Getting Clever About Smart Cities New Opportunities

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Making Leaders Successul Every Day

November 2, 2010

Geng Cever Abo Smar Ces:New Oppornes Reqre NewBsness Modesb Jenner Bssen, Ph.D.

or Vendor Sraeg Proessonas
http://www.forrester.com/


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2010, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Inormation is based on best availableresources. Opinions refect judgment at the time and are subject to change. Forrester, Technographics, Forrester Wave, RoleView, TechRadar,and Total Economic Impact are trademarks o Forrester Research, Inc. All other trademarks are the property o their respective companies. Topurchase reprints o this document, please [email protected]. For additional inormation, go to www.orrester.com.

For Vendor Sraeg Proessonas

ExECutiVE SuMMARy

Population growth and urbanization are stretching many cities inrastructure and resources to

breaking point. Policymakers and public leaders are increasingly looking to IC solutions to eectively

provide public services like education, healthcare, saety, transportation, and utilities. At the same time,

municipal bankruptcies and public-sector nancial crises create a gap between the ends required and

the means to get there. Public-sector I leaders are less optimistic about the outlook or their sector

than those in other industries. Yet, they do report plans to increase spending or certain hardware andsoware categories, particularly industry-specic applications and networking equipment that underpin

smart city initiatives. Demand rom local governments, along with similar conglomerations like

universities and company towns, will drive incremental opportunities or IC suppliers in the coming

years. o capitalize on these opportunities, vendor strategists must partner with urban leaders, providing

guidance not only on the technology solutions and services but also on the business models and delivery

options that will ensure the long-term viability o smart city projects.

tABlE OF CONt ENtSUrban Dmograpics Ruir Nw

Approacs To Public Srvics

T Smart Cit A Framwor For

Addrssing Global Issus Locall

T Smart Cit Opportunit For Tc Vndors

Srvics And Products

Smart Cit Solutions Must Start Wit T

Cit, Not T Smart

RECOMMENDAtiONS

Trs No Cras Cours To Bcoming A

Smartr Cit

Supplmntal Matrial

NOtES & RESOuRCESForreser nervewed echnoog vendors

and c pocmakers. technoog vendorsncded Accenre, Acae-lcen, Capgemn,

Csco Ssems, CSC, HP, iBM, logcas Grop,

MercSream, Orace, Orange Bsness Servces,

SAP, Semens, Sohwes One, and teenca.

Rlatd Rsarc Documnts

Ompc Oppornes in Emergng Markes

March 10, 2010

Hepng CiOs undersand Smar C inaves

Febrar 11, 2010

Smar Compng Drves the New Era O itGrowh

December 4, 2009

November 2, 2010

Geng Cever Abo Smar Ces: NewOppornes Reqre New Bsness Modesb Jnnifr Blissnt, P.D.wh Chrsopher Mnes, Edward Radce, and yahor Darashkevch

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2010, Forreser Research, inc. Reprodcon ProhbedNovember 2, 2010

Geng Cever Abo Smar Ces: New Oppornes Reqre New Bsness Modes


2

URBAN DeMOGRAPhICS ReqUIRe NeW APPROACheS TO PUBLIC SeRVICeS

Global population growth and urbanization give rise to new social and economic challenges.

Between 2009 and 2050, the world population will increase by 2.3 billion reaching 9.1 billion

people. Over the same period, the population living in urban areas is projected to grow by 2.9

billion reaching 6.3 billion people, or nearly 70% o the worlds population, in 2050.1 Tese

global numbers mask a signicant dierence between mature and emerging markets, with the least

developed countries experiencing some o the most dramatic population growth and urbanization

(see Figure 1).2

Many cities are stretched beyond the capacity o their existing inrastructure and resources. Te

growing inux o migrants into cities requires new thinking about how to meet the demand or

public services. Even where overall population growth is smaller or even negative, urbanization

is increasing. Population growth in developed countries will only be 3% between 2010 and 2050,

but the size o the urban population will increase by 18%. In both developed and developingcountries, policymakers must address the need to provide more services to more people. And in

developed countries where overall populations are not growing as quickly, cities oen ace a limited

and shrinking tax base, meaning that many ace the age-old challenge o having to do more with

less. Innovative governments and public organizations undertake smart city initiatives to bring

inormation and communications technology (IC) to bear in response to the demands o an

increasingly urban population.

Population growth pressures global resources. More people means competition or limitedresources and eventual scarcity. Demand or water and energy illustrates these pressures. In

1990, 20 countries aced water scarcity up rom only seven in 1955. By 2025, an additional

10 countries and by 2050, another our will ace water scarcity, accounting or a total

o 18% o the worlds population. Another 24% will experience water stress or shortage.3

Combined, thats almost hal the worlds population with most in developing countries. Te

demand or energy use is also growing more rapidly in developing countries. Te Organisation

or Economic Cooperation and Development (OECD) estimates that energy consumption

will increase by 84% in non-OECD countries, compared with a 14% increase in energy use

among the 33 OECD countries. Te two largest uses o energy consumption are industry and

transportation, both o which are expected to increase more rapidly in non-OECD countries.4

Rapid urbanization concentrates eects in cities and new megacities. Te phenomenon

o the megacity a city with more than 10 million inhabitants exacerbates the eects opopulation grown and urbanization. In 1950, there were just two megacities in the world:

New York and okyo. Since then, megacities have cropped up like mushrooms, with most

emerging in developing countries. oday, Asia has 11 megacities, Latin America has our, and

Arica, Europe, and North America have two each. Tese 21 megacities account or 9.4% o the

worlds urban population. By 2025, when the number o megacities reaches 29, Asia will have


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2010, Forreser Research, inc. Reprodcon Prohbed November 2, 2010



3

gained another ve, Latin America two, and Arica one or a total o 10.3% o the worlds urban

population. Nine o these cities will have more than 20 million inhabitants turning urban

issues such as trafc, public saety, healthcare, education, and housing into megachallenges.

Uneven distribution means that services requirements vary across cities. As developingcountries grow and ace the pressures o megacities, the more mature markets are also acing

pressures that o increasingly aging and oen shrinking populations. By 2050, the percentage

o the population that is 65 or older will be 32%in Germany, 33% in Italy, and almost 38% in

Japan. Germanys overall population will all by 14% between 2010 and 2050. By contrast, the

over-65 population will be just 13% in India, Egypt, Saudi Arabia, and the Philippines.5 For

the mature markets, such high concentrations o older people bring a whole new set o issues,

particularly with ewer people in the workorce to support the unding o services required.

Cities in these more rapidly aging markets need to attract and retain citizens and businesses

through programs that increase the competitiveness and attractiveness o their cities rom both

commercial and residential perspectives.

The SMART CITy A FRAMeWORk FOR ADDReSSING GLOBAL ISSUeS LOCALLy

As policymakers address these demographic shis, the concept o a smart city serves as shorthand

or the complete menu o initiatives that city leaders could undertake. Smart or other adjectives

associated with technological innovation, such as uture or digital city initiatives will drive

technology adoption into the public sector at an increasing rate, particularly in emerging markets

where demographic challenges are most acute.

Forrester denes the smart city as:

A city that uses inormation and communications technologies to make the critical inrastructure

components and services o a city administration, education, healthcare, public saety, real estate,

transportation, and utilities more aware, interactive, and efcient.6

Tis new approach to urban governance is enabled by the next macro cycle o inormation

technology innovation, which Forrester labels Smart Computing, using real-time awareness and

data analytics to support better decision-making.7 Each system that makes up a citys inrastructure

can be made smarter by enabling real-time interaction either human or machine to acilitate

decision-making based on the data produced. In the system o systems that is a city, the potential

or efciency grows as more systems interconnect and interact. Computing technology transorms a

citys core systems, enabling them to capture, analyze, and act on the data they produce. As a result,

a smart city can optimize the use o and return rom nite resources.


