How LaaS helps the bottom line—and the planet

In the traditional method of lighting procurement, organizations purchase and maintain their own lighting equipment for illuminating their properties: potentially thousands of luminaires and the wiring, controllers, servers, gateways, switches, sensors, and other infrastructure components required to operate and manage them.

Light-as-a-service (LaaS) turns this model around. In an LaaS arrangement, companies “rent" light from a lighting provider on a recurring subscription basis, instead of owning the lighting gear themselves. The lighting provider retains ownership of the equipment, and largely bears responsibility for maintaining and upgrading it.

Companies that embrace LaaS can rest easy, knowing they don’t have to worry about the practical responsibilities of owning their own lighting—all those luminaires to monitor and repair, all those lighting performance targets to hit, all that supporting hardware to maintain. In addition, under a LaaS agreement, companies can shift Capex costs from purchasing and owning lighting systems into operational costs that have a lesser impact on the balance sheet, improving free cash flow.

The chart below shows how adopting LaaS can save a company 10 percent of what it would have paid in energy and maintenance costs had it continued to own its lighting over the first five years of operation. By the sixth year, the company is saving 50 percent of those costs. This chart also makes clear the startling results that LaaS can deliver in terms of generating free cash flow. 

Fewer burdensome capital assets, relief from the labor- and capital-intensive “busywork" of ownership, and free cash flow: these are valuable benefits for any organization. But they aren't the only advantages that LaaS brings.

The best LaaS platforms are defined by connectivity. In addition to providing traditional illumination functions, a connected lighting platform serves as an ideal foundation for deploying Internet of Things (IoT) capabilities—often in the form of a combination of sensor technology and data analytics. Like any connected lighting system, an LaaS system with embedded sensors can collect information from every square foot of the illuminated environment. Transmitted securely to the cloud and analyzed, collected data can inform key management decisions.

Using the insights derived from occupancy and presence data, for example, a logistics facility can organize its stock to accelerate order picking. A manufacturer can better deploy raw materials and workstations. That same manufacturer can optimize its office footprint to minimize real estate costs while ensuring employee satisfaction.

At the extreme, numerous IoT-enabled industrial facilities can function more or less autonomously, with oversight exercised remotely—an important capability in a world trying to cope with the effects of a pandemic. More IoT-enabled capabilities will become mainstream as the technology inevitably improves, sensing becomes more precise, analysis becomes deeper, and open APIs make integration of smart systems easier.

IoT capabilities can also make facilities more pleasant and safe for workers. Context-responsive lighting results in better task performance, fewer manufacturing rejects, and perhaps most importantly, fewer accidents.