Getting Clever About Smart Cities

Making Leaders Successful Every Day

November 2, 2010

Getting Clever About Smart Cities: New Opportunities Require New Business Models by Jennifer Blissent, Ph.D.for Vendor Strategy Professionals

2010, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester, Technographics, Forrester Wave, RoleView, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. To purchase reprints of this document, please email [email protected]. For additional information, go to www.forrester.com.

For Vendor Strategy Professionals

ExECutiVE SuMMARyPopulation growth and urbanization are stretching many cities infrastructure and resources to breaking point. Policymakers and public leaders are increasingly looking to ICT solutions to effectively provide public services like education, healthcare, safety, transportation, and utilities. At the same time, municipal bankruptcies and public-sector financial crises create a gap between the ends required and the means to get there. Public-sector IT leaders are less optimistic about the outlook for their sector than those in other industries. Yet, they do report plans to increase spending for certain hardware and software categories, particularly industry-specific applications and networking equipment that underpin smart city initiatives. Demand from local governments, along with similar conglomerations like universities and company towns, will drive incremental opportunities for ICT suppliers in the coming years. To 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 of smart city projects.

tABlE OF CONtENtSUrban Demographics Require New Approaches To Public Services

The Smart City A Framework For Addressing Global Issues Locally

The Smart City Opportunity For Tech Vendors Services And Products

Smart City Solutions Must Start With The City, Not The Smart

RECOMMENDAtiONS

Theres No Crash Course To Becoming A Smarter City

Supplemental Material

NOtES & RESOuRCESForrester interviewed technology vendors and city policymakers. technology vendors included Accenture, Alcatel-lucent, Capgemini, Cisco Systems, CSC, HP, iBM, logicalis Group, MetricStream, Oracle, Orange Business Services, SAP, Siemens, Southwest One, and telefnica.

Related Research DocumentsOlympic Opportunities in Emerging MarketsMarch 10, 2010

Helping CiOs understand Smart City initiatives February 11, 2010

Smart Computing Drives the New Era Of it Growth December 4, 2009

November 2, 2010

Getting Clever About Smart Cities: New Opportunities Require New Business Models by Jennifer Blissent, Ph.D.with Christopher Mines, Edward Radcliffe, and yahor Darashkevich

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2010, Forrester Research, inc. Reproduction ProhibitedNovember 2, 2010

Getting Clever About Smart Cities: New Opportunities Require New Business Models For Vendor Strategy Professionals

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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% of the worlds population, in 2050.1 These global numbers mask a significant difference between mature and emerging markets, with the least developed countries experiencing some of the most dramatic population growth and urbanization (see Figure 1).2

Many cities are stretched beyond the capacity of their existing infrastructure and resources. The growing influx of migrants into cities requires new thinking about how to meet the demand for 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 of the urban population will increase by 18%. In both developed and developing countries, 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 often face a limited and shrinking tax base, meaning that many face the age-old challenge of having to do more with less. Innovative governments and public organizations undertake smart city initiatives to bring information and communications technology (ICT) to bear in response to the demands of an increasingly urban population.

Population growth pressures global resources. More people means competition for limited resources and eventual scarcity. Demand for water and energy illustrates these pressures. In 1990, 20 countries faced water scarcity up from only seven in 1955. By 2025, an additional 10 countries and by 2050, another four will face water scarcity, accounting for a total of 18% of the worlds population. Another 24% will experience water stress or shortage.3 Combined, thats almost half the worlds population with most in developing countries. The demand for energy use is also growing more rapidly in developing countries. The Organisation for 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. The two largest uses of energy consumption are industry and transportation, both of which are expected to increase more rapidly in non-OECD countries.4

Rapid urbanization concentrates effects in cities and new megacities. The phenomenon of the megacity a city with more than 10 million inhabitants exacerbates the effects of population grown and urbanization. In 1950, there were just two megacities in the world: New York and Tokyo. Since then, megacities have cropped up like mushrooms, with most emerging in developing countries. Today, Asia has 11 megacities, Latin America has four, and Africa, Europe, and North America have two each. These 21 megacities account for 9.4% of the worlds urban population. By 2025, when the number of megacities reaches 29, Asia will have

2010, Forrester Research, inc. Reproduction Prohibited November 2, 2010


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gained another five, Latin America two, and Africa one for a total of 10.3% of the worlds urban population. Nine of these cities will have more than 20 million inhabitants turning urban issues such as traffic, public safety, healthcare, education, and housing into megachallenges.

Uneven distribution means that services requirements vary across cities. As developing countries grow and face the pressures of megacities, the more mature markets are also facing pressures that of increasingly aging and often shrinking populations. By 2050, the percentage of the population that is 65 or older will be 32%in Germany, 33% in Italy, and almost 38% in Japan. Germanys overall population will fall 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 of older people bring a whole new set of issues, particularly with fewer people in the workforce to support the funding of 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 of their cities from both commercial and residential perspectives.

The SMART CITy A FRAMeWORk FOR ADDReSSING GLOBAL ISSUeS LOCALLy

As policymakers address these demographic shifts, the concept of a smart city serves as shorthand for the complete menu of initiatives that city leaders could undertake. Smart or other adjectives associated with technological innovation, such as future 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 defines the smart city as:

A city that uses information and communications technologies to make the critical infrastructure components and services of a city administration, education, healthcare, public safety, real estate, transportation, and utilities more aware, interactive, and efficient.6

This new approach to urban governance is enabled by the next macro cycle of information 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 infrastructure can be made smarter by enabling real-time interaction either human or machine to facilitate decision-making based on the data produced. In the system of systems that is a city, the potential for efficiency grows as more systems interconnect and interact. Computing technology transforms 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 of and return from finite resources.