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4

Figur 1 Goba Markes Face Pressres From Popaon And urbanzaon Growh

Source: Forrester Research, Inc.56701

Source: United Nations Web site (http://esa.un.org/unpp/)*More developed regions comprise Europe, North America, Australia/New Zealand, and Japan.Less developed regions comprise all regions of Africa, Asia (excluding Japan), Latin America and the Caribbean,and some Pacific Islands.

The least developed countries according to standard United Nations designation

United Nations world population prospects: the 2008 revision1-1

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

9,000,000

10,000,000

WorldMore

developed*Less

developedLeast

developed

2010 2050

Growth32%

Growth3%

Growth29%

Growth96%

United Nations world urbanization prospects: the 2009 revision1-2

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

WorldMore

developed*Less

developedLeast

developed

2010 2050

2010

2050

2010

2050

6,908,688

9,149,984

1,237,228

1,275,243

4,816,763

6,202,328

854,696

1,672,414

Growth80%

Growth18%

Growth85%

Growth267%

50%75%

48%29%

3,486,326

6,285,881

929,851

1,099,730

2,307,033

4,271,781

249,442

914,370

69%86%

69%55%

World Moredeveloped*

Lessdeveloped

Leastdeveloped

Urban population as a percentage

2010 2050


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5

Smart Cit Initiativs Improv Critical Infrastructur And Srvics

A sampling o smart city initiatives stretches across the critical inrastructure and public services

that city governments provide or citizens (see Figure 2):

ransportation. ransportation systems can reroute buses or open new lanes o trafc toaccommodate in real time the ows o trafc on city streets. Stockholm and London are two

places with sophisticated smart transportation initiatives leveraging IBMs Smart ransportation

solutions. Another example o I-enabled transportation initiatives is the mobile payment

program or parking launched in San Juan Province in Northwest Argentina, where drivers pay

or parking via SMS. Leveraging its network and billing inrastructure, elenica works with

local governments to develop these mobile payment initiatives. Streetline, a provider o smart

technologies or cities, oers solutions that leverage sensors and real-time networks to identiy

available parking spaces and improve monitoring o parking meters. Several bus rapid transit

initiatives have also launched in cities in many regions, building on basic inrastructure, such asdedicated bus routes, to also include integrated scheduling and ticketing systems.

Utilities. Smart energy grids deliver only as much energy as needed to reduce waste; theyinorm users o how much they are consuming to inuence demand. Services rms such

as Accenture and Capgemini oer a range o consulting and systems integration services to

help local utilities and governments improve energy distribution and to change consumption

patterns through increased awareness enabled by smart meters. Yet, in some regions, knowing

how much energy is being used is not the problem; rather, its getting any electricity at all. In

these regions, a lack o reliable electricity limits the use o technology and prevents expansion o

smart initiatives. New designs or solar-powered data centers enable cities to leverage alternative

energy sources and control energy use based on available solar input and by prioritizing critical

applications. Suppliers like Inveneo and Green Wi provide products and solutions to enable

connectivity in remote and underserved locations.

Healthcare. In healthcare, electronic patient records acilitate inormation sharing andcollaboration across clinics, pharmacies, and hospitals.8 elemedicine extends the reach

o medical acilities and improves access to medicine. Such eHealth initiatives are being

implemented worldwide. At the national level, countries such as Egypt and Saudi Arabia

are implementing eHealth programs as a way to accommodate the needs o a rapidly

growing population. At a more local level, cities such as rikala in Greece have implemented

telemedicine pilot programs to remotely monitor elderly, disabled, and chronically ill patients.9

Vendors such as Cisco, GE, IBM, and Siemens work with industry-specic partners, including

InterSystems and McKesson, to deliver smart healthcare solutions. MN and elenica oer

mobile healthcare services.


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6

Education. Within higher education, educators and administrators recognize the power o newtechnology to improve the efciency and eectiveness o universities. Tey are increasingly

interested in leveraging new technologies to both increase access to educational content and

improve collaboration among students and aculty. For example, the Blue Sky eLearning

initiative in China provides students in rural areas with remote access to educational content

and urban aculty members.10 However, more broadly, universities are aced with the reality o

managing the campus city. From campus transportation to public saety to administration,

advanced technologies such as broadband and Wi-Fi, sensors, and analytics are improving

the efciency and cost-eectiveness o university services. Universidad Nacional Autnoma

de Mxico (UNAM) launched an initiative UNAM Digital to promote strategic and

efcient use o IC to support the broader mandate o the university (education, research,

and dissemination o culture) as well as the overall management o the campus (public saety,

transportation, and buildings maintenance).11

Public saety. Initiatives to improve public saety are oen high on public ofcials prioritylist. Ofcials reap political benets rom public saety initiatives that serve to: optimize the

capacity and response time o emergency services; secure and control mass events; secure public

administration transactions and workows; and provide surveillance o public places. In Ceuta,

Spain, located on the northernmost tip o Arica, or example, 250 cameras were positioned

around town and connected to emergency services. Feeds rom cameras are combined with

video analysis and a centralized emergency command center. ech vendors and service

providers alike provide public saety solutions. Ciscos Video Surveillance Manager provides

cameras and command centers with policy-based access to live and archived video. elenica

leverages its mobility and network assets to provide enhanced 911 (E911) services to improve

the response times o emergency services.

Building management. Buildings are the building blocks o cities, and real estate boomshave changed the landscape in many major cities, particularly in Asia. Te buildings sector

both residential and commercial accounts or about one-h o the worlds total delivered

energy consumption.12 In the US, buildings account or about 70% o energy use: Tink o

the HVAC system, lights, water, elevators, the power and cooling or I, and the heating and

cooling or people. Optimized and modernized heating, ventilation, and air conditioning

alone can signicantly reduce building energy consumption. Integrated building and room

automation systems urther cut energy and operating costs. Long-time building automation and

management vendors, such as Honeywell and Johnson Controls, provide building technologysolutions. Etisalats E-Real Estate and E-Facilities Management (FM) oering manages

intelligent building technologies and integrated FM solutions, with noted clients including

several airports, mosques, and government buildings in Dubai.


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7

Constituent services both or citizens and businesses. eGovernment portals enable citiesto better communicate with their constituents, be they citizens, employees, suppliers, or local

businesses. Te Spanish city o Ceuta provides extensive online services, with our portals or

basic inormation, citizen services, business, and tourists, all based on a common inrastructure.

For example, live eeds rom hundreds o digital cameras located around the city provide real-

time views o historical sites or tourists but also link to emergency services departments. Even

businesses benet rom more efcient interaction with the city through more streamlined and

transparent procurement policies, as well as registration and taxation processes. An Accenture

project in South Arica ound one company with 196 dierent points o tax registration a

constituent that would truly benet rom streamlined business registration and taxation

processes.13

City management. City administrations can integrate systems to enable win-win budget

decisions across competing city departments: Imagine the transportation and sanitationdepartments leveraging data to resolve joint issues, rather than competing or budget to solve

the issue in a silo. Citywide planning and technology implementations enable efciencies across

departments, such as the use o surveillance cameras or both transportation and security

solutions. Siemens City o the Future demonstration center in Singapore gives city managers a

hands-on introduction to a range o solutions to address cross-system city management, such as

its City Dashboard.


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8

Figur 2technoog Soons Make C Ssems Smarer


Source: Siemens AG; Siemens One, Copyright: Siemens AG


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9

Figur 2technoog Soons Make C Ssems Smarer (Con.)

Smart Citis Will Com In All Saps And Sizs

We see existing cities that ace crumbling inrastructure and pressures to improve services as

demographics shi aging in some regions and growing in others. We also see new cities emerging

to absorb the growing demand or urban areas. In China alone, population growth and migration

will give rise to 81 new cities by 2025.14 However, traditional cities are not the only opportunity or

target or smart city initiatives. Other entities are equally systems o systems and ace a similar

array o issues. We dene three categories o targets that will provide opportunities or technology

vendors, systems integrators, and service providers (see Figure 3):


Public safetyand security

Smart public safety solutions use sensor-activated video surveillance cameras, video analytics,and workflow to identify and route suspicious or anomalous observations to the appropriateauthorities. Enhanced 911 systems automatically identify a callers location either through thefixed telephone location, or via cell triangulation or GPS in the case of mobile calls.

