00] Challenges, potentials and status quo – This is what the use case looks like in practice
- [13:50] Solutions, offerings and services – A look at the technologies used
- [30:45] Results, Business Models and Best Practices – How Success is Measured
Merck is known in the market as a leading science and technology company in the fields of life science, healthcare and electronics. More than 64,000 employees work on products and services to speed up the development and manufacturing of pharmaceuticals. From discovering unique ways to treat diseases to providing applications for smart devices.
In 2022, Merck generated sales of EUR 22.2 billion in 66 countries. These key figures speak for themselves and today we can take a unique look into the world of buildings. Namely, we learn from Daniel, the IT manager at Merck Real Estate GmbH, about the concepts for a resource-saving, energy-efficient future and what use cases are being implemented through the use of data specifically for intelligent optimization, such as building utilization.
Joining them is their selected IoT partner “Crem-Solutions”, the leading provider of software solutions for commercial and technical real estate management. Today represented by Artur, Senior Consultant for Smart Building Solutions. Let’s start!
Hello Artur and Daniel, nice to have you with us today! Artur, how are you and where are you?
Thank you for the invitation! I’m doing great, I’m currently sitting in my cozy home office in Cologne and looking forward to the conversation.
I am also working from home in Lambsheim, in Rhineland-Palatinate. My commute is a bit longer, so it’s good that we have the option to work at home.
Is there also the company of you or where is it located?
The main location is in Darmstadt.
That means you’re in the region near Mannheim right now?
Exactly, near Mannheim/Ludwigshafen.
I’m glad that you’re on board. Let’s start with Artur and with Crem-Solutions. You are known on the market as a leading German provider of software solutions, both for commercial and technical real estate management.
You are a wholly owned subsidiary of the “Nemetscheck Group”. Here you develop powerful software for companies, especially in the real estate industry.
What I find particularly exciting about you is that you cover bidirectional integration of data. Above all, everything that concerns data protection, including workplace consulting, you are very strong in this area. That’s why I’m so happy to have you with me today. You are a Senior Consultant for Smart Building Solutions. What exactly does your department do and which clients do you work with here?
One more addition to the Nemetschek Group: Namely, the Nemetschek Group offers end-to-end support along the entire lifecycle chain with its software solutions. We as Crem-Solutions represent, among other sister companies, the division “Operate and Manage”. Our Smart Building Solutions department is responsible for the sales, for the implementation and also for the consulting of our software solutions in the DACH region.
Our clients include companies that want to implement activity-based working and hybrid work models on the one hand, but also want to design buildings efficiently and sustainably.
Daniel, you are with Merck Real Estate GmbH. How did you actually meet, was it classically at a fair or is there a personal story from both of you?
I was involved early on in the sales process because there were technical challenges and Daniel was responsible for the software selection process at the time. Back then, there was a requirement to utilize our own information technology infrastructure before the data is loaded into our software.
We sat in various workshops together with Daniel to solve the challenges. After one or two architectural sketches, we had a solution that was also approved by our project team. That was one of the bases for the decision.
That’s correct, we carried out a selection process, as is classically done in a large corporation, and an important point was that we wanted data sovereignty. We use the data not only for the booking software, but also for other things.
At that time, about two years ago, there were not many providers who could guarantee data sovereignty with us. This was the decisive point why Crem-Solutions was chosen.
Challenges, potentials and status quo – This is what the use case looks like in practice [06:00]
Do you have use cases and case studies that you implement with customers? Can you tell us about what you did together with Merck Real Estate?
First of all, I am pleased to be part of the network here and to present our use cases. I would like to describe our use cases from the perspective of different stakeholders: Basically, we have a strongly data-driven software. If we look at the management, for this it is above all important, in addition to a regulated back office strategy, that the resources of the company are used optimally. And here they have the opportunity to get an overview of the most important KPI’s.
In addition, optimization suggestions are also provided through our analytics dashboards, such as identifying vacancies or inefficient utilization of certain rooms.
Then there is the facility manager, for whom it is mainly important that the building is operated efficiently and safely. Here, for example, they could identify that a ventilation system or a heating system is not being used efficiently in order to initiate measures.
In addition to inefficiency, it is also important to ensure a healthy work environment. They do this by measuring certain factors, such as the CO2 content in the air or volatile organic components. The noise level is also important in activity-based working spaces, where they also analyze them and try to ensure that they do not exceed the limit.
Furthermore, the employee who is in a building and wants to interact with it, wants to book and find their workstation in seconds, maybe wants to book a workstation, close to their colleague.
For example, they can use our touchpoints to search for where their colleague is currently located in order to book a workstation right next to them.