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Figure 1 Global Markets Face Pressures From Population And urbanization Growth

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

01,000,0002,000,0003,000,0004,000,0005,000,0006,000,0007,000,0008,000,0009,000,000

10,000,000

WorldMore

developed*Less

developedLeast

developed

2010 2050

Growth32%

Growth3%

Growth29%

Growth96%

United Nations world urbanization prospects: the 2009 revision1-2

01,000,0002,000,0003,000,0004,000,0005,000,0006,000,0007,000,0008,000,000

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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Smart City Initiatives Improve Critical Infrastructure And Services

A sampling of smart city initiatives stretches across the critical infrastructure and public services that city governments provide for citizens (see Figure 2):

Transportation. Transportation systems can reroute buses or open new lanes of traffic to accommodate in real time the flows of traffic on city streets. Stockholm and London are two places with sophisticated smart transportation initiatives leveraging IBMs Smart Transportation solutions. Another example of IT-enabled transportation initiatives is the mobile payment program for parking launched in San Juan Province in Northwest Argentina, where drivers pay for parking via SMS. Leveraging its network and billing infrastructure, Telefnica works with local governments to develop these mobile payment initiatives. Streetline, a provider of smart technologies for cities, offers solutions that leverage sensors and real-time networks to identify available parking spaces and improve monitoring of parking meters. Several bus rapid transit initiatives have also launched in cities in many regions, building on basic infrastructure, such as dedicated bus routes, to also include integrated scheduling and ticketing systems.

Utilities. Smart energy grids deliver only as much energy as needed to reduce waste; they inform users of how much they are consuming to influence demand. Services firms such as Accenture and Capgemini offer a range of 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 of reliable electricity limits the use of technology and prevents expansion of smart initiatives. New designs for 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 Wifi provide products and solutions to enable connectivity in remote and underserved locations.

Healthcare. In healthcare, electronic patient records facilitate information sharing and collaboration across clinics, pharmacies, and hospitals.8 Telemedicine extends the reach of medical facilities 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 of a rapidly growing population. At a more local level, cities such as Trikala 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-specific partners, including InterSystems and McKesson, to deliver smart healthcare solutions. MTN and Telefnica offer mobile healthcare services.



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Education. Within higher education, educators and administrators recognize the power of new technology to improve the efficiency and effectiveness of universities. They are increasingly interested in leveraging new technologies to both increase access to educational content and improve collaboration among students and faculty. For example, the Blue Sky eLearning initiative in China provides students in rural areas with remote access to educational content and urban faculty members.10 However, more broadly, universities are faced with the reality of managing the campus city. From campus transportation to public safety to administration, advanced technologies such as broadband and Wi-Fi, sensors, and analytics are improving the efficiency and cost-effectiveness of university services. Universidad Nacional Autnoma de Mxico (UNAM) launched an initiative UNAM Digital to promote strategic and efficient use of ICT to support the broader mandate of the university (education, research, and dissemination of culture) as well as the overall management of the campus (public safety, transportation, and buildings maintenance).11

Public safety. Initiatives to improve public safety are often high on public officials priority list. Officials reap political benefits from public safety initiatives that serve to: optimize the capacity and response time of emergency services; secure and control mass events; secure public administration transactions and workflows; and provide surveillance of public places. In Ceuta, Spain, located on the northernmost tip of Africa, for example, 250 cameras were positioned around town and connected to emergency services. Feeds from cameras are combined with video analysis and a centralized emergency command center. Tech vendors and service providers alike provide public safety solutions. Ciscos Video Surveillance Manager provides cameras and command centers with policy-based access to live and archived video. Telefnica leverages its mobility and network assets to provide enhanced 911 (E911) services to improve the response times of emergency services.

Building management. Buildings are the building blocks of cities, and real estate booms have changed the landscape in many major cities, particularly in Asia. The buildings sector both residential and commercial accounts for about one-fifth of the worlds total delivered energy consumption.12 In the US, buildings account for about 70% of energy use: Think of the HVAC system, lights, water, elevators, the power and cooling for IT, and the heating and cooling for people. Optimized and modernized heating, ventilation, and air conditioning alone can significantly reduce building energy consumption. Integrated building and room automation systems further cut energy and operating costs. Long-time building automation and management vendors, such as Honeywell and Johnson Controls, provide building technology solutions. Etisalats E-Real Estate and E-Facilities Management (FM) offering manages intelligent building technologies and integrated FM solutions, with noted clients including several airports, mosques, and government buildings in Dubai.



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Constituent services both for citizens and businesses. eGovernment portals enable cities to better communicate with their constituents, be they citizens, employees, suppliers, or local businesses. The Spanish city of Ceuta provides extensive online services, with four portals for basic information, citizen services, business, and tourists, all based on a common infrastructure. For example, live feeds from hundreds of digital cameras located around the city provide real-time views of historical sites for tourists but also link to emergency services departments. Even businesses benefit from more efficient interaction with the city through more streamlined and transparent procurement policies, as well as registration and taxation processes. An Accenture project in South Africa found one company with 196 different points of tax registration a constituent that would truly benefit from 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 sanitation departments leveraging data to resolve joint issues, rather than competing for budget to solve the issue in a silo. Citywide planning and technology implementations enable efficiencies across departments, such as the use of surveillance cameras for both transportation and security solutions. Siemens City of the Future demonstration center in Singapore gives city managers a hands-on introduction to a range of solutions to address cross-system city management, such as its City Dashboard.