Buildingmanagement

Smart building management solutions use smart meters, monitoring devices, and sensors toconnect heating, air-conditioning, lighting, security systems, and other appliances in homesand businesses, enabling users to better track and control use of electricity and water.

Cityadministration

Smart city administration solutions facilitate the automation of city processes, from reportingof complaints to registration of a business or renewal of a drivers license. Rules engines andautomated workflows streamline processes and facilitate interactions with city administration.

Wastemanagement

Smart waste management solutions use sensors (e.g., capacity sensors to trigger waste removal,electronic noses to detect toxicity in landfills), automatic notification, and collaboration amonglocal authorities to improve the efficiency of waste collection and treatment.

City system Examples of smart solutions

Transportation Smart transportation solutions use sensors and analytics to predict the arrival of a bus or train,and notify passengers via SMS or through information boards at city bus and train stations.Parking information is also available in response to an SMS query or information signsadvertising free parking spaces using sensors to detect available spaces. Payment may bemade via SMS. Municipal fleet management solutions use onboard sensors in vehicles todetect and notify drivers or fleet owners when there is a problem with the vehicle, if there is anaccident, or when maintenance procedures are needed.

Healthcare Smart healthcare solutions include telemedicine applications, electronics recordsmanagement, health information exchanges, hospital and clinic asset management, andsupply chain optimization. Patients can be fitted with ID bracelets that include GPS capabilitiesthat track a patients location, medication administration, and medical condition. Data fromremote diagnostics equipment in a patients home can monitor the status of vital signs, bloodpressure, and glucose levels and can be used as an alternative to visiting a doctors office.

There are also remote monitoring system for disabled, chronically ill, or elderly patients.

Education Smart education solutions range from eLearning to connected campuses. Learning solutionsfocus on increased access to educational content and improved collaboration among studentsand faculty through connectivity, content management, and unified communicationtechnologies. Large universities also leverage broadband, Wi-Fi, sensors, and analytics toimprove the efficiency and cost-effectiveness of university services from campustransportation to public safety to administration.


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10

Figur 3 Ces Come in Mpe Favors


Smart cities are currently in three different stages of development . . .3-1

City type

New cities Start from scratch with asmart city vision

Define objective of the city

Design overall architecture

Develop and deploy acomprehensive ICTinfrastructure andapplications plan

Explore funding options andidentify appropriate businessmodels

Explore partnerships in

public and private sectors

Establish political will tocreate new city from theground up

Identify land allocation andfunding sources

Enlist key IT, political, andcorporate stakeholders

Engage major developer toexecute

Songdo (Korea)Lavasa (India)Meixi (China)Masdar (UAE)Skolkovo (Russia)

Evaluate existinginfrastructure



Identify immediate needsand prioritize smart cityinitiatives

Develop and deployprioritized projects

Explore funding options andidentify appropriate businessmodels

Explore partnerships in

public and private sectors

Establish political will toundertake new initiatives

Address issues with existinginfrastructure

Enlist key IT, political,corporate, and residentialstakeholders

Prioritize and establishtimelines

Identify funding sources

Sao Paolo (Brazil)Monterrey (Mexico)Lima (Peru)Stockholm (Sweden)

Start from scratch with asmart city vision

AND/OR

Evaluate existinginfrastructure



Identify immediate needsand prioritize

Develop and deployprioritized projects

Explore funding options and

identify appropriate businessmodels

Overcome limited sense of aunique whole oridentification as a city

Address and accommodatemore diverse stakeholdersand cultural factors than in atraditional city

Identify funding sources

UNAM (Mexico)Aramco (Saudi)Six Flags (US)

Existing cities

Noncities

Opportunity Obstacle Example


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11

Figur 3 Ces Come in Mpe Favors (Con.)


Songdo IBD, South Korea

Global business district

Renewable energy

Smart transportation

Smart buildings

Smart city operations

Hwaseong Dongtan,South Korea

Business district

Smart traffic andtransportation

Smart buildings

U-city framework

Masdar City, Abu Dhabi

Sustainable city

Renewable energy

Waste management

Economic zone Smart real estate

Meixi District, China

Business district

Renewable energy


Smart buildings

Smart city operations

Lavasa, India

New urbanism

Eco-friendly planning

Smart buildings

Smart transportation eGovernment

Skolkovo Technopolis,Russia

Smart buildings


R&D centerUNAM, Mexico

Connected campus

Smart identification


Smart public safety

Smart administration

eLearning

So Paulo, Brazil

Connected stadiums

Smart buildings

Sustainable hospitality

Urban mobility

Smart public safety


Existing cityNoncityNew city

. . . and they are spread all across the globe3-2


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1. New cities that are smart rom the start. New cities have the luxury o incorporating the

smart city vision rom inception. Tese cities are oen purpose-built, strategically placed,

and designed to attract businesses and residents with a master plan that incorporates

IC inrastructure and world-class services. Tey oen include broadband connectivity,incorporation o green belts, renewable energy, green buildings, smart transportation, and

other intelligent city systems. Tere are an increasing number o such cities around the globe,

particularly in emerging markets, including: Songdo IBD, South Korea; Meixi Lake, China;

Masdar City, Abu Dhabi; King Abdullah Economic City, Saudi Arabia; Lavasa, India; and the

newly announced Skolkovo, Russia. While some new cities have government sponsors, others

are privately owned. Lavasa is run as a private corporation, and another ve new cities planned

along a corridor between Delhi and Mumbai will be mostly privately owned.15 Te ownership

structure o these new cities described by one Stanord economist as charter cities itsel

challenges the denition o a city, and o the public sector.16

2. Existing cities that address challenges with retrofts and upgrades. From Manchester to

Monterrey, existing cities are addressing issues with their inrastructure and the services they

provide. Cisco and the City o Holyoke, Massachusetts recently announced new technology-

based initiatives that empower the city to collaboratively work toward generating new economic

opportunities, improving the delivery and quality o education, and bolstering population

retention via a ramework o strategic network solutions. Shenyang, the capital city o Liaoning

Province in Northeast China, has recently launched a revitalization eort to transorm the city

into a regional hub and address the eects o an industrial legacy. Note that the issues dier

rom those aced by ast-growing megacities; existing cities are more oen trying to attract

or retain residents. Other existing city initiatives aim to improve job creation and workorce

retraining, eliminate blight and improve property maintenance, improve public saety, andreduce the environmental impact o aging manuacturing inrastructure. Tese cities arguably

need to become smart in order to remain cities at all.

3. Noncity cities that also provide opportunities, sometimes with ewer obstacles.17 I a city

is a system o systems, there are actually a number o cities that all outside o the more

traditional denition o a city.18 Universities, company towns, and even amusement parks

such as Disney World can be considered cities. With their own I departments acing many

o the same issues as traditional cities, many o these entities certainly strive to be smarter.

For example, Saudi Aramco the national oil company in Saudi Arabia acts as a city in

many ways, providing extensive services to its 350,000 employees. Te company provides the

communities it operates with electricity, healthcare acilities, public saety services, schools, and

other cultural services, such as a mobile libraries program and an annual childrens art contest. It

operates an electrical power grid, health center acilities, and nearly 135 schools, and it has been

active in community education initiatives, such as health campaigns, extensive environmental

awareness campaigns, recycling campaigns, and campaigns on trafc and re saety. Vendors

pay attention: Saudi Aramco is a candidate or smart city solutions.


