The Build Up of Safe Cities - An Emerging Market for Defence and Security Players

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As the Safe City idea spreads across the globe, this new, exciting market begins to take shape. And
it is in this context that Defence & Security players—from technology providers to system
integrators—can enjoy new revenue opportunities in a completely new competitive environment.

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The Build Up of Safe Cities - An Emerging Market for Defence and Security Players

  1. 1. June 2011 The Build Up of Safe Cities -An Emerging Market for Defence and Security Players Bruno Mucciolo, Senior Consultant - Aerospace, Defence & Security “We Accelerate Growth”
  2. 2. The Rise of Safe Cities Market Insight The Rise of Safe Cities Last year Frost & Sullivan initiated a global Visionary Innovation Research Programme that looks at “Defence & Mega Trends across various industries. The objective of the programme was to identify the key Security factors shaping industries in the next 10 years. One of the top five Mega Trends for the next 10 players—from years was the rise of the so-called Safe Cities. With this in mind, Frost & Sullivan’s Aerospace, technology providers to Defence & Security team decided to launch its own project dedicated to Safe Cities in 2011. The system ultimate goal of this project is to assess market opportunities for our Defence & Security clients. integrators— can enjoy new Safe Cities, however, should not be seen as an occurrence of the future, the implementation of Safe revenue City initiatives is happening right now. This maturing market, where concepts and technologies areopportunities in being tested, is expected to boom in the years to come. a completelynew competitive Some of the large cities and capitals across the globe are already assessing how they can leverage environment.” this concept and make their cities safer through the implementation of smart, integrated, time- responsive solutions. As the Safe City idea spreads across the globe, this new, exciting market begins to take shape. And it is in this context that Defence & Security players—from technology providers to system integrators—can enjoy new revenue opportunities in a completely new competitive environment. “The Build Up of Safe Cities” white paper essentially provides insights on how this new market is evolving, how cities are likely to explore this idea, and what challenges cities and industry players are currently facing. Figure 1: Top 20 Megacities in 2025 45 40 1. Population (million) 35 Tokyo 6. Mexico 9. São 11. Mumbai 30 2. City 8. Paulo 16. Delhi 25 New Shanghai 12. Osaka- New definition of Megacity ‘25 York 20 Kobe 18. Guangzhou 3. Los 17. Moscow 15 14. Beijing U.N definition Angeles 10 10. Buenos of Megacity ‘09 7. Paris Aires 19. Seoul 5 4. London 5. Chicago 15. Hong Kong 20. Miami 13. Philadelphia 0 (1) 1 3 5 7 9 11 13 15 17 19 21 23 Ranking based on population and GDP *Size of the bubble - GDP 2025 Size of the bubble - GDP 2009 Cities with current or future plans to become Safe Cities Note: All figures rounded; the base year is 2009. Source: Frost & Sullivan © 2011Frost & Sullivan Page 2
  3. 3. The Rise of Safe Cities Market Insight Why is Safe City a Mega Trend Across Industries? Security is increasingly becoming part of our day-to-day life. Be it at home, on the street or at “Defence work, “security” will be present in each and every task we have as individuals in a society. More than companies are its presence, security is becoming more and more critical to the functionality of our daily tasks— investing time driving in traffic, entering your office building, shopping online and checking your e-mails.and resources to take theirexisting solutions In this context, cities themselves, industry sectors and the advancement of technology are the three and understand big drivers pushing forward the idea of “safer cities.” how they can support law As cities expand urban zones, they demand further investments in services and infrastructure, enforcement including security. Urban growth is not always planned; therefore it can be a challenge for local and emergency authorities to create a sustainable setting that will cope with current and future needs. In an ever- services in growing city, threats are becoming increasingly anonymous, and this demands further attention frommunicipalities to local authorities and law enforcement services. optimise their response timeand capabilities” But the city has also changed its role in social responsibility and the well-being of its citizens. As we can see today, city authorities are under enormous pressure to cope with the common, expected security threats but also unexpected ones, including terrorism, floods, earthquakes and other environmental issues. This is already a reality for many municipalities. Mega Cities, in particular, are