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Kaer: Keeping things cool while disrupting the air-conditioning industry

Air-conditioning firm Kaer

Kaer has provided air-conditioning to commercial and industrial buildings in Southeast Asia for 60 years. The Singapore firm has come a long way since it first started out in 1952 as a distributor of international brands such as Carrier, Trane and Daikin. In the 1990s, it saw the opportunity to move up the value chain to become a system integrator – providing “design, build and operate” services. Today, Kaer is transforming its business yet again to capitalise.

Citing the rising popularity of subscription services such as Spotify and Netflix, Justin Taylor, Kaer’s CEO, says customers are now used to living in a product-as-a-service world with flexibility, enhanced support, lower upfront costs and reduced risk for a variety of services.

"We pioneered ACaaS as further service differentiation to give customers what they were looking for,” Justin adds.

ACaaS: A win-win business model

Kaer’s revolutionary ACaaS model stems from the notion that its customers want to focus on their core business. In the ACaaS model, Kaer purchases customers’ air-conditioning assets, and takes on the responsibility of operating, maintaining, and upgrading these assets.

Customers in turn purchase air-conditioning on a consumption basis without the need to invest in any air-conditioning equipment. Since most customers are not in the business of air-conditioning, it makes sense for them to let Kaer take care of this aspect so they can focus on their core business.

The ACaaS model provides Kaer with large amounts of data which it then analyses to drive the performance of its air-conditioning service level. This translates into lower energy costs for Kaer’s customers, making it a win-win approach. David Mackerness, Kaer’s Customer Success Manager, explains, “Economies of scale from the ACaaS model justify our investment into the top talent, research and development, technology and equipment. Customers are happy for Kaer to take on such investments as that frees up their investment capital for their core business.”

air-conditioning-as-a-service (ACaaS)

K-RealTime: Real-time monitoring of real-life conditions

Previously, Kaer’s engineers have had to toggle with different machine settings to select the right option for each environment. Given the large number of variables at play - such as humidity, external temperature and machine settings – there can be up to 8,000 possible permutations.

Kaer’s proprietary K-RealTime system helps its engineers eliminate this uncertainty. The system has a user-friendly yet comprehensive dashboard interface that allows engineers to monitor the operational performance of each asset from a centralised location. This makes it much easier for engineers to identify system trends for better decision-making. As everything can now be controlled from a central dashboard, Kaer can scale more rapidly with no change in manpower as fewer engineers need to be deployed on-site.

Another plus point of scaling is that more assets provide more data. This data is critical for Kaer’s AI-powered solution (known as brIQs) that Kaer has incorporated into its systems. BrIQs leverages machine learning to churn data and self-optimise operating parameters for greater energy efficiency, thereby helping assets reduce unnecessary energy wastage. Customers using K-RealTime and BrIQs have seen their energy efficiency increase by up to 50%. In fact, every single asset linked to these systems has achieved the Platinum mark under the Building and Construction Authority’s Green Mark Assessment.

Kaer's Singapore headquarters

Since the start of the year, Kaer has also incorporated Pollutant Standards Index (PSI) data from the National Environment Agency into its dashboard. If the PSI rises beyond healthy levels, the systems automatically reduce the intake of outside air into the building, signal for more frequent changes of air filters, and sends advisory messages to its customers.

To develop the K-RealTime Broadcast Centre, Kaer worked closely with Enterprise Singapore (ESG) to scope and finance the project. Although continuous investment into K-RealTime is a necessary investment for Kaer to stay ahead of the curve and future-proof its business, significant funds were required to design and implement the system. The firm approached ESG for support, and obtained an Enterprise Development Grant that enabled it to successfully develop the project. Today, both organisations are in discussion about how to further improve Kaer’s business efficiency and expand its international footprint as demand for energy-efficient solutions grow across Asia.

“Enterprise Singapore has been a great partner who has worked with us on improvement of processes and systems as well as test-bedding of innovative ideas and technology,” says Justin.

Elements of Business Transformation

The transformation from a product seller to service provider involved significant changes – both internal and external.

Justin says, “It is about reimagining the way to do business. This involves a move from a traditional mechanical engineering company to one with greater focus on software, data and technology.”

Over the past few years, Kaer has revamped its organisational structure as it pivots towards ACaaS. One of the most significant changes was the formation of a dedicated customer success team, which works closely with customers to ensure everything from onboarding to day-to-day operational processes are smooth.

David emphasises, “Customer-centricity is the number one pillar in driving our business forward. Placing the customer at the centre of what we do has greatly impacted the way we operate and manage our assets.”

Kaer has also hired many more data scientists, software engineers and asset managers – a shift from the traditional emphasis on engineers. Language used during customer discussions has evolved from engineering terminologies like chillers and machinery to financial terms such as asset value, return on investment and capital management.

David elaborates, “We still have the same engineering in place but we now focus more on customers instead of pieces of equipment. Our engineers are now focusing more on the experience that we create for our customers and improving productivity based on our service level.”

Kaer acknowledges that pitching ACaaS to some traditional brick and mortar companies is not without its challenges, especially as the business model is a new one. Yet, Kaer remains confident that ACaaS is the way forward.

“The “as-a-service” business model has disrupted every industry it has been applied to and we have not seen a single example of an industry that has been able to stand up to this customer-centric approach to doing business”, David quips.

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