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Figure 2 technology Solutions Make City Systems Smarter


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



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Figure 2 technology Solutions Make City Systems Smarter (Cont.)

Smart Cities Will Come In All Shapes And Sizes

We see existing cities that face crumbling infrastructure and pressures to improve services as demographics shift aging in some regions and growing in others. We also see new cities emerging to absorb the growing demand for 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 for smart city initiatives. Other entities are equally systems of systems and face a similar array of issues. We define three categories of targets that will provide opportunities for 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 reporting of 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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Figure 3 Cities Come in Multiple Flavors


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

City type

New cities Start from scratch with asmart city vision

Dene objective of the city Design overall architecture Develop and deploy a

comprehensive ICTinfrastructure andapplications plan

Explore funding options and identify appropriate business models

Explore partnerships in public and private sectors

Establish political will to create new city from the ground up

Identify land allocation and funding sources

Enlist key IT, political, and corporate stakeholders

Engage major developer to execute

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

Evaluate existing infrastructure

Dene objective of the city Design overall architecture Identify immediate needs

and prioritize smart city initiatives

Develop and deploy prioritized projects

Explore funding options and identify appropriate businessmodels

Explore partnerships in public and private sectors

Establish political will to undertake new initiatives

Address issues with existing infrastructure

Enlist key IT, political, corporate, and residential stakeholders

Prioritize and establish timelines

Identify funding sources

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

Start from scratch with asmart city vision

AND/OR Evaluate existing

infrastructure Dene objective of the city Design overall architecture Identify immediate needs

and prioritize Develop and deploy

prioritized projects Explore funding options and

identify appropriate business models

Overcome limited sense of a unique whole or identication as a city

Address and accommodate more diverse stakeholdersand cultural factors than in a traditional city

Identify funding sources

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

Existing cities

Noncities

Opportunity Obstacle Example



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Figure 3 Cities Come in Multiple Flavors (Cont.)


Songdo IBD, South Korea Global business district Renewable energy Smart transportation Smart buildings Smart city operations

Hwaseong Dongtan, South Korea Business district Smart trac and transportation 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 transportation Smart buildings Smart city operations

Lavasa, India New urbanism Eco-friendly planning Smart buildings Smart transportation eGovernment

Skolkovo Technopolis, Russia Smart buildings Smart transportation R&D center

UNAM, Mexico Connected campus Smart identication Smart transportation Smart public safety Smart administration eLearning

So Paulo, Brazil Connected stadiums Smart buildings Sustainable hospitality Urban mobility Smart public safety Smart transportation

Existing cityNoncityNew city

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



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1. New cities that are smart from the start. New cities have the luxury of incorporating the smart city vision from inception. These cities are often purpose-built, strategically placed, and designed to attract businesses and residents with a master plan that incorporates ICT infrastructure and world-class services. They often include broadband connectivity, incorporation of green belts, renewable energy, green buildings, smart transportation, and other intelligent city systems. There are an increasing number of 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 five new cities planned along a corridor between Delhi and Mumbai will be mostly privately owned.15 The ownership structure of these new cities described by one Stanford economist as charter cities itself challenges the definition of a city, and of the public sector.16

2. Existing cities that address challenges with retrofits and upgrades. From Manchester to Monterrey, existing cities are addressing issues with their infrastructure and the services they provide. Cisco and the City of 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 of education, and bolstering population retention via a framework of strategic network solutions. Shenyang, the capital city of Liaoning Province in Northeast China, has recently launched a revitalization effort to transform the city into a regional hub and address the effects of an industrial legacy. Note that the issues differ from those faced by fast-growing megacities; existing cities are more often trying to attract or retain residents. Other existing city initiatives aim to improve job creation and workforce retraining, eliminate blight and improve property maintenance, improve public safety, and reduce the environmental impact of aging manufacturing infrastructure. These cities arguably need to become smart in order to remain cities at all.

3. Noncity cities that also provide opportunities, sometimes with fewer obstacles.17 If a city is a system of systems, there are actually a number of cities that fall outside of the more traditional definition of a city.18 Universities, company towns, and even amusement parks such as Disney World can be considered cities. With their own IT departments facing many of the same issues as traditional cities, many of 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. The company provides the communities it operates with electricity, healthcare facilities, public safety 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 facilities, 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 traffic and fire safety. Vendors pay attention: Saudi Aramco is a candidate for smart city solutions.



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UNAM, a university in Mexico, is also a city for all practical purposes. In fact, 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 faculty members and 30,000 administrative staff. The city provides extensive services that include housing, transportation, public safety, health, administrative services, and, of course, education. UNAM Digital is the smart city agenda for the university, which clearly deserves to be considered a city.19

Cities Face Considerable Constraints None Insurmountable

The media worldwide is not short on stories of public debt and municipal bankruptcy. Even those governments unencumbered by public debate or voters potential wrath still face political and economic constraints: budget balancing, constituent concerns, and competing political agendas. One municipal CIO pithily characterized his top IT-related priority simply as survival. Despite the universal appeal of many smart city initiatives, governments do not have carte blanche. But these constraints dont amount to insurmountable obstacles because:

Public-sector budget challenges exist, but IT decision-makers find funds for some projects. The fiscal challenges of the public sector are reflected in Forresters surveys of IT 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% of public-sector respondents saw the year as a good one versus 33% overall (see Figure 4). But public-sector IT budgets appear more stable with fewer decreases than others and, in fact, a few increases. More public-sector IT decision-makers planned spending increases in industry-specific software applications and in networking equipment than those in other industries (see Figure 5). The combination of these categories suggests the adoption of network-based, industry-specific initiatives to make these cities smarter.



