1. Integration of Security and Fire with BAS: Putting More Information to Effective Use Frost & Sullivan April 27 th 2005 Sapan Agarwal

2. Copyright Frost & Sullivan 2005 Introduction Introduction Integration of Security and Fire with BAS: Putting More Information to Effective Use This presentation is designed to outline a wider group of research services by Frost & Sullivan which combine research in the building automation systems (BAS) market by our dedicated Building Technologies Group It covers issues and concerns pertaining to integration across market verticals, including HVAC; Fire and Life Safety; & Building Security markets The purpose of today’s briefing is to respond to the great increase in interest by the BAS community and beyond, to the proven potential of integrated systems

3. Copyright Frost & Sullivan 2005 Building Technologies Our Competencies Our Competencies Integration of Security and Fire with BAS: Putting More Information to Effective Use Controls and Equipment Market Engineering Services Strategic Analysis Home Automation HVAC Controls and Equipment Lighting Controls and Equipment Fire and Life Safety Building Automation Controls Performance Contracting Integrated Facilities Management Remote Monitoring Services BAS Installation and Maintenance Energy Management Services Web Accessible Control Systems Integration of BAS with Building Security Systems Indoor Air Quality: Issues and Strategies

4. Copyright Frost & Sullivan 2005 Integration: System Fundamentals Integration: System Fundamentals Integration of Security and Fire with BAS: Putting More Information to Effective Use What is Integration? Systems can only be considered “Integrated” if they were designed to seamlessly share, versus duplicate, system resources Types of integration: Proprietary integration Front-end integration Open integration System Fundamentals

5. Copyright Frost & Sullivan 2005 Interfacing: System Fundamentals Interfacing: System Fundamentals Integration of Security and Fire with BAS: Putting More Information to Effective Use What is Interfacing? Where two previously stand-alone systems are interfaced to each other via software and two-way communications to share data and commands Types of integration: Custom interfaces Bundled custom interfaces Front-end interfaces Open interfaces System Fundamentals

6. Copyright Frost & Sullivan 2005 Technological Evolution of BAS Technological Evolution of BAS Integration of Security and Fire with BAS: Putting More Information to Effective Use Pneumatic Transmission Electric Controls Electronic Controls Mini Computers Personal Computers Direct Digital Controls BACnet/Lon Revolution Internet/Intranet Growing Convergence of BAS and IT Wireless Interfaces and Email Alarms IT Standardizing Information Presentation Models Evolution of Systems that may Integrate all Building Services on Standard IT Infrastructure Building Automation Controls

7. Copyright Frost & Sullivan 2005 BAS and IT Converging BAS and IT Converging Integration of Security and Fire with BAS: Putting More Information to Effective Use Growing need to interconnect building facilities spread over different geographical locations for remote monitoring/analysis and control Use of BAS data for other organizational needs such as facility management Increasing machine-to-machine communication Growing Convergence Information Technology Building Automation Increasing need for interconnecting facilities and accessing real-time data over the Internet Convergence of Enterprise network and the building automation network for data communication and sharing facility wide data for BAS as well as other organizational needs Building Automation Controls

8. Copyright Frost & Sullivan 2005 Market Revenues Market Revenues Integration of Security and Fire with BAS: Putting More Information to Effective Use NOTE: The revenue figures indicate the market size for the building level controllers and the human machine interface only These figures exclude any revenues from unitary controllers and devices These figures exclude any revenues for installation, training, or servicing of such equipment Compound Annual Growth Rate (2004-2008): 6.6% NOTE: The revenue figures indicate the market size for the unitary controllers and the applied controllers only These figures exclude any revenues for installation, training, or servicing of such equipment Compound Annual Growth Rate (2004-2008): 5.5% Building Automation Controls

9. Copyright Frost & Sullivan 2005 Time to Integrate Network and Building Security Time to Integrate Network and Building Security Integration of Security and Fire with BAS: Putting More Information to Effective Use Building Security Fastest growing markets are physical security, biometrics and radio frequency identification (RFID) in the automatic identification sector Businesses must realize the importance of integrating physical and digital security in the workplace by accepting that security is a single issue – rather than breaking it down in terms of digital and physical security Facilities access makes the security of IT systems vulnerable. As per industry feedback, approximately 70.0 percent of data theft from a company is physical theft The need to cut costs is another driving factor for this convergence. Integration of the budgets for physical and IT security can deliver substantial efficiencies The efficiencies become even more compelling when a common data repository is used for all identity related information

10. Copyright Frost & Sullivan 2005 Digital age is ushering in a convergence of voice, data and video “How” the information is stored and retrieved is becoming more important than “Where” it is stored Security providers can use this information to provide additional services: Supervision Email notification Browser interfaces Audio/video Up/download common configuration databases on the network Moving Towards IP Centric Platform Moving Towards IP Centric Platform Integration of Security and Fire with BAS: Putting More Information to Effective Use Building Security

11. Copyright Frost & Sullivan 2005 Market Revenues Market Revenues Integration of Security and Fire with BAS: Putting More Information to Effective Use NOTE: The revenue figures indicate the market size for the perimeter security equipment and the interior security equipment only These figures exclude any revenues for installation, training, or servicing of such equipment NOTE: The revenue figures indicate the market size for the proximity card, magnetic stripe, smart cards and other card-based access control systems markets only These figures exclude any revenues from sale of any individual component in isolation such as card or reader These figures exclude any revenues for installation, training, or service of such equipment Compound Annual Growth Rate (2004-2008): 8.1% Compound Annual Growth Rate (2004-2008): 12.7% Building Security