For this purpose we provide different touchpoints, which are hung up directly in front of the conference room or a touchpanel, which is placed directly at the entrance in the office, so that the employee can book their workstation ad hoc, if they have forgotten it. And their smartphone or laptop, which they usually always has with them, can also be used to interact with the building via our software.
Did you implement this in the same way with Merck Real Estate or what is the joint project?
At Merck Real Estate, we have just about all the use cases in place, all three of which are eligible. The fact that it was possible to book workstations and switch to another building created a use case that was not on everyone’s mind before. That’s when the opportunity arose to save energy by only using certain buildings that are more efficient than others.
Merck is known as a German company in the chemical and pharmaceutical sector, with headquarters in Darmstadt. Today we are not talking about Merck in general, but about Merck Real Estate GmbH. Daniel, can you tell us about what exactly you are doing there and what your vision towards digitalization and IoT is?
Merck is a relatively large company that relies heavily on innovation and demonstrates strong growth. Real Estate GmbH are mainly responsible for Germany, for our main locations in Darmstadt and in Gernsheim.
You have to think of it as the Real Estate running the whole site of the buildings. We have over 740 buildings at the Darmstadt site, have a civil engineering department with us, a building construction department and rent out the buildings internally. In this context, the main task was to ensure that we provide our users with the space they need, at the right time, and support the core business.
You quickly get into areas like having smart buildings, making fact-based decisions based on these kinds of IoT solutions and, of course, promoting sustainability. Then such interesting use cases arise that fit exactly into the time, i.e. also out of a need.
For example, saying: We are doing our part to save energy or CO2 emissions by adapting in the winter, especially in a phase where many are working from home, we are shutting down the buildings to winter operation, that is, not to zero. You still have to operate, but you can save energy and the rest of your colleagues, without having a negative impact, you move to other buildings that have the same conditions.
Using such combinations of technology and innovation, you can create use cases that add value again. The vision is to achieve a benefit with data, that is, to make a business, to get ahead, to develop. And there’s a point of using the data not only for booking software or for area software, but also to make the buildings smarter, for example. If you think about it further, there are many possible applications.
Now the cordial invitation, who is listening, if you are listening and you think: I am also a building operator or at least have to do with the topic, our guests are both represented in the network, that is, you are welcome to join. We have monthly meetings where you are warmly invited to engage in discussions with Daniel and Artur.
Where are we exactly with you and what kind of processes do you classically have in these individual buildings?
At Real Estate, it’s like this: we have a large portfolio of buildings. We have different building operation standards and then when we go into the normal, administrative office buildings, which is not production, we still have a large portfolio and we operate that. What is known from the FM sector, are infrastructure services, TGM services that we commission, partly externally, partly internally, and we basically take care of everything related to building operations.
What is special about us is that we also construct the buildings ourselves. We don’t have the construction workers, but we do a lot of design services, with us the project managers are responsible for that, also architects.
Since we also internally rent out the spaces we provide to our internal clients from all units, we offer services such as monitoring of spaces and strategic development of spaces. This is what the regular user sees, for example, a booking software for workstations or rooms.
Solutions, offerings and services – A look at the technologies used [13:50]
What is the challenge that you have observed in the individual processes or with your internal clients that led you to take this path? What are some big challenges you face at the position today?
One is the cost pressure, which is always there. We have to position ourselves vis-à-vis the market. We cannot perform worse than a “competitor” in the market. This means that we must always remain performant and find new ways to optimize our processes.
The other issue is: We are a company that is growing strongly. This means that we must always respond to circumstances. For example, when production goes elsewhere or a line is phased out, that we then have issues or units are built up or downsized and there is restructuring.
We have over 6,000 moves a year, so we always have to be efficient and look for solutions to keep these processes running. All this in an area that supports the core business as much as possible and is not hindered by our processes.
What is the relevant data for you from the technical buildings, the laboratories and maybe even from civil engineering?
When it comes to area operations, that’s the occupancy data. By using hard data, we can see how the spaces are utilized and analyze the level of activity through combinations of various sensors. With the dashboards we have, we can also analyze space utilization in more detail. This is not just from a gut feeling or by taking a snapshot, but over a very long period of time, a whole year or two. The longer something like this runs, the more meaningful data we have.
We in the area use temperature/CO2 that the user has an information to choose an ideal area where they would like to work. For other trades, the data means completely different issues again, as with ventilation systems, building automation systems. When it comes to lighting conditions, lights on/off and then the whole thing fully automated.