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Figure 4 the Public Sector Sees More Challenges than Others yet Still Expects Budget 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%, and Decrease 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)

Public sector (N = 380)

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 in enterprise companies with 100 or more employees

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



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Figure 5 Cities Are More Bullish than Others in Some Areas More Report Spending increases

Source: Forrester Research, Inc. 56701

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

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 been excluded 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)

Public sector (N = 380)Overall (N = 2,803)

How do you expect your firms spending on the following softwarecategories 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%

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



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Politics and potential turnover require alliance building. As a system of systems, a city is also a system of stakeholders the mayors office, city council, the utilities authority, the nurses union, the PTA, among others, including constituents with competing interests that can result in delays and even cancellation of projects. In many cases, public-sector projects are controlled by politicians; they are beholden to voters and campaign supporters, face regular elections, and manage limited resources. The value propositions and business cases of 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 welfare system on the grounds that it was a flawed concept.20 The Kochi smart city project in Kerala, India has been in planning for nearly 10 years; the project has been hindered by existing regulation designed to support the tech industry as well as other controversies and conflict between developers and the local government.21 Vendor strategists can mitigate such obstacles by identifying the larger ecosystem of stakeholders and casting a wide net of alliances. Pursuing specific projects that appeal to constituents also provides political benefits. For example, Telefnica helps governments in Latin America implement E911 initiatives that have broad political appeal, as safety is a perennial voter concern.

The threat of social unrest can be an impetus for new policy initiatives. In the public sector, the stakeholders of a project include the broader public. While fear of constituent dissatisfaction and opposition can be an obstacle to new projects, it can also be a driver of smart initiatives. Chinas Blue Sky Education initiative, for example, is designed to alleviate the disparity in the availability of qualified education between well-developed cities and poorer regions of China. As cities grow and standards of living improve in China, constituents in rural areas increasingly sense the disparity in services. The Ministry of Education designated 21 pilot schools in which they trained teachers and technicians to use and maintain network-based classrooms. They collected 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 four schools in India starting pilot programs.22

Overcoming inertia requires a solid value proposition and hard sell to some stakeholders. ICT vendors are used to hearing, Thats how weve always done it, Were not goaled on it, or, Were not accountable for the outcome, only the administration of the process from 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. The automation of processes that enable case workers to process applications more quickly, or to audit a program more effectively, provides incentives for recalcitrant administrators.



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The SMART CITy OPPORTUNITy FOR TeCh VeNDORS SeRVICeS AND PRODUCTS

Cities and their private-sector partners will invest in all layers of ICT infrastructure 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 of smart cities (see Figure 7). Particular hotspots for growth will be:

Consulting services for city governments. Cities face 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, define objectives, and design a road map, architecture, and integration plans. These engagements often start with a vision for what type of city they would like to be: a business hub, a tourist and heritage destination, or a manufacturing or retail center.23 For other cities, the starting point is an obvious, acute problem like traffic congestion that requires an urgent redress of transportation management. In both cases, and others in between, technology integrators and consultants are devising approaches and partnerships to help urban policymakers choose where to start identifying specific planning objectives, prioritizing initiatives, and segmenting a big plan into feasible, more affordable steps. For example, IBM Global Services often takes a top-down approach, working with city leaders to help them map out a long-term plan, starting with their vision for the city. Others, such as Accenture, work outwards from a more focused initiative, such as smart grid and smart metering, and then expand to a broader vision of a smart city.

Networking, telecommunications, and other hardware infrastructure. The foundation of smart city initiatives is typically a communications backbone to support the collection and transfer of data. For new smart cities, creating broadband access to all residential and business locations is the first order of business. Cisco provided the networking infrastructure to wire every square inch of Songdo IBD, a new smart city in South Korea.24 Existing cities also invest in networking and telecom infrastructure, often starting with municipal Wi-Fi. The city of Trikala in Greece offers a free Wi-Fi network covering the whole city via 34 nodes across the city. Logicalis, a systems integrator with a strong focus on ICT 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 foundation for a smart electrical grid. RFID, sensors, and video cameras also leverage the network to deliver real-time data for smart initiatives in transportation and public safety.

Middleware infrastructure. All smart city initiatives require middleware to link physical asset monitoring with databases and analytical engines. These run the gamut from identity and access management to application, Web, and portal servers that power citizen services and Web sites and to integration software that ensures a single view of the citizen and real-time updates of information across city systems. Cities are leveraging communications applications like



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Microsoft OCS and Google Apps to increase collaboration across departments and interaction with constituents. And, content management software enables the coordination and refresh of content across multiple city administration Web sites both internal and external. Business analytics software, such as IBMs Cognos portfolio and Oracles Hyperion portfolio, enables analysis of 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-specific applications and solutions. All technology components from networking and hardware to middleware and applications come together in sector-specific solutions, which address a particular slice of the smart city challenge in an integrated fashion. Large solutions vendors offer a portfolio of such capabilities, such as IBMs Smart Transportation, Smart Public Safety, and other offerings. GEs imagination concept provides sector-specific applications for smarter cities through programs like Healthymagination electronic medical records, image sharing and workflow, and eHealth real-time collaboration and Ecomagination solutions to reduce the water use, carbon footprint, and energy costs of cities. GE located its first Ecomagination center in Masdar City, Abu Dhabi, as part of a larger partnership with the Abu Dhabi government to accelerate the development and implementation of new energy solutions in the region.