learning from this much quicker, since a small disruption in any of the city’s infrastructure (energy supply, mass transportation, etc.) becomes an exponential issue, potentially affecting millions of people and generating financial loss and security issues. This role of minimizing and managing unexpected security and safety threats is gradually making local authorities important players in promoting national security, a role that historically has been limited to the federal government. We can also see the Defence & Security industry pushing the Safe City concept. The recent ups and downs of the sector are forcing companies to look for non-traditional businesses, where their solution can be adapted to an entirely new end-user. Defence companies are investing time and resources to take their existing solutions and understand how they can support law enforcement and emergency services in municipalities to optimise their response time and capabilities. On top of being a new set of customers, the interesting aspect of the Safe City market—but not necessarily the most profitable—is the large number of potential customers. Defence companies have traditionally assisted a limited number of end-users with political caveats and secrecy. The Safe City market might be similar for them in this aspect. In others, however, it is an entirely new environment, given the various players from different industry sectors competing in this market as well as fragmented bidding processes of different scale and scope. In essence, Defence companies willing to compete in the Safe City market will have to consider new business models, alliances and alternative ways of creating value for potential customers. © 2011 Frost & Sullivan Page 3
  4. 4. The Rise of Safe Cities Market Insight Security companies are more familiar with working with local authorities. But again, the Safe City market that is taking shape is expecting them to bring their solutions to a different level, where integration and interoperability between security solutions and other infrastructures will be “...partnerships required. Again, partnerships with different industry sectors such as energy, construction and with different transportation are likely to impact the way security organisations will enter this new market. industry sectors such as energy,construction and Finally, which is perhaps implicit but easily forgotten, technology itself is a key driver in this transportation initiative. Technology today allows us to think about Safe Cities. The ability to integrate solutions are likely to across large urban areas, using software, satellites, wireless and other upstream technologies, is the impact the way critical enabler to the Safe City concept. In fact, as technology evolves, it is likely that the current security ideas surrounding Safe Cities will change to accommodate technological innovations. organisations will enter this One common discussion on the market for Safe City technology is how it relates to the creation new market.” of Smart Cities. A simple way of correlating these two concepts is by understanding their ultimate goals. Smart City initiatives aim to deploy technology solutions across different infrastructures in a city with very specific goals. For example, smart transportation solutions are deployed to optimise traffic flow, increase transport connectivity, reduce time spent on mobility, etc. Smart energy technologies are used to increase efficiency, reduce pollution across urban areas, make use of “The ability to renewable sources, amongst others. In essence, the “Smart” concept is using cutting-edge integrate technologies and solutions to make a city a better place to live. “Safe” is the enabler to “Smart,” solutions across simply because it must be present across all different factors—transportation, energy, etc. In other large urban words, Safe Cites do not compete with Smart Cities. areas, using software, satellites, wireless and Figure 2: How SMART Drives SAFE other upstream technologies, is SMART Buildings: SMART Mass Transport: Multimodal Transport Hubs the critical At least 50% of Buildings Providing Excellent Air, Rail, Will be Green and enabler to the Intelligent Built with BIPV; Road Connectivity to Other Mega Cities. Safe City 20% of the Buildings Will be Net Zero Buildings. concept.” SMART Energy: 20% of Energy Produced in the City Will be Renewable SMART Technology: (Wind, Solar etc). Intelligent Communication Systems Connecting Home, Office, iPhone and Car on a Single Wireless IT Platform. SMART GRID: Infrastructure to Enable Real Time Monitoring of Power Flow and Provide Energy Surplus Back to the Grid. Satellite Towns: Main City Centre Will Merge with Several Satellite SMART Cars: Towns to Form ONE BIG At least 10% of Cars will be MEGA CITY. Electric Vehicles. Free Fast Source: Google Images Charging Stations at Every © 2011 Frost & Sullivan Page 4 Half Mile.