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13

UNAM, a university in Mexico, is also a city or all practical purposes. In act, the central

campus is known as Ciudad Universitaria, or University City, and encompasses several square

kilometers. UNAM is the largest university in the Americas, serving about 314,000 students

with 35,000 aculty members and 30,000 administrative sta. Te city provides extensiveservices that include housing, transportation, public saety, health, administrative services, and,

o course, education. UNAM Digital is the smart city agenda or the university, which clearly

deserves to be considered a city.19

Citis Fac Considrabl Constraints Non Insurmountabl

Te media worldwide is not short on stories o public debt and municipal bankruptcy. Even those

governments unencumbered by public debate or voters potential wrath still ace political and

economic constraints: budget balancing, constituent concerns, and competing political agendas.

One municipal CIO pithily characterized his top I-related priority simply as survival. Despite the

universal appeal o many smart city initiatives, governments do not have carte blanche. But theseconstraints dont amount to insurmountable obstacles because:

Public-sector budget challenges exist, but I decision-makers fnd unds or some projects. Te scal challenges o the public sector are reected in Forresters surveys o I organizations

but not as dramatically as one might expect. More public-sector respondents see 2010 as a

challenging year compared with their counterparts in other industries 70% characterized

2010 as a challenging or somewhat challenging year versus 64% overall; only 26% o public-

sector respondents saw the year as a good one versus 33% overall (see Figure 4). But public-

sector I budgets appear more stable with ewer decreases than others and, in act, a ew

increases. More public-sector I decision-makers planned spending increases in industry-

specic soware applications and in networking equipment than those in other industries (seeFigure 5). Te combination o these categories suggests the adoption o network-based,

industry-specic initiatives to make these cities smarter.


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14

Figur 4 the Pbc Secor Sees More Chaenges than Ohers ye S Epecs Bdge increases


Source: Forrsights Budgets And Priorities Tracker Survey, Q2 2010

*Note: Percentages do not total 100 because responses for About the same have been excluded.Note: Percentages will not total 100 because responses for About the same, Decrease 5% to 10%, andDecrease more than 10% have been excluded.

Overall (N = 2,803)

What is your industry outlook for 2010?*

How do you expect your spending on the following categories to change in 2010?

Total IT spending(operating plus capital budget)

Media, entertainment, and leisure (N = 220)

Public sector (N = 380)

Utilities and telecommunications (N = 165)

Business services/construction (N = 575)

Retail and wholesale (N = 276)

Financial services and insurance (N = 454)

Manufacturing (N = 716)

Overall (N = 2,803)

Media, entertainment, and leisure (N = 220)


Utilities and telecommunications (N = 165)

Business services and construction (N = 575)

Retail and wholesale (N = 276)

Financial services and insurance (N = 454)

Manufacturing (N = 716)

A somewhat challenging yearA very challenging year A somewhat good year A very good year

38% 25% 8%

38% 17% 8%

36% 19% 7%

42% 22% 8%

36% 25% 7%

41% 24% 8%

39% 27% 8%

37%

26%

28%

34%

25%

28%

22%

23%

22% 30% 8%

29% 12%

26% 11%

25% 13%

23% 17%

29% 12%

31% 10%

30% 11%

31% 13%

Increase 5% to 10% Increase more than 10%

Base: global IT executives and technology decision-makers inenterprise companies with 100 or more employees



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Figur 5 Ces Are More Bsh than Ohers in Some Areas More Repor Spendng increases



Source: Forrsights Budgets And Priorities Tracker Survey, Q2 2010*Note: Responses for About the same, Decrease 5% to 10%, and Decrease more than 10% have beenexcluded from this analysis.

Security software

Information management

Industry-specific applications

Collaboration applications

Infrastructure software

Packaged process applications

Platform softwarePublic sector (N = 380)

Overall (N = 2,803)


Overall (N = 2,803)

How do you expect your firms spending on the following software

categories to change in 2010?(responses = Increase 5% to 10% and Increase more than 10% combined)*

How do you expect your firms spending on the following hardwarecategories to change in 2010?

(responses = Increase 5% to 10% and Increase more than 10% combined)*

36%37%

33%39%

30%25%

30%32%

25%28%

20%29%

17%25%

Monitors, printers, andperipherals

Infrastructure-as-a-service

Server hardware

PCs and workstations

Networking equipment

Storage products

20%19%

29%21%

33%29%

32%32%

34%

33%31%

33%



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16

Politics and potential turnover require alliance building. As a system o systems, a city isalso a system o stakeholders the mayors ofce, city council, the utilities authority, the

nurses union, the PA, among others, including constituents with competing interests that

can result in delays and even cancellation o projects. In many cases, public-sector projects are

controlled by politicians; they are beholden to voters and campaign supporters, ace regular

elections, and manage limited resources. Te value propositions and business cases o projects

are thus subject to political interpretation. In Indiana, a new governor canceled a $1.3 billion

deal signed in 2006 with IBM to overhaul the states welare system on the grounds that it

was a awed concept.20 Te Kochi smart city project in Kerala, India has been in planning

or nearly 10 years; the project has been hindered by existing regulation designed to support

the tech industry as well as other controversies and conict between developers and the local

government.21 Vendor strategists can mitigate such obstacles by identiying the larger ecosystem

o stakeholders and casting a wide net o alliances. Pursuing specic projects that appeal to

constituents also provides political benets. For example, elenica helps governments in LatinAmerica implement E911 initiatives that have broad political appeal, as saety is a perennial

voter concern.

Te threat o social unrest can be an impetus or new policy initiatives. In the public sector,the stakeholders o a project include the broader public. While ear o constituent dissatisaction

and opposition can be an obstacle to new projects, it can also be a driver o smart initiatives.

Chinas Blue Sky Education initiative, or example, is designed to alleviate the disparity in the

availability o qualied education between well-developed cities and poorer regions o China.

As cities grow and standards o living improve in China, constituents in rural areas increasingly

sense the disparity in services. Te Ministry o Education designated 21 pilot schools in which

they trained teachers and technicians to use and maintain network-based classrooms. Teycollected educational materials across multiple academic subjects and shared them remotely

with the pilot schools. Other countries have shown an interest in the program, with two cities

and our schools in India starting pilot programs.22

Overcoming inertia requires a solid value proposition and hard sell to some stakeholders.IC vendors are used to hearing, Tats how weve always done it, Were not goaled on

it, or, Were not accountable or the outcome, only the administration o the process rom

prospective local government customers. Overcoming public-sector inertia requires a value

proposition that clearly demonstrates a projects ability to make citizens lives and local

administration easier and better. Te automation o processes that enable case workers toprocess applications more quickly, or to audit a program more eectively, provides incentives or

recalcitrant administrators.


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17

The SMART CITy OPPORTUNITy FOR TeCh VeNDORS SeRVICeS AND PRODUCTS

Cities and their private-sector partners will invest in all layers o IC inrastructure in order to

realize smart city initiatives (see Figure 6). And, technology vendors have and will continue to

actively pursue these opportunities to map their products and services to the goals and initiatives o

smart cities (see Figure 7). Particular hotspots or growth will be:

Consulting services or city governments. Cities ace myriad issues and as many (or more)vendors with solutions to sell. In some cases, city leaders are seeking help to develop their

overarching vision, dene objectives, and design a road map, architecture, and integration

plans. Tese engagements oen start with a vision or what type o city they would like to

be: a business hub, a tourist and heritage destination, or a manuacturing or retail center.23

For other cities, the starting point is an obvious, acute problem like trafc congestion that

requires an urgent redress o transportation management. In both cases, and others in between,

technology integrators and consultants are devising approaches and partnerships to help urbanpolicymakers choose where to start identiying specic planning objectives, prioritizing

initiatives, and segmenting a big plan into easible, more aordable steps. For example, IBM

Global Services oen takes a top-down approach, working with city leaders to help them map

out a long-term plan, starting with their vision or the city. Others, such as Accenture, work

outwards rom a more ocused initiative, such as smart grid and smart metering, and then

expand to a broader vision o a smart city.