Smart city governance and city management. Managing a system of systems and the solutions that integrate them is not easy. Siemens IT Solutions and Services couples its extensive array of sector-specific solutions with the tools to manage them, like the City Cockpit a real-time dashboard for monitoring city systems, including an online city hall, budgeting and accounting, and electronic payment and access cards.25 At the other end of the vendor spectrum, MetricStream also offers solutions to help city authorities manage smart city policies and ensure the necessary controls and procedures are in place for better governance. Coming from 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 financial policy management.26

Systems integration. Many systems integrators and service providers are going beyond the define, design, develop, and deploy offerings for specific smart city initiatives by integrating multiple initiatives or by offering to manage and run them on behalf of city administrations. Accenture clearly sees the integration opportunity; as it describes it, Many cities are doing isolated initiatives but the aggregate benefits get lost if it is not all integrated.27 Having started with smart grid projects, it recognizes the need to get the city itself involved, rather than just the electrical company or local utility, and to leverage common infrastructure across city initiatives.



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Telecom and managed services. Both global and regional service providers offer to manage and run city applications and services. BT offers unified communications as a service based on Cisco Unified Communications and Microsoft Office Communications Suite, with a number of public-sector customers. CSC offers office productivity applications on-demand based on Google Apps, with the City of Los Angeles as its lighthouse account. Other service providers offer more industry-specific offerings. Telefnica provides a wide range of managed services, focusing on those that leverage its core business of networks and mobility. Services include mobile payments for parking, networked image sharing and storage for hospitals, and E911, to name just a few. Etisalats building management service and MTN Nigerias healthcare initiative and mobile banking initiatives across Africa illustrate the role of regional service providers in providing smart services. To 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 for operators portfolio helps identify new opportunities for IP-based smart services, such as home automation, intelligent building control systems, video surveillance, and eGovernment. OBS designs, builds, and operates the networks and will create and deliver services on the service providers behalf, or train them and transfer operations to the provider itself. OBS works with Mobily in Saudi Arabia and Solidere, a real estate developer cum service provider in Lebanon.28

Figure 6 Cities invest in iCt infrastructure From the Ground up


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Figure 7 Smart Cities Provide Myriad Opportunities For technology Vendors

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

Despite the very visible pressures on city governments and services, the market for some smart city solutions features more vendor push than city government pull at present. That is to say, tech vendors are instrumental in driving technology solutions into the public sector and, specifically, into local governments. However, for smart city initiatives to be sustainable opportunities, tech vendors must ground their strategies and solutions in the context of the cities and the systems within them. This means developing new engagement and business models that start with the dynamics of city administration and service provision, rather than with the capabilities of technology systems.


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Identify objectivesand vision,develop businessarchitectures, andunderstand policyrequirements

Strategy andvision planning,and policy advisory

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Creative engagement Models Will Strengthen Smart Initiatives

The financial prospects of cities across the globe vary dramatically. While some are funded through sovereign wealth, as in many of the Gulf States and parts of Asia, others are in dire straits. In many countries, public finance 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, identifying funding 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. The catch was that respondents couldnt leave the page until they had balanced the books by identifying the source of funding either tax increases, program cuts, or asset sales. To help cities accelerate smart initiatives, tech vendors must pursue creative engagement models, such as (see Figure 8):

Helping clients secure external funding. Regional banks such as the Asian Development Bank and Inter-American Development Bank and investment funds often provide funding for new IT-based city initiatives. Organizations within the EU have provided funding for Eastern and Southern European projects, such as Trikala in Greece. Country-level development banks have also been active in smart city investments. Estruturadora Brasileira de Projetos is a joint venture of the Brazilian Development Bank (BNDES) and several private banks that help Brazilian government entities fund development of infrastructure projects. Vendors must be aware of possible funding options to help potential clients explore alternatives and must help negotiate if appropriate.

Identifying revenue-generating (or cost-cutting) initiatives. Revenue-generating initiatives and, ideally, self-funding initiatives appeal to cash-strapped municipal governments and are great first projects. Fee collection for 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 fees and taxes.29 Malaysia, South Africa, and Argentina have invested heavily in ICT as part of tax administration overhauls: South Africa integrated multiple tax systems and streamlined processes; Malaysia enabled eFiling and other online services.

Forming revenue-sharing agreements. Going a step further, some cities give up the franchise or offer revenue sharing for a revenue-generating service, such as a toll road, high-speed rail, or other fee collection services. For their part, tech vendors or service providers share the risk of investment by entering into the agreement. Telefnica has engaged in a number of projects on a shared revenue basis, including a mobile parking program in San Juan, Argentina. Customers pay for parking from a prepaid balance or from a local bank account via SMS; Telefnica will also bill customers who are not on prepaid accounts. For the service, Telefnica charges the local government a small fixed fee per month plus a percent of the revenue generated.



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Brokering public-private partnerships. Public-private partnerships come in many forms. In the case of Saudi Arabias economic cities, the Saudi Arabian General Investment Authority (SAGIA) acts as a facilitator, 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 of the world, as Brazil prepares for the Olympics, the BNDES has reached out to the private sector to help fund infrastructure development. Investment funding is targeted at 60% government and 40% private, with BNDES announcing lines of credit for stadiums, public safety 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 from the stadium for a period of time with rights to sell sponsorships, merchandise, and food and beverages. Tech vendors are also engaging in partnerships: IBM and the Singapore Land Transport Authority (LTA) partnered to integrate IBMs Traffic Prediction Tool and LTAs i-Transport System.30 The joint project was then replicated in Ireland, enabling Singapores LTA to generate revenue from its partnership and investment. Although a long-term investment, tech vendors see public-private partnerships as inevitable in a competitive global environment.