  5. 5. The Rise of Safe Cities Market InsightDefining the Market for Safe CitiesToday, not everyone has a common, clear understanding of what a Safe City project is or representsin terms of solutions for city users and opportunities for industry participants. As a new, evolvingconcept, the market is going through the process of breaking the usual vicious circle that preventsthe market from taking off immediately.On the one hand, city planners and operators are yet testing ideas and discussing how to bestimplement security solutions that will suit their current and future urban needs. These end-usersare also looking for existing solutions that could fit their various security plans. On the other hand,however, security and solution providers are waiting for requirements and future security plansdesigned by city stakeholders to adapt their existing portfolio of products and services to best suita Safe City initiative.This impasse is normal and will gradually disappear once projects are implemented by those whoare in most need or who have a clear security strategy for their city’s infrastructure.But what is a Safe City? A Safe City project has two key aspects that help us better understand whatthis market is all about: a social and a technological intent.The key objective of a Safe City initiative is to enhance the well-being of citizens. But it is importantto note that a Safe City project is not about an overwhelming deployment of security equipmentto monitor and control citizens in order to reduce crime and other security threats. Here weshould consider improving the well-being of a certain population in order to create a better urbanenvironment, where security and safety solutions will be used to detect, act and manage potentialthreats. This is the social intent.The technological intent refers to the type of security and safety solutions that will enable cityoperators to promote well-being in an ever-changing urban environment. In order to do so,technology needs to meet the following requirements: 1. Able to be integrated into a larger solution 2. Reliable (technical and operational) 3. Centrally or remotely controlled 4. Scalable Source: Frost & Sullivan© 2011 Frost & Sullivan Page 5
  6. 6. The Rise of Safe Cities Market Insight These four requirements represent most of the current concept of Safe City implementations. With this, Frost & Sullivan has defined Safe City as:“Integration and “A plan to enhance public security and welfare by deploying networked security systems interoperability across a city’s infrastructure to optimise the necessary response from detection, action toare fundamental management.” in this process. From CCTVs to crisis As critical assets in a city’s infrastructure, security technologies and solutions in future cities will management play an important role in promoting better well-being and will support city operators to better centres, cope with security and safety challenges. technology will act as a key Integration and interoperability are fundamental in this process. From CCTVs to crisis management enabler for law centres, technology will act as a key enabler for law enforcement, emergency services and local enforcement, decision-makers to optimise their response to the expected and unexpected. emergency services and local decision- This is when “Safe” connects to “Smart.” As building companies deploy smart technologies in new makers to structures (i.e., using sensors to measure energy sources across the building and to monitor the optimise their flow of people) a secondary goal is to increase security and safety of the building in case of response to the emergency or other threats to the general public. Moreover, these smart technologies also mean expected and that emergency services and law enforcers have information available about that building to unexpected” facilitate and optimise response on demand. In future cities, the more integrated and interoperable security and safety systems are, the easier it will be for city operators to detect, act and manage potential threats. It is, however, important to “The more a note the impact of integration on a large scale. The more a city’s infrastructure and mechanism to city’s respond are integrated, the more reliable they need to be, since a disruption will impact the entire infrastructure ecosystem of a city. Cyber attacks, for example, could represent a major threat to a fully integrated and mechanism Safe City. Mechanisms to prevent cyber fragility must be taken into consideration and must be top to respond are priorities for city operators. integrated, the more reliable Integration and interoperability are also key challenges for both city planners/operators and they need to be, technology/solution suppliers. To architect such initiatives in a city, stakeholders must understand since a the “whos” and “hows” of their urban area in order to design the right strategy to cope with disruption will impact the expected and unexpected events today and tomorrow.entire ecosystem of a city. Cyber In this reality, Defence & Security companies begin to make sense as part of this market. By bringing attacks, for expertise in system integration and interoperability, companies in the sector are well positioned to example, could tackle this challenge by adapting existing solutions (be it for the military or security forces) as well represent a as exploiting alternative concepts that have not worked out well for traditional customers. major threat toa fully integrated Safe City.” © 2011 Frost & Sullivan Page 6