Networking, telecommunications, and other hardware inrastructure. Te oundation osmart city initiatives is typically a communications backbone to support the collection and

transer o data. For new smart cities, creating broadband access to all residential and business

locations is the rst order o business. Cisco provided the networking inrastructure to wire

every square inch o Songdo IBD, a new smart city in South Korea.24 Existing cities also invest

in networking and telecom inrastructure, oen starting with municipal Wi-Fi. Te city o

rikala in Greece oers a ree Wi-Fi network covering the whole city via 34 nodes across the

city. Logicalis, a systems integrator with a strong ocus on IC and networking deployments,

deployed a common public-sector broadband network in Wales; it initially served the education

district, the healthcare district, and 22 local councils but is currently expanding to emergency

services and other public-sector constituents. Another network element is the oundation or a

smart electrical grid. RFID, sensors, and video cameras also leverage the network to deliver real-

time data or smart initiatives in transportation and public saety.

Middleware inrastructure. All smart city initiatives require middleware to link physical assetmonitoring with databases and analytical engines. Tese run the gamut rom identity and

access management to application, Web, and portal servers that power citizen services and Web

sites and to integration soware that ensures a single view o the citizen and real-time updates

o inormation across city systems. Cities are leveraging communications applications like


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18

Microso OCS and Google Apps to increase collaboration across departments and interaction

with constituents. And, content management soware enables the coordination and reresh o

content across multiple city administration Web sites both internal and external. Business

analytics soware, such as IBMs Cognos portolio and Oracles Hyperion portolio, enablesanalysis o the data generated by the sensors, cameras and networks in order to improve

decision-making and better tailor the services available across the city.

Sector-specifc applications and solutions. All technology components rom networkingand hardware to middleware and applications come together in sector-specic solutions,

which address a particular slice o the smart city challenge in an integrated ashion. Large

solutions vendors oer a portolio o such capabilities, such as IBMs Smart ransportation,

Smart Public Saety, and other oerings. GEs imagination concept provides sector-specic

applications or smarter cities through programs like Healthymagination electronic

medical records, image sharing and workow, and eHealth real-time collaboration and

Ecomagination solutions to reduce the water use, carbon ootprint, and energy costs o

cities. GE located its rst Ecomagination center in Masdar City, Abu Dhabi, as part o a larger

partnership with the Abu Dhabi government to accelerate the development and implementation

o new energy solutions in the region.

Smart city governance and city management. Managing a system o systems and the solutionsthat integrate them is not easy. Siemens I Solutions and Services couples its extensive array

o sector-specic solutions with the tools to manage them, like the City Cockpit a real-

time dashboard or monitoring city systems, including an online city hall, budgeting and

accounting, and electronic payment and access cards.25 At the other end o the vendor spectrum,

MetricStream also oers solutions to help city authorities manage smart city policies andensure the necessary controls and procedures are in place or better governance. Coming rom

a background in governance, risk, and compliance, the MetricStream approach enables cities

to address complaint management, energy policy management, building management, city

disaster and emergency management, as well as healthcare, transportation, and nancial policy

management.26

Systems integration. Many systems integrators and service providers are going beyond thedene, design, develop, and deploy oerings or specic smart city initiatives by integrating

multiple initiatives or by oering to manage and run them on behal o city administrations.

Accenture clearly sees the integration opportunity; as it describes it, Many cities are doing

isolated initiatives but the aggregate benets get lost i it is not all integrated.27 Having started

with smart grid projects, it recognizes the need to get the city itsel involved, rather than just the

electrical company or local utility, and to leverage common inrastructure across city initiatives.


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19

elecom and managed services. Both global and regional service providers oer to manageand run city applications and services. B oers unied communications as a service based on

Cisco Unied Communications and Microso Ofce Communications Suite, with a number

o public-sector customers. CSC oers ofce productivity applications on-demand based on

Google Apps, with the City o Los Angeles as its lighthouse account. Other service providers

oer more industry-specic oerings. elenica provides a wide range o managed services,

ocusing on those that leverage its core business o networks and mobility. Services include

mobile payments or parking, networked image sharing and storage or hospitals, and E911, to

name just a ew. Etisalats building management service and MN Nigerias healthcare initiative

and mobile banking initiatives across Arica illustrate the role o regional service providers in

providing smart services. o help navigate these new opportunities, Orange Business Services

(OBS) works with new and existing service providers to develop and deliver their own smart

city services. Its solutions or operators portolio helps identiy new opportunities or IP-

based smart services, such as home automation, intelligent building control systems, videosurveillance, and eGovernment. OBS designs, builds, and operates the networks and will create

and deliver services on the service providers behal, or train them and transer operations to

the provider itsel. OBS works with Mobily in Saudi Arabia and Solidere, a real estate developer

cum service provider in Lebanon.28

Figur 6 Ces inves in iCt inrasrcre From the Grond up


Smartcitiesadvisoryandmanagedservices

Smart city governance and management

Smartcity

infrastructure

Smartcity

middleware

Smartcity

applications

Workflow Emergencycommand andcontrol

City dashboard

Public safety Virtual city hall Digital campus

eHealth Buildingautomation

Mobile parking

Businessintelligence

Unifiedcommunication

Web, app, andintegration software

Networkinfastructure

Server and servervirtualization

Data captureinfrastructure (RFID,

sensors, cameras)


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20

Figur 7 Smar Ces Provde Mrad Oppornes For technoog Vendors

SMART CITy SOLUTIONS MUST START WITh The CITy, NOT The SMART

Despite the very visible pressures on city governments and services, the market or some smart

city solutions eatures more vendor push than city government pull at present. Tat is to say, tech

vendors are instrumental in driving technology solutions into the public sector and, specically, into

local governments. However, or smart city initiatives to be sustainable opportunities, tech vendors

must ground their strategies and solutions in the context o the cities and the systems within them.

Tis means developing new engagement and business models that start with the dynamics o city

administration and service provision, rather than with the capabilities o technology systems.


Define

Design

D

evelop

Deploy/deliver

Telecom andmanaged

service providers

Businessapplication

vendors

Middlewarevendors

Infrastructurevendors

Servicescompanies and

systems integrators

Offerings Technologies

Example

initiatives

Example

vendorsHosted andmanaged services

Cloud computingand servicesmanagement

e911 service,eHealth,Mobile parking

Telefnica, OrangeBusiness Services

Industry-specificsolutions

Custom andindustry-specificapplications

Mobile parking,traffic routing,e911, eHealth,distance learning

GE, Siemens, IBM

Softwareinfrastructure

Data warehouse,master datamanagement,business analyticssoftware, contentmanagement, and

unifiedcommunications

eGovernmentportals, singlecitizen view, andemployeecollaboration

IBM, SAS, SAP,Oracle

Hardware andtelecommuni-cationsinfrastructure

Networking,telecommuni-cations, RFID,sensors, and videocameras

Broadbandconnectivity, videosurveillance, andreal-time datacapture

Cisco, Huawei,Juniper, IBM

Design andplanning, andsystemsintegration

Identify objectivesand vision,develop businessarchitectures, andunderstand policyrequirements

Strategy andvision planning,and policy advisory

Accenture, IBMTelefnica,OrangeBusiness Services


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21

Crativ engagmnt Modls Will Strngtn Smart Initiativs

Te nancial prospects o cities across the globe vary dramatically. While some are unded through

sovereign wealth, as in many o the Gul States and parts o Asia, others are in dire straits. In many

countries, public nance is highly regulated, with bond measures subject to voter approval and long-

term vendor contracts subject to provincial approval and public scrutiny. As a result, identiying

unding sources and making tough prioritization decisions is a political challenge. Who is going to

pay and at what cost? One creative city council in the UK recently ran an online campaign asking

citizens what services the council should provide. Te catch was that respondents couldnt leave the

page until they had balanced the books by identiying the source o unding either tax increases,

program cuts, or asset sales. o help cities accelerate smart initiatives, tech vendors must pursue

creative engagement models, such as (see Figure 8):

Helping clients secure external unding. Regional banks such as the Asian Development

Bank and Inter-American Development Bank and investment unds oen provide undingor new I-based city initiatives. Organizations within the EU have provided unding or

Eastern and Southern European projects, such as rikala in Greece. Country-level development

banks have also been active in smart city investments. Estruturadora Brasileira de Projetos is a

joint venture o the Brazilian Development Bank (BNDES) and several private banks that help

Brazilian government entities und development o inrastructure projects. Vendors must be

aware o possible unding options to help potential clients explore alternatives and must help

negotiate i appropriate.