Enabling larger city IT departments to become service providers. Some cities want to monetize their own investments by offering services to others. For example, the City of Cape Town recently won approval to provide broadband services to smaller neighboring municipalities with similar requirements but that wouldnt otherwise have the funding to invest on their own. Now, Cape Town envisions providing additional business applications as a service to these cities. In this model, the larger municipality with excess capacity built in from the start offers shared services in a local government cloud. But, cities arent necessarily in the business of selling IT services. In the case of Cape Town, the city wasnt interested in implementing and on-boarding a municipality. It expects tech vendors, systems integrators, or service providers to help with this.

Facilitating multicity initiatives. Economies of scale certainly lower the cost per user of an IT investment. Working with other cities or agencies enables smaller cities to undertake projects otherwise outside of their budget; it allows larger cities to better justify their investment, especially if they are getting revenues from the use of their infrastructure. Logicalis worked with 22 unitary authorities (district councils), health services, and the education sector in Wales to create a common broadband network. The implementation surpassed the projected number of connections in the first year, with the cost per connection falling with each subsequent organization brought onto the network. In another example, Southwest One is a joint venture set up between Somerset County Council, Taunton Deane Borough Council, Avon and Somerset Constabulary, and IBM to create efficiencies in IT procurement and delivery for both back-office applications and customer-facing services. Southwest One expects to realize savings of 150 million over a 10-year period through economies of scale, strategic procurement practices, and operational efficiencies.



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Enabling data monetization. Instrumented systems within cities produce data. By exposing the data that city systems capture and making it available for commercial use, cities can monetize their investments in smart infrastructure. Transport for London (TfL) recently opened its doors to the commercial use of large numbers of primary data sets and live feeds. The newly available data includes: Tube and train traffic data; feeds from live traffic cameras; Oyster card top-up locations; pier and station locations; cycle hire locations; and riverboat timetables. TfL has also announced plans to release further information on bus stops, routes, timetables, and schedules.31 Access to this data represents an opportunity for developers to create travel applications based on real-time information, for advertisers to predict the eyeballs passing specific locations, or for real estate agents and developers to compare the potential value of alternative business or building locations. These data-enabled services provide a potential source of revenue for the data owners.

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

Leasing and financing. Cities traditional funding option, bond financing, often isnt appropriate for technology investments: Bonds have a 15- or 20-year time horizon, whereas the refresh rate on technology might be just three to five years. More importantly, bond issues require voter approval. Cities need to match the term of financing with the type of product. Many tech vendors provide financing options to customers, and public-sector financing is big business. IBM sees its global financing as a major competitive lever for its smart cities projects. It is not funding bridges but maybe the sensors on them and is seeing significant interest in vendor financing options. HP Financial Services also sees growth in the public sector, particularly as capital budgets shrink and more IT departments shift to opex-based business models. By financing through a lease, cities can also terminate and return the equipment if they dont have the money in subsequent years which is reassuring for both city leaders and their constituents.

Exchanging products and services for resources and references. Many vendors offer deep discounts to the public sector to secure product placement particularly in the case of higher education. Universities often act as a test bed for new products, trading the inconvenience of beta testing and the obligation to take a call from a potential customer for the associated price tag. Tech vendors get additional headcount for testing and (hopefully) a good reference customer.

Tailoring products to customers financial profiles. While most cities do not have unlimited resources, some are better endowed than others either due to sovereign wealth from oil or other natural resources or due to a strong economic base. Telefnica approaches its product portfolio with two city profiles in mind. For those cities with deeper pockets, external funding, or often more extensive economies of scale, Telefnica 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, Telefnica has a portfolio of standard solutions hosted in Telefnica data centers. One example is its LocalTek tools, which include Web page design, content management, and hosting and allow a local government to create its own Web site for services to their citizens.



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Figure 8 Alternative Engagement Models Ensure the Viability Of it initiatives


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 oflarge 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

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Leasing and financing

Barter or in-kindexchange

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



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Figure 9 Public-Private Partnerships Share Responsibilities

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

TheReS NO CRASh COURSe TO BeCOMING A SMARTeR CITy

Governments typically arent agile, fast-moving innovators; many face challenges such as entrenched interests, voter education, and the perennial question of funding. Even where they dont face the threat of election turnover, it takes time to educate cities to make them smart. that requires skill, creativity, and time. Vendor strategists should keep a few critical variables in mind as they approach the smart opportunity:

Location, location, location. to educate a city, tech vendors need to address the specific issues of the city even helping identify them as a first step. Help define the vision and the road map of new initiatives based on the needs and priorities of the stakeholders in the city. identify creative, local-market-specific solutions that resonate with city leaders and constituents as a first step: food traceability in regions highly dependent on food exports; mobile banking in regions with high unbanked populations; and eElder care in those areas with aging populations.


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

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Audience, audience, audience. Cities are made up of multiple constituencies. incorporating multiple stakeholders into the smart city planning process means balancing interests, but it beats having obstacles surface well into the process. this cross-constituent audience also requires a common language. Speak in terms that non-techies understand; speak to the planners and policymakers, and to the parents and local partners. listen attentively. Anticipate and participate in the policy discussion or debate. Engage lawmakers to sponsor projects and understand the legislation needed to make projects most effective sharing data, integrating systems, consolidating infrastructure. the discussion is not technical but is about achieving a particular objective. Having the smart city discussion requires calling on new people and supports the shift from it to business technology (Bt).

Funding, funding, funding. Just as important as the objectives and the audience is the business model most appropriate to the given city. Do local governments have the political autonomy to define and finance new initiatives? this is likely in federal systems, although funds-matching programs might come with strict federal guidelines. in national systems with strong central governments, those guidelines might be more restrictive. understand the political structure and its constraints as part of your homework.