Otherwise, we have a vision of making buildings truly smart. When we combine this with booking data, we can see evidence of reservations and bookings. With this information, I can already control my facilities in a way that ensures optimal room climate at all times. Then suddenly temperature and CO2 data make more sense for a building again.
What were the technical requirements for the solution that you had to have in any case?
One issue was data sovereignty. Data sovereignty in this case means that we want to collect the sensor data. We don’t have a heterogeneous building environment, we have buildings that are 100 years old and we have buildings that are two to three years old. There you simply have a different technical standard.
So it was important for us to have a provider that was proficient in software and hardware. I didn’t want to have ten suppliers for four sensors again. I wanted to have a contact person who could tell me which sensors work well and where they have experience, as I wanted to participate.
Because we have different standards in the different buildings, how we work with sensors, different types of sensors, different technologies, and how we can then collect the data together. So it was important to us that it all comes together in our company so that we can also create added value for other trades.
We don’t always have the resources to know everything. We also need to buy in expertise at times. Also the reporting, i.e. the evaluation topics, because this is not just a “simple” dashboard, but there is also know-how behind such evaluations. The KPI’s are collected via certain statistical models, empirical values and scientific findings, so that there is a certain know-how behind it and we can work with it, because we simply don’t have the time to invent any reporting for two or three years.
Because you’re an expert on the individual processes and converting that into the data is exactly the step with these statistical models.
Isn’t data privacy also a topic of concern? Suppose you have different jobs, but there are always people involved as well. Just GDPR and such topics, is that relevant?
It’s an issue, definitely. Data sovereignty played into that, it made it easier. I would say medium priority, because every company has this issue. Where are the data? Who works with the data? Where do the data go, even if they are personal data?
If you have a New Work, i.e. a new workplace model, you can no longer say through the sensors: Madeleine is sitting there or Artur is sitting there, because the system doesn’t even know at first. But what is interesting, with the booking data, there you reveal who you are, from when to when you are where, and may I be found? These are points, but I think every software provider, at least in Germany, has to have that, otherwise you won’t get anywhere.
Artur, can you briefly explain what exactly you built together? Can you make this solution tangible in two to three sentences?
First and foremost, our solution is an effective tool to support the implementation of topics such as activity-based working, hybrid work models and New Work. In the long term, Merck Real Estate aims to be supported in utilizing its spaces as efficiently as possible. This includes identifying that less space is required compared to pre-COVID times. The goal is not only to reduce energy consumption in buildings but also, if possible, to consider renting out spaces for additional utilization.
Who did what exactly in the project? Daniel, you have sort of built on this software solution. Where did you start, where did the Artur team end?
This was a hand-in-hand issue. The basic tools from Crem-Solutions have been provided. Then our part starts that we have to provide data. Classic things like preparing master data. This then goes back to Crem. They reprocess that and we control that again.
We then install the hardware, the sensors, deliver the reference information back to them, and Crem implements that in turn.
Everyone has their building block, what to do, I can only say for Merck. I don’t know if it’s the same with other customers, but we work hand in hand. We have established a standard for ourselves. We can implement large areas very efficiently and quickly and have become very agile as a result.
Artur, how are you doing from the hardware side?
We basically have three different data resources. There we are talking about the natively integrated sensor technology, then we have our standardized interface and collaborators, so the user interacting with the touchpoints is also a data point for us.
When we look at native integrated sensors, we’re talking about sensors that are included in our product catalog and go through a rigorous evaluation before they come into our product catalog. If a sensor is not in the product catalog, you can use our generic interface. We call it the “Generic End Point”, which is also used at Merck Real Estate, for example.
That’s where we define a standardized interface and Merck then sends data from their IT infrastructures to us in a defined JSON format. This means that it can either be a sensor, but it can also be the building control system or the building automation system, where computers pass the data on to us.
Again, the point about user touchpoints, the employee who ends up booking that workstation is, of course, also a data point. In that case, an anonymous data point that can also be used to later provide partial or demand-based heating or ventilation in certain areas.
How does this processing of the data work? You capture them, create these touchpoints, and manage these interfaces. What is the step after that?
I like to divide this into primary and secondary communication. The primary communication is between the sensor and the gateway. As a rule, we use either wired or wireless technologies there. Wireless would be “LoRaWAN”, for example.
Then we have the communication between the gateway and the cloud. That’s where it goes out to the wide area network, where first the data is stored temporarily in an IoT cloud, for example TTI or LORIOT, and then it goes into our cloud for the long term. Our cloud consists of the Google Cloud Platform and is hosted in the European area, according to GDPR guidelines.
The occupancy data, are these building management systems or other IT systems that you integrate there?