Identiying revenue-generating (or cost-cutting) initiatives. Revenue-generating initiatives and, ideally, sel-unding initiatives appeal to cash-strapped municipal governments and are

great rst projects. Fee collection or building permits, drivers license renewal, car

registration, property taxes, or other local taxes and electronic government procurement are

both candidates here. Adquira, a B2B commerce exchange, provides a local government solution

that enables cities in Spain to easily collect ees and taxes.29 Malaysia, South Arica, and

Argentina have invested heavily in IC as part o tax administration overhauls: South Arica

integrated multiple tax systems and streamlined processes; Malaysia enabled eFiling and other

online services.

Forming revenue-sharing agreements. Going a step urther, some cities give up the ranchiseor oer revenue sharing or a revenue-generating service, such as a toll road, high-speed rail, or

other ee collection services. For their part, tech vendors or service providers share the risk oinvestment by entering into the agreement. elenica has engaged in a number o projects on

a shared revenue basis, including a mobile parking program in San Juan, Argentina. Customers

pay or parking rom a prepaid balance or rom a local bank account via SMS; elenica will

also bill customers who are not on prepaid accounts. For the service, elenica charges the

local government a small xed ee per month plus a percent o the revenue generated.


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Brokering public-private partnerships. Public-private partnerships come in many orms. In thecase o Saudi Arabias economic cities, the Saudi Arabian General Investment Authority (SAGIA)

acts as a acilitator, regulator, and promoter, while private participation provides capital and acts as

land owner, developer, and even, eventually, the city services provider (see Figure 9). On the other

side o the world, as Brazil prepares or the Olympics, the BNDES has reached out to the private

sector to help und inrastructure development. Investment unding is targeted at 60% government

and 40% private, with BNDES announcing lines o credit or stadiums, public saety and security

projects, urban mobility/transportation projects, and hotel construction. In some cases, there will

be revenue sharing. For example, private developers will operate and generate revenues rom the

stadium or a period o time with rights to sell sponsorships, merchandise, and ood and beverages.

ech vendors are also engaging in partnerships: IBM and the Singapore Land ransport Authority

(LA) partnered to integrate IBMs rafc Prediction ool and LAs i-ransport System. 30 Te

joint project was then replicated in Ireland, enabling Singapores LA to generate revenue rom its

partnership and investment. Although a long-term investment, tech vendors see public-privatepartnerships as inevitable in a competitive global environment.

Enabling larger city I departments to become service providers. Some cities want tomonetize their own investments by oering services to others. For example, the City o

Cape own recently won approval to provide broadband services to smaller neighboring

municipalities with similar requirements but that wouldnt otherwise have the unding to

invest on their own. Now, Cape own envisions providing additional business applications as

a service to these cities. In this model, the larger municipality with excess capacity built in

rom the start oers shared services in a local government cloud. But, cities arent necessarily

in the business o selling I services. In the case o Cape own, the city wasnt interested in

implementing and on-boarding a municipality. It expects tech vendors, systems integrators, orservice providers to help with this.

Facilitating multicity initiatives. Economies o scale certainly lower the cost per user o an Iinvestment. Working with other cities or agencies enables smaller cities to undertake projects

otherwise outside o their budget; it allows larger cities to better justiy their investment,

especially i they are getting revenues rom the use o their inrastructure. Logicalis worked with

22 unitary authorities (district councils), health services, and the education sector in Wales to

create a common broadband network. Te implementation surpassed the projected number

o connections in the rst year, with the cost per connection alling with each subsequent

organization brought onto the network. In another example, Southwest One is a joint ventureset up between Somerset County Council, aunton Deane Borough Council, Avon and

Somerset Constabulary, and IBM to create efciencies in I procurement and delivery or

both back-ofce applications and customer-acing services. Southwest One expects to realize

savings o 150 million over a 10-year period through economies o scale, strategic procurement

practices, and operational efciencies.


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Enabling data monetization. Instrumented systems within cities produce data. By exposing thedata that city systems capture and making it available or commercial use, cities can monetize

their investments in smart inrastructure. ransport or London (L) recently opened its doors

to the commercial use o large numbers o primary data sets and live eeds. Te newly available

data includes: ube and train trafc data; eeds rom live trafc cameras; Oyster card top-up

locations; pier and station locations; cycle hire locations; and riverboat timetables. L has also

announced plans to release urther inormation on bus stops, routes, timetables, and schedules.31

Access to this data represents an opportunity or developers to create travel applications based

on real-time inormation, or advertisers to predict the eyeballs passing specic locations, or

or real estate agents and developers to compare the potential value o alternative business or

building locations. Tese data-enabled services provide a potential source o revenue or the

data owners.

Vendors are using more traditional business models in smart city contexts as well:

Leasing and fnancing. Cities traditional unding option, bond nancing, oen isnt appropriateor technology investments: Bonds have a 15- or 20-year time horizon, whereas the reresh rate on

technology might be just three to ve years. More importantly, bond issues require voter approval.

Cities need to match the term o nancing with the type o product. Many tech vendors provide

nancing options to customers, and public-sector nancing is big business. IBM sees its global

nancing as a major competitive lever or its smart cities projects. It is not unding bridges but

maybe the sensors on them and is seeing signicant interest in vendor nancing options. HP

Financial Services also sees growth in the public sector, particularly as capital budgets shrink and

more I departments shi to opex-based business models. By nancing through a lease, cities

can also terminate and return the equipment i they dont have the money in subsequent years which is reassuring or both city leaders and their constituents.

Exchanging products and services or resources and reerences. Many vendors oer deepdiscounts to the public sector to secure product placement particularly in the case o higher

education. Universities oen act as a test bed or new products, trading the inconvenience o beta

testing and the obligation to take a call rom a potential customer or the associated price tag. ech

vendors get additional headcount or testing and (hopeully) a good reerence customer.

ailoring products to customers fnancial profles. While most cities do not have unlimited

resources, some are better endowed than others either due to sovereign wealth rom oil orother natural resources or due to a strong economic base. elenica approaches its product

portolio with two city proles in mind. For those cities with deeper pockets, external unding,

or oen more extensive economies o scale, elenica provides tailor-made solutions and has

implemented well over 100 custom-made smart city initiatives; Ceuta Digital is an example. For

smaller and less well-endowed cities, elenica has a portolio o standard solutions hosted

in elenica data centers. One example is its Localek tools, which include Web page design,

content management, and hosting and allow a local government to create its own Web site or

services to their citizens.


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24

Figur 8 Aernave Engagemen Modes Ensre the Vab O it inaves


Engagement models

External investment Regional banks and investments funds such as the Asian Development Bank,Inter-American Development Bank and the Brazilian Development Bank, providefunding for public-sector IT initiatives.

Revenue-generating and cost-cutting initiatives, such as fee and tax collection orelectronic government procurement, can become self-funding and prove appealingboth for budgetary and political reasons.

Partnerships with a vendor, service provider, systems integrator, or even real estatedeveloper on a revenue-sharing basis can defray upfront costs and risks of a newinitiative.

Excess capacity from large municipal IT infrastructure or applications deployments canbe provided to neighboring cities or organizations, with the larger city IT departmentacting as a service provider or through a managed service provider.

Upfront agreements to pool resources and share infrastructure facilitate the launch of

large IT initiatives.

Traditional financing remains an alternative for the purchase of IT infrastructure,particularly hardware and networking, and provides flexibility in case of budgetshortfall or other political contingencies.

Exchange of product testing or customer references for new technologies is a way ofovercoming budget shortfalls, particularly for universities or research facilities withskilled developers and users.