Partner, partner, partner. Recognize that you cant do it all yourself. Bigger solution vendors can build up their street cred with small, industry-specific iSVs and regional systems integrators. Smaller, local players ride the coattails and channels of the big player. Global and regional real estate developers such as Emaar, Gale international, Nakheel, and Solidere (Beirut) are instrumental in launching new smart city developments.

Repetition, repetition, repetition if possible. Smart city solutions must address local requirements within a local context and with local players. However, vendors will want to develop replicable solutions. this is a tough requirement. Framework solutions based on common building blocks with pluggable architectures for local applications or partners increase the degree of replicability. understand similarities and differences across cities in terms of size and scale, geography, resource base, politics, and economic activities. We are, after all, talking about being smart.

SUPPLeMeNTAL MATeRIAL

Forresters Forrsights Budgets And Priorities Tracker Survey, Q2 2010 was fielded to 2,803 IT executives and technology decision-makers located across the world from SMB and enterprise companies with 100 or more employees. This survey is part of Forresters Forrsights for Business Technology and was fielded from March to May of 2010. Forrester produced a custom filter to weed out anomalies and incomplete data. Survey participants were asked for their company revenue, total IT budget, and what they believe they spend on IT as a percentage of revenue. Participants that were unable to report IT budget as a percentage of revenue within one percentage-point of the value they calculated were removed from this sample to enforce quality.



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Forresters Forrsights for Business Technology fields 10 business-to-business technology studies in 12 countries each calendar year. For quality control, we carefully screen respondents according to job title and function. Forresters Forrsights for Business Technology ensures that the final survey population contains only those with significant involvement in the planning, funding, and purchasing of IT products and services. Additionally, we set quotas for company size (number of employees) and industry as a means of controlling the data distribution and establishing alignment with IT spend calculated by Forrester analysts.

We have illustrated only a portion of survey results in this document. For access to the full data results, please contact [email protected].

Companies Interviewed For This Document

Accenture

Alcatel-Lucent

Capgemini

Cisco Systems

CSC

HP

IBM

Logicalis Group

MetricStream

Oracle

Orange Business Services

SAP

Siemens

Southwest One

Streetline

Telefnica

eNDNOTeS

1 The urban areas of the world are expected to absorb all of the expected population growth and more as migration depletes rural areas: Urban population growth will be higher than overall population growth. In China, for example, population growth will actually slow to about 5% between 2010 and 2050, while urban population growth is expected to grow by 63%. In faster-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 fall by 16% from 2010 to 2050, but cities will grow by 2%. Source: World Population Prospects: The 2008 Revision Population Database, United Nations (http://esa.un.org/unpp/index.asp?panel=1).

2 The 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 of 0.6 and in least developed countries of 4.1. Source: The State Of World Population 2009 (http://www.unfpa.org/swp/2009/en/pdf/EN_SOWP09_DemSocialEcon.pdf).



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3 Countries experiencing water scarcity include those for which the availability of renewable water per person per year is less than 1,000 cubic meters. Source: ITT Industries Guidebook to Global Water Issues, ITT Industries (http://www.itt.com/WATERBOOK/intl_scarcity.asp).

4 Energy consumption for 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 Information Administration press release, May 25, 2010 (http://www.eia.doe.gov/oiaf/ieo/highlights.html).

5 Source: World Population Prospects: The 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 from rapid urbanization. What makes a smart city smart is the combined use of software systems, server infrastructure, network infrastructure, and client devices which Forrester calls Smart Computing technologies to better connect seven critical city infrastructure components and services: city administration, education, healthcare, public safety, real estate, transportation, and utilities. The concept of the smart city is pushing the CIOs in federal, state, and local governments and their technology teams to further evaluate emerging technologies and engage with key stakeholders within and outside of their organizations. To successfully deliver on the smart city vision, CIOs should have a clear understanding of 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 defines Smart Computing as a new generation of integrated hardware, software, and network technologies that provide IT systems with real-time awareness of 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 The New Era Of IT Growth report.

8 Telefnicas Colabor@ solution enables health networks hospitals, clinics, labs, and pharmacies to share diagnoses, medical files, 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 Trikala, the program created an integrated network of tele-care using telematics infrastructure to support services for vulnerable groups (the elderly, disabled, and chronically ill); it has served 300 patients to date. Patient information is recorded and transmitted either via mobile or fixed-line telecommunications interfaces and transferred to the computer system at the County Hospital of Trikala or a similar private physician. The program was partially sponsored by Vodafone. Source: e-trikala (http://www.e-trikala.gr/taxonomy/term/2).

10 The primary objective of the Blue Sky eLearning initiative is to, Seek a feasible technical solution to address the educational disparity between developed cities and western rural areas in China. Source: Professor Zheng Qinghua, Blue Sky Project: Innovation in Education Technology presentation, IBM, 2010 (http://www.ibm.com/smarterplanet/global/files/us__en_us__government__prof_zheng_final_6-3-2010.pdf).



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11 UNAM is considered to be the largest university in the Americas, serving about 314,000 students with 35,000 faculty members and 30,000 administrative staff. For more details on its UNAM Digital initiative, visit Jennifer Belissent, What Is A City, Let Alone A Smart One? Jennifer Belissents Blog For Vendor Strategy Professionals, May 21, 2010 (http://blogs.forrester.com/jennifer_belissent/10-05-21-what_city_let_alone_smart_one).

12 Source: International Energy Outlook 2010 - Highlights, U.S. Energy Information Administration press release, May 25, 2010 (http://www.eia.doe.gov/oiaf/ieo/highlights.html).