For occupancy data, we either use retrofitting sensors, which are peer sensors that work via photo-infrared sensors, but if building automation in the field already has such sensors, then we can integrate them as well.
Can you describe how this analysis works exactly? Are you doing that on your cloud infrastructures, on Google Cloud, or are they your own services?
First, we have different analyses there. We break this down by data type. For example, we have the space monitor, then also the comfort monitor, and there again we have a gradation and different levels.
First, the level as an overview for the management. Then we can go one level lower, where then a facility manager can extract the insights. One more level down, making heavy use of statistical tools, where data science teams can extract insights. The analysis at our company works on the basis of “Qlik”. This is a BI company that we use because we take the best-of-breed approach.
So what is simple to process data and what is more complex data types?
Simple dynamic data includes, for example, occupancy. That’s just a one or a zero that’s sent and then evaluated at our end. Then there is utilization, which we call utilization here, where we can evaluate how many people are in a room. For example, if a room was planned for eight people, but on average there are only three or four people in that room, then this can be analyzed accordingly.
Daniel, how are you using this data for yourselves now? Do you have different dashboards where you see this evaluation accordingly? Because the actual intelligence flows together with your know-how at the point.
For now, the dashboard is still from CREM and we use that as the basis for our analysis. Depending on the use case or need, we can take that as a basis and build our own reporting or draw our conclusions.
We are no longer concerned exactly with the cost of one job, but this is the business case for us. You can see that teams have restructured themselves or that buildings can be redensified without the user having a negative impact, so you can quickly find out how many additional jobs you can notionally create in such a shared model and then make a counter-calculation.
For example, I can completely lease an external building and then you quickly have a use case where you can use internal key figures to calculate how worthwhile it is. As we have a large portfolio of buildings and are actively involved in construction and recycling, we are engaged throughout the entire lifecycle. This provides us with many opportunities to increase efficiencies.
Is that internal reporting where you have an evaluation as a dashboard?
Exactly, the dashboards are first predefined by the manufacturer. We can take those for our use cases and then adapt them. This isn’t Rocket Science, just classically pulling into a PowerPoint, editing the data, but working with the data as a base, and then pulling our reporting.
For the regular topics that interest area managers by default, such dashboards are sufficient, but, as it is in business, you have to give different answers for different questions and then you can use that as a basis.
Results, Business Models and Best Practices – How Success is Measured [30:45]
Can you summarize, Daniel, what the business case is for you at the end of this project?
Using tools to derive decisions and often making data-driven decisions based on hard facts and numbers to optimize building utilization and increase efficiencies. This includes finding ways to save rental costs externally by leasing out buildings.
The next phase will be to make strategic decisions. If you have a lot of growth, how much staff is coming, how much space do I need, what do I have in terms of buildings and how can I optimize that?
In your long experience, there have certainly been some pitfalls or best practices that have emerged. What are the lessons learned from the project?
From our side, we had the immediate involvement of all IT units that are necessary in the corporate environment. If we have a topic or problems where we are not getting anywhere and we have not involved the contact persons from the beginning, we often have projects that drag on for a long time. This already starts with SSO and Outlook integration.
Initially, we focused on implementation, and in the second phase, we focused on optimization. I believe it is important to initiate such efforts right from the first phase, especially in a corporate environment, where processes can be slow, and numerous regulations, including data security, need to be adhered to. Ensuring system compatibility, initiating such topics promptly, and setting the right course in a timely manner to avoid falling behind and jeopardizing project success.
Based on experience, it has always proven beneficial for us to establish standards and regulations as early as possible so that everyone speaks the same language. Regular updates are also important, log everything thoroughly so everyone is on the same page.
I think this project is very exciting. I think that’s one of the few projects specifically from the building environment that I’ve had here on the podcast.
From my side, heartfelt thanks for being a part of it, and thus the final words go to you. It was a pleasure for me that you reported about it.
Thank you very much! In the future, the topic of sustainability and efficiency will be at the top of the list. That at some point you even go there and achieve a partial, demand-oriented building technology control. We are currently also running a test at Merck Real Estate, in which buildings are being tested in the company to the extent that booking data is extracted from our software and used to control the buildings and technical systems.
This is also where our product continues to develop. This also means that energy data is also included in the analysis, not just the space utilization, and that synergies can be extracted accordingly.
I’ll just mention these buzzwords that you hear again and again: digital twin, smart buildings, sustainability, these are also the very big topics at Merck. Especially if you come from energy-intensive industries like we do, you have to create efficiencies to be successful in the long term. A great lever can also be an efficient building.
Maybe do another episode where you guys talk more about sustainability and energy efficiency, what the results were from that pilot project. Have a great rest of the week!