Revenue-generating(or cost-cutting)initiatives

Revenue-sharing andpublic-privatepartnerships

Capacity reselling

Multicity initiatives

Leasing and financing

Barter or in-kindexchange

Data monetization The use of primary data generated by instrumented infrastructure provides a potentialrevenue source for data owners.


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25

Figur 9 Pbc-Prvae Parnershps Share Responsbes

R E C O M M E N D A t i O N S

TheReS NO CRASh COURSe TO BeCOMING A SMARTeR CITy

Governmens pca aren age, as-movng nnovaors; man ace chaenges sch as

enrenched neress, voer edcaon, and he perenna qeson o ndng. Even where he

don ace he hrea o eecon rnover, akes me o edcae ces o make hem smar.

tha reqres sk, creav, and me. Vendor sraegss shod keep a ew crca varabes n

mnd as he approach he smar opporn:

Location, location, location. to edcae a c, ech vendors need o address he specfcsses o he c even hepng den hem as a frs sep. Hep defne he vson and

he road map o new naves based on he needs and prores o he sakehoders n he

c. iden creave, oca-marke-specfc soons ha resonae wh c eaders and

consens as a frs sep: ood raceab n regons hgh dependen on ood epors;

mobe bankng n regons wh hgh nbanked popaons; and eEder care n hose areas

wh agng popaons.


Source: SAGIA presentation, IBM Analyst Day, Riyadh, Saudi Arabia

SAGIA

Define and enforce minimumstandards

Continuously introducingpro-business environment

Regulations andpolicies

Investment andlaunch

Operations

Promote investmentopportunities globally

Support developers in securingattractive incentive packages

Develop operating model

Identify and sign up private investors

Co-invest in specific opportunities

Guarantee coverage of all cityservices either through providingitself or others

License operators, commercial,residents, and issue permits

Sign up strategic partners forkey services

Ensure high level of service quality

Developers

Split of responsibilities for city administration and services between SAGIA and developers


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26

Audinc, audinc, audinc. Ces are made p o mpe consences. incorporangmpe sakehoders no he smar c pannng process means baancng neress, b

beas havng obsaces srace we no he process. ths cross-consen adenceaso reqres a common angage. Speak n erms ha non-eches ndersand; speak o

he panners and pocmakers, and o he parens and oca parners. lsen aenve.

Ancpae and parcpae n he poc dscsson or debae. Engage awmakers o sponsor

projecs and ndersand he egsaon needed o make projecs mos eecve sharng

daa, negrang ssems, consodang nrasrcre. the dscsson s no echnca b s

abo achevng a parcar objecve. Havng he smar c dscsson reqres cang on

new peope and sppors he sh rom it o bsness echnoog (Bt).

Funding, funding, funding. Js as mporan as he objecves and he adence s hebsness mode mos approprae o he gven c. Do oca governmens have he poca

aonom o defne and fnance new naves? ths s ke n edera ssems, ahoghnds-machng programs mgh come wh src edera gdenes. in naona ssems wh

srong cenra governmens, hose gdenes mgh be more resrcve. undersand he

poca srcre and s consrans as par o or homework.

Partnr, partnr, partnr. Recognze ha o can do a orse. Bgger soonvendors can bd p her sree cred wh sma, ndsr-specfc iSVs and regona ssems

negraors. Smaer, oca paers rde he coaas and channes o he bg paer. Goba and

regona rea esae deveopers sch as Emaar, Gae inernaona, Nakhee, and Sodere

(Ber) are nsrmena n anchng new smar c deveopmens.

Rptition, rptition, rptition if possibl. Smar c soons ms address ocareqremens whn a oca cone and wh oca paers. However, vendors w wan odeveop repcabe soons. ths s a ogh reqremen. Framework soons based on

common bdng bocks wh pggabe archecres or oca appcaons or parners

ncrease he degree o repcab. undersand smares and derences across ces n

erms o sze and scae, geograph, resorce base, pocs, and economc acves. We are,

aer a, akng abo beng smar.

SUPPLeMeNTAL MATeRIAL

Forresters Forrsights Budgets And Priorities racker Survey, Q2 2010 was elded to 2,803 I

executives and technology decision-makers located across the world rom SMB and enterprise

companies with 100 or more employees. Tis survey is part o Forresters Forrsights or Businessechnology and was elded rom March to May o 2010. Forrester produced a custom lter to weed

out anomalies and incomplete data. Survey participants were asked or their company revenue, total

I budget, and what they believe they spend on I as a percentage o revenue. Participants that were

unable to report I budget as a percentage o revenue within one percentage-point o the value they

calculated were removed rom this sample to enorce quality.


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27

Forresters Forrsights or Business echnology elds 10 business-to-business technology studies

in 12 countries each calendar year. For quality control, we careully screen respondents according

to job title and unction. Forresters Forrsights or Business echnology ensures that the nal

survey population contains only those with signicant involvement in the planning, unding, andpurchasing o I products and services. Additionally, we set quotas or company size (number o

employees) and industry as a means o controlling the data distribution and establishing alignment

with I spend calculated by Forrester analysts.

We have illustrated only a portion o survey results in this document. For access to the ull data

results, please contact [email protected].

Companis Intrviwd For Tis Documnt

Accenture

Alcatel-Lucent

Capgemini

Cisco Systems

CSC

HP

IBM

Logicalis Group

MetricStream

Oracle

Orange Business Services

SAP

Siemens

Southwest One

Streetline

elenica

eNDNOTeS

1 Te urban areas o the world are expected to absorb all o the expected population growth and more as

migration depletes rural areas: Urban population growth will be higher than overall population growth.

In China, or example, population growth will actually slow to about 5% between 2010 and 2050, while

urban population growth is expected to grow by 63%. In aster-growing countries, such as Saudi Arabia

expected to grow by 66% between 2010 and 2050 urbanization will be more pronounced at 82%. Even in

countries that are expected to shrink, cities are still growing. In Poland, the overall population will all by

16% rom 2010 to 2050, but cities will grow by 2%. Source: World Population Prospects: Te 2008 Revision

Population Database, United Nations (http://esa.un.org/unpp/index.asp?panel=1).

2 Te UN projects that the global urban population will increase globally by 80% between 2010 and 2050,

with only 18% growth in more developed countries compared with 267% in the least developed countries.

From 2005 to 2010, migration to the cities accelerated, with an average growth rate in more developed

regions o 0.6 and in least developed countries o 4.1. Source: Te State O World Population 2009 (http://

www.unpa.org/swp/2009/en/pd/EN_SOWP09_DemSocialEcon.pd).


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3 Countries experiencing water scarcity include those or which the availability o renewable water per person

per year is less than 1,000 cubic meters. Source: I Industries Guidebook to Global Water Issues, I

Industries (http://www.itt.com/WAERBOOK/intl_scarcity.asp).

4 Energy consumption or transportation is expected to grow by 12% between 2005 and 2035 in OECD

countries compared with 89% in non-OECD countries. Source: International Energy Outlook 2010 -

Highlights, U.S. Energy Inormation Administration press release, May 25, 2010 (http://www.eia.doe.gov/

oia/ieo/highlights.html).

5 Source: World Population Prospects: Te 2008 Revision Population Database, United Nations (http://esa.

un.org/unpp/index.asp?panel=2).

6 Cities are becoming smarter, as governments, businesses, and communities increasingly rely on

technology to overcome the challenges rom rapid urbanization. What makes a smart city smart

is the combined use o soware systems, server inrastructure, network inrastructure, and client

devices which Forrester calls Smart Computing technologies to better connect seven critical cityinrastructure components and services: city administration, education, healthcare, public saety, real

estate, transportation, and utilities. Te concept o the smart city is pushing the CIOs in ederal, state, and

local governments and their technology teams to urther evaluate emerging technologies and engage with

key stakeholders within and outside o their organizations. o successully deliver on the smart city vision,

CIOs should have a clear understanding o what the smart city is, its key drivers, and their role in it. See the

February 11, 2010, Helping CIOs Understand Smart City Initiatives report.