13 Andre van der Post, who is responsible for strategy, architecture, innovation, and research in the [South African Revenue Services] technical services division, knew that urgent action was needed: Organisations were separately registered for income-tax, value added tax (VAT), pay-as-you-earn (PAYE) and employee insurance, and these organisations often had multiple subsidiaries, each of which appeared as a separate tax account in our systems. One company had 196 different points of tax registration. To provide a perspective on the situation, it could take a member of the Revenue Service staff up to three weeks to consolidate the tax information associated with a major South African corporation, simply because we needed to drill down through so many different systems and screens. Source: South African Revenue Service: Customer Relationship Management, Accenture (http://www.accenture.com/Global/Services/By_Industry/Government_and_Public_Service/PS_Global/Client_Successes/SouthTaxpayer.htm#SectionButtons).

14 Source: McKinsey Global Institute, Preparing for Chinas urban billion, McKinsey & Company, March 2009 (http://www.mckinsey.com/mgi/reports/pdfs/china_urban_billion/China_urban_billion_full_report.pdf).

15 These cities are being developed by the Delhi-Mumbai Industrial Corridor (DMIC), a $90 billion government-led project that is in fact only 49% government-owned. Although funded by the Indian government, the overall project and the cities to be developed are private. Source: James Fontanella-Khan,

India, the nation of villages, faces urban future, Financial Times, September 21, 2010 (http://www.ft.com/cms/s/0/9670af02-c50f-11df-b785-00144feab49a.html).

16 Source: Jennifer Belissent, Redefining The Public Sector? Jennifer Belissents Blog For Vendor Strategy Professionals, October 18, 2010 (http://blogs.forrester.com/jennifer_belissent/10-10-18-redefining_the_public_sector).

17 Source: Jennifer Belissent, What Is A City, Let Alone A Smart One? Jennifer Belissents Blog For Vendor Strategy Professionals, May 21, 2010 (http://blogs.forrester.com/jennifer_belissent/10-05-21-what_city_let_alone_smart_one).

18 A city is defined officially as an administrative district established by state or other government charter. But in broader terms, a city is a densely populated area.

19 The UNAM Digital initiative constitutes the universitys smart city agenda, with plans to incorporate technology across the systems of the university. UNAMs public safety and unified ID card initiatives provide an illustration of its use of technology. UNAM has its own security force and maintains infrastructure to control access to facilities. Cameras monitor building access and streets, and there are plans to expand the use of cameras as well as to launch an integrated ID card system with common



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authentication for access to parking, libraries, sports facilities, health services, transportation, and some university services such as class registration. The integrated ID will be used for all university activities, including one that is reminiscent of the Vlib bicycle program in Paris: Bicipuma allows students to check out a bicycle with their university ID. Both the public safety initiative and the integrated ID are part of the UNAM Digital initiative, designed to promote strategic and efficient use of ICT to support the work of the university (education, research, and dissemination of culture) and the administrative processes and academic-related administration.

20 Source: Mel Duvall, IBM, Indiana Sue Each Other Over Welfare Project, CioZone, May 14, 2010 (http://www.ciozone.com/index.php/IT-Services/IBM-Indiana-Sue-Each-Other-Over-Welfare-Project.html).

21 Conflicts between Tecom, the real estate developer, and the Kerala state government have also hindered the advancement of 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: Professor Zheng Qinghua, Blue Sky Project: Innovation in Education Technology presentation, IBM, 2010 (http://www.ibm.com/smarterplanet/global/files/us__en_us__government__prof_zheng_final_6-3-2010.pdf).

23 Numerous other examples of smart city programs evolving out of specific visions or objects exist. Take tourism, for example: Knowledge Economic City in Medina, Saudi Arabia has incorporated tourism into its smart city vision in order to better serve the influx of millions during the month of the annual Hajj to Mecca. Venices 20 million annual visitors now enjoy new mobile apps that provide tourist maps and information. Ceutas eGovernment portal provides tourist information and real-time video of 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.fastcompany.com/magazine/142/the-new-new-urbanism.html).

25 Source: City of the Future, Siemens (http://www.it-solutions.siemens.com/country/belgium/en/sectors/public-sector/cities/city-of-the-future/Pages/city-of-the-future.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 IT services for the new economic cities across the Kingdom. Source: Mobily, Orange to create smart ICT services for Saudi real estate market, Saudi Gazette, 2009 (http://www.saudigazette.com.sa/index.cfm?method=home.regcon&contentID=2009102752715).

In Lebanon, Solidere, the real estate developer responsible for the reconstruction and development of downtown Beirut, obtained a license to install and operate a high-speed fiber-optic network as part of the master plan for the city. The developer will provide broadband services across the downtown area. Source: Natasha Tohme, Solidere to install broadband network in Downtown, Lebanonwire, January 24, 2004 (http://www.lebanonwire.com/0401/04012427DS.asp).



31

29 Source: Adquira (http://www.adquira.es/adquira/portal/Facturacion-Electronica/Administraciones-Publicas-Es.htm).

30 Source: IBM and Singapores Land Transport Authority Pilot Innovative Traffic Prediction Tool, IBM press release, August 1, 2007 (http://www-03.ibm.com/press/us/en/pressrelease/21971.wss).

31 Source: Jennifer Blissent and Eddie Radcliffe, Open Cities, Smart Cities: Data Drives Smart City Initiatives, Jennifer Belissents Blog For Vendor Strategy Professionals, July 8 2010 (http://blogs.forrester.com/jennifer_belissent/10-07-08-open_cities_smart_cities_data_drives_smart_city_initiatives).

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Getting Clever About Smart Cities

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