12. Copyright Frost & Sullivan 2005 Fire is a regulated, code driven business. Interference of any other system with fire is being controlled by the governing agencies like NFPA to make it fail safe as versus fail secure Interfacing of fire alarm systems with BAS and other building safety systems is on the rise Audibility and intelligibility issues are enhancing the protection being provided by voice evacuation systems Distributed intelligence with peer to peer network is being preferred as it offers better survivability for the systems In a trend towards open and multiple protocols, end-users are asking for program and access codes to integrate two panels of different makes Fire Alarm Panels: Are We There As Yet? Fire Alarm Panels: Are We There As Yet? Integration of Security and Fire with BAS: Putting More Information to Effective Use Fire and Life Safety

13. Copyright Frost & Sullivan 2005 Inherent barriers such as regulations, codes and mandates, and embedded industry practices inhibit the introduction of new technologies Fire are passive systems with no user interaction required while security systems are highly interactive. This generates inherent conflicts in integration The fire equipment manufacturers prefer a very clear demarcation between the fire and the other building systems Although the fire industry is open to interface their systems at the island level yet it is not embracing the concept because flawed integration may compromise on the reliability of fire systems Fire Alarm Panels: Are We There As Yet? (2) Fire Alarm Panels: Are We There As Yet? (2) Integration of Security and Fire with BAS: Putting More Information to Effective Use Fire and Life Safety

14. Copyright Frost & Sullivan 2005 Market Revenues Market Revenues Integration of Security and Fire with BAS: Putting More Information to Effective Use NOTE: The revenue figures indicate the market size for heat detectors, smoke detectors and flame detectors only These figures exclude any revenues for installation, training, or servicing of such equipment NOTE: The revenue figures indicate the market size for water-based fire suppression systems, gas-based fire suppression systems and special fire suppression systems only These figures exclude any revenues from manually operated systems and associated controls and detectors These figures exclude any revenues for installation, training, or servicing of such equipment Compound Annual Growth Rate (2004-2008): 3.3% Compound Annual Growth Rate (2004-2008): 4.1% Fire and Life Safety

15. Copyright Frost & Sullivan 2005 Fire and Life Safety Industry It is a proprietary and code driven environment Building Security Industry There are no real dominant players in the market in terms of a vertically integrated total solution This industry seems to be most enthusiastic about integration The HVAC and Lighting Industry Integration – Different Perspectives Integration – Different Perspectives Integration of Security and Fire with BAS: Putting More Information to Effective Use Industry Perspective End-user Perspective Indifferent End-users Lack of Knowledge and Limited Awareness About Benefits Aware but Uneducated End- users Perceptions of High Costs and Technological Complexities Aware and Educated End- users Very Specific about Security Needs, no Interference from other Building Services Integration Issues and Concerns

16. Copyright Frost & Sullivan 2005 Accessibility to enormous information to be used in diverse applications across facilities promising growth for integration Quick return on investments attributed to shared resources such as wiring, common databases etc. driving demands Lack of specifications for integrated systems challenges consulting engineers to recommend integrated systems Lack of standardization of data to be exchanged slowing growth of the market Apprehensions of IT personnel about level of network security discouraging integration potential Key Trends and Challenges Key Trends and Challenges Integration of Security and Fire with BAS: Putting More Information to Effective Use Integration Issues and Concerns

17. Copyright Frost & Sullivan 2005 To view the roadmap for integration that lies ahead, it must be first understood that each building control system is made of the same basic computing hardware and software operating system If the systems can be driven by the IT standards, integration capabilities may be taken to the next higher level However, this is not likely to happen in a big way anytime soon for the simple reason that the present world is organized in a way where different industries (HVAC, lighting, security and fire) prefer to protect their own personal spaces Also, integration may not be financially viable in legacy systems and older buildings. The building owners may not even be motivated to attempt such a venture As a result, for a long time the focus for integration may continue to be new construction or major retrofit projects Road Map – The Integration Nirvana Road Map – The Integration Nirvana Integration of Security and Fire with BAS: Putting More Information to Effective Use Integration Issues and Concerns

18. Copyright Frost & Sullivan 2005 How can Companies Grow in this Market? How can Companies Grow in this Market? Integration of Security and Fire with BAS: Putting More Information to Effective Use Provide complete technical solutions Educate end-users on potential benefits of integration Adhere to open systems and common standards for communication Acquire, merge or partner with existing participants in different verticals Examples: Carrier Corporation, a subsidiary of United Technologies Corporation acquired Automated Logic Corporation, April, 2004 Schneider Electric acquired TAC in June, 2003 followed by acquisition of Andover Controls, August, 2004 General Electric Corporation acquired Edwards Systems Technology, November, 2004 Honeywell acquired Novar plc, December, 2004, Novar plc had acquired Alerton, March, 2003 Richards-Zeta Building Intelligence, Inc., Panduit and Cisco Systems, Inc., entered into a collaborative effort for delivering complete IP centric solutions, February, 2005 Competitive Analysis

19. Copyright Frost & Sullivan 2005 Relevant Research Services Relevant Research Services Integration of Security and Fire with BAS: Putting More Information to Effective Use Published Research: North American Building Automation Systems Protocols Analysis (Q2, 2005) Strategic Analysis: Integration of Building Security Systems with BAS Strategic Analysis of the North American Web Accessible Control Systems Markets North American BAS Controls Markets North American Fire Alarm Equipment Markets North American Fire Suppression Systems Markets North American Lighting Controls Markets End User Analysis Custom Research

20. Copyright Frost & Sullivan 2005 Contact Details Molly Norton Account Manager Environment p) 210.247.2410 e) molly.norton@frost.commolly.norton@frost.com Sapan Agarwal Program Leader Building Technologies e) sapan_agarwal@frost.com@frost.com Michael Poole Account Manager Environment and BT p) 210.247.3842 e) mike.poole@frost.com Tolu Babalola NA Corporate Communications p) 210-477-8427 e) tolu.babalola@frost.com