7 Forrester denes Smart Computing as a new generation o integrated hardware, soware, and network

technologies that provide I systems with real-time awareness o the real world and advanced analytics

to help people make more intelligent decisions about alternatives and actions that will optimize business

processes and business balance-sheet results. See the December 4, 2009, Smart Computing Drives Te NewEra O I Growth report.

8 elenicas Colabor@ solution enables health networks hospitals, clinics, labs, and pharmacies to

share diagnoses, medical les, and images, as well as to engage in direct contact. In Latin America, the

solution is in use at a large health services provider in Argentina and in pilots in Colombia and Chile.

9 In rikala, the program created an integrated network o tele-care using telematics inrastructure to support

services or vulnerable groups (the elderly, disabled, and chronically ill); it has served 300 patients to

date. Patient inormation is recorded and transmitted either via mobile or xed-line telecommunications

interaces and transerred to the computer system at the County Hospital o rikala or a similar private

physician. Te program was partially sponsored by Vodaone. Source: e-trikala (http://www.e-trikala.gr/

taxonomy/term/2).10 Te primary objective o the Blue Sky eLearning initiative is to, Seek a easible technical solution to address

the educational disparity between developed cities and western rural areas in China. Source: Proessor Zheng

Qinghua, Blue Sky Project: Innovation in Education echnology presentation, IBM, 2010 (http://www.ibm.

com/smarterplanet/global/les/us__en_us__government__pro_zheng_nal_6-3-2010.pd).
http://www.forrester.com/go?docid=55590&src=56701pdfhttp://www.forrester.com/go?docid=55157&src=56701pdfhttp://www.forrester.com/go?docid=55157&src=56701pdfhttp://www.forrester.com/go?docid=55157&src=56701pdfhttp://www.forrester.com/go?docid=55157&src=56701pdfhttp://www.forrester.com/go?docid=55590&src=56701pdf


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11 UNAM is considered to be the largest university in the Americas, serving about 314,000 students with

35,000 aculty members and 30,000 administrative sta. For more details on its UNAM Digital initiative,

visit Jennier Belissent, What Is A City, Let Alone A Smart One? Jennier Belissents Blog For Vendor

Strategy Proessionals, May 21, 2010 (http://blogs.orrester.com/jennier_belissent/10-05-21-what_city_let_alone_smart_one).

12 Source: International Energy Outlook 2010 - Highlights, U.S. Energy Inormation Administration press

release, May 25, 2010 (http://www.eia.doe.gov/oia/ieo/highlights.html).

13 Andre van der Post, who is responsible or strategy, architecture, innovation, and research in the [South

Arican Revenue Services] technical services division, knew that urgent action was needed: Organisations

were separately registered or income-tax, value added tax (VA), pay-as-you-earn (PAYE) and employee

insurance, and these organisations oen had multiple subsidiaries, each o which appeared as a separate tax

account in our systems. One company had 196 dierent points o tax registration. o provide a perspective

on the situation, it could take a member o the Revenue Service sta up to three weeks to consolidate

the tax inormation associated with a major South Arican corporation, simply because we needed to

drill down through so many dierent systems and screens. Source: South Arican Revenue Service:

Customer Relationship Management, Accenture (http://www.accenture.com/Global/Services/By_Industry/

Government_and_Public_Service/PS_Global/Client_Successes/Southaxpayer.htm#SectionButtons).

14 Source: McKinsey Global Institute, Preparing or Chinas urban billion, McKinsey & Company, March 2009

(http://www.mckinsey.com/mgi/reports/pds/china_urban_billion/China_urban_billion_ull_report.pd).

15 Tese cities are being developed by the Delhi-Mumbai Industrial Corridor (DMIC), a $90 billion

government-led project that is in act only 49% government-owned. Although unded by the Indian

government, the overall project and the cities to be developed are private. Source: James Fontanella-Khan,

India, the nation o villages, aces urban uture, Financial Times, September 21, 2010 (http://www..com/cms/s/0/9670a02-c50-11d-b785-00144eab49a.html).

16 Source: Jennier Belissent, Redening Te Public Sector?Jennier Belissents Blog For Vendor Strategy

Proessionals, October 18, 2010 (http://blogs.orrester.com/jennier_belissent/10-10-18-redening_the_

public_sector).

17 Source: Jennier Belissent, What Is A City, Let Alone A Smart One?Jennier Belissents Blog For Vendor

Strategy Proessionals, May 21, 2010 (http://blogs.orrester.com/jennier_belissent/10-05-21-what_city_let_

alone_smart_one).

18 A city is dened ofcially as an administrative district established by state or other government charter. But

in broader terms, a city is a densely populated area.

19 Te UNAM Digital initiative constitutes the universitys smart city agenda, with plans to incorporate

technology across the systems o the university. UNAMs public saety and unied ID card initiatives

provide an illustration o its use o technology. UNAM has its own security orce and maintains

inrastructure to control access to acilities. Cameras monitor building access and streets, and there

are plans to expand the use o cameras as well as to launch an integrated ID card system with common


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authentication or access to parking, libraries, sports acilities, health services, transportation, and some

university services such as class registration. Te integrated ID will be used or all university activities,

including one that is reminiscent o the Vlib bicycle program in Paris: Bicipuma allows students to check

out a bicycle with their university ID. Both the public saety initiative and the integrated ID are part othe UNAM Digital initiative, designed to promote strategic and efcient use o IC to support the work

o the university (education, research, and dissemination o culture) and the administrative processes and

academic-related administration.

20 Source: Mel Duvall, IBM, Indiana Sue Each Other Over Welare Project, CioZone, May 14, 2010 (http://

www.ciozone.com/index.php/I-Services/IBM-Indiana-Sue-Each-Other-Over-Welare-Project.html).

21 Conicts between ecom, the real estate developer, and the Kerala state government have also hindered

the advancement o the project. Source: Smart City delay sending wrong signals, Expressbuzz,

May 5, 2010 (http://expressbuzz.com/cities/kochi/%E2%80%98smart-city-delay-sending-wrong-

signals%E2%80%99/170824.html).

22 Source: Proessor Zheng Qinghua, Blue Sky Project: Innovation in Education echnology presentation,

IBM, 2010 (http://www.ibm.com/smarterplanet/global/les/us__en_us__government__pro_zheng_

nal_6-3-2010.pd).

23 Numerous other examples o smart city programs evolving out o specic visions or objects exist. ake

tourism, or example: Knowledge Economic City in Medina, Saudi Arabia has incorporated tourism into

its smart city vision in order to better serve the inux o millions during the month o the annual Hajj

to Mecca. Venices 20 million annual visitors now enjoy new mobile apps that provide tourist maps and

inormation. Ceutas eGovernment portal provides tourist inormation and real-time video o key sites

throughout the city.

24 Source: Greg Lindsay, Ciscos Big Bet on New Songdo: Creating Cities From Scratch, Fast Company,February 1, 2010 (http://www.astcompany.com/magazine/142/the-new-new-urbanism.html).

25 Source: City o the Future, Siemens (http://www.it-solutions.siemens.com/country/belgium/en/sectors/

public-sector/cities/city-o-the-uture/Pages/city-o-the-uture.aspx).

26 Source: MetricStream (http://metricstream.com/solutions/smart_cities.htm).

27 Source: Forrester interview with Accenture, July 2, 2010.

28 Mobily in Saudi Arabia has entered the smart cities arena to provide I services or the new economic cities

across the Kingdom. Source: Mobily, Orange to create smart IC services or Saudi real estate market,

Saudi Gazette, 2009 (http://www.saudigazette.com.sa/index.cm?method=home.regcon&contentID=200910

2752715).

In Lebanon, Solidere, the real estate developer responsible or the reconstruction and development o

downtown Beirut, obtained a license to install and operate a high-speed ber-optic network as part o the

master plan or the city. Te developer will provide broadband servi

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Getting Clever About Smart Cities New Opportunities