  7. 7. The Rise of Safe Cities Market Insight The Participants in a Safe City Project Plans to deploy networked solutions to increase the well-being of citizens differ from city to city. “By bringing Therefore, it is very important to understand who is involved and will be impacted by such a plan, expertise in and also how it can be implemented in the most optimal way. system integration and interoperability, The “whos” in a Safe City project companies in the sector are A city has three umbrellas of entities: users, infrastructures and operators. City users are the well positioned inhabitants, businesses and visitors. City infrastructures are those serving the users in many to tackle this different ways: roads, trains, energy grids, water system, etc. City operators are the public challenge by organisations responsible for the infrastructure (not necessarily handling it) and providing theadapting existing necessary services to the users, including security. These are the law enforcement agencies, solutions (be it emergency services and other public bodies. for the military or security forces) as well The “hows” in a Safe City project as exploiting alternative A project, as such, could be implemented in many different ways depending on the scale and scope concepts that of its objective. In other words, Safe City projects will see differences in terms of responsibility,have not worked management and solution architecture. For example, a Safe City project might demand a single or out well for multiple city operators in charge. It can also require a fully centralised management process and/or traditional a combination of centralised/diffused operators dealing with detection, action and management of customers.” security and safety issues. Finally, it might demand different types of solution architectures to link all processes, infrastructure and others. Here, the challenge of a “universal communication” solution becomes critical, since it is likely to be the backbone system of an integrated and “A Safe City interoperable approach. plan that didn’t respect the It is important to discuss the “whos” and “hows” because they are critically dependent on each peculiarities of other. A Safe City plan that didn’t respect the peculiarities of its infrastructure and users may faceits infrastructure difficulties in deploying certain solutions and resolving how to best manage them. and users may face difficulties And this is another challenge for both city planners and industry. On the one hand, planners would in deploying be reluctant to mirror investment in other case studies of Safe Cities, given the specificities of theircertain solutions and resolving city; on the other hand, industry would consider it commercially challenging to constantly adapt how to best their solution to over-tailored customer requirements. manage them.” Fundamentally, this new, exciting market will be executed in many different ways. It is very important to account for how such initiatives will impact the city and its users to promote a better well-being. In order to do so, planners will have to work with suppliers to better understand what type of services and technology solutions will best suit that city. However, the type of Safe City project will be reliant on the type of technology strategy to ensure that current and future needs are met—again aligned with the city’s reality. © 2011 Frost & Sullivan Page 7
  8. 8. The Rise of Safe Cities Market Insight Without a clear technology strategy, a Safe City project might fail to achieve its objective. And here is where city planners and industry start to work together. Collaboration and partnership are key to make sure a technology strategy is time-evolving to effectively cope with future challenges.“Without a clear technology And despite the approach toward Safe City being extremely open and tailored to each city, there strategy, a Safe are a few characteristics that could cluster Safe City into three main types of projects. City project might fail to achieve its Figure 3: The Different Types of Safe City Projects objective. And here is where city planners and industry start to work together.” PLANNED CITIES MATURE CITIES MATURING CITIES - Aggressive, Disorganised - Built From Scratch - Consolidated Infrastructure Urbanisation - Developing Countries - Global Phenomenon - Developed Countries (but not restricted to) - Security Apparatus Does Not - Planned Infrastructure - Legacy Security Solutions Follow Urban Growth - Dependent on Available - Budget is Hardly - Available Funding Budget Compromised - Strong Political Will - ‘Volatile’ political will - Weak Political Will Planned Cities Following the “Smart” concept, the phenomenon of planned cities is rapidly spreading all over the world. Be it a government or private initiative, or an attempt to create an energy source- sustainable, environmentally friendly urban area, planned cities will see the “Safe” element as a critical aspect of its existence. Planned cities as a concept not only account for the creation of a large urbanised zone, but also are a definition for many plans by local authorities to develop from scratch new neighbourhoods on the outskirts of old cities. © 2011 Frost & Sullivan Page 8
  9. 9. The Rise of Safe Cities Market InsightThese types of Safe Cities are likely to facilitate the interaction between planners, operators andsolution providers. The first has a very clear understanding and technology strategy to determinewhich organisations are best suited to be part of the initiative. At the same time, planned citiescome along with the necessary funding to invest in the necessary infrastructure—and the “Safe”enabling tools— to achieve its ultimate objective. Ultimately, Defence & Security companies willinteract with limited number of decision-makers who have a clear understanding of how toarchitect and deploy solutions across the planned area.Mature CitiesThese comprise a significant part of what is expected to be the global Safe City market. Maturecities are those with old infrastructure and limited room for urban growth. European capitals aregreat examples of mature cities as a Safe City profile.In mature cities, major structural changes to implement Safe City initiatives are not possible, sinceit would create undesirable disruptions. Also, cities that form this group are likely to have significantsecurity and IT solutions across urban areas. The “whos” in mature cities dictate that anoverwhelming plan to enhance and integrate security solutions across the entire city is tooambitious in the short term, meaning that politics can be volatile. Therefore, in mature cities, it islikely that Safe City initiatives begin in localised areas (zone basis) and then more toward a large-scale project.In this type of project, technology and solution providers will face many challenges trying tointegrate new requirements into legacy security and IT systems, as well as dealing with numerousstakeholders involved in the process. It is here that Defence & Security companies can establishtheir footprint in the market.Maturing CitiesThis final umbrella of Safe City projects is characterised by a rather aggressive urbanisationprocess, where cities grow in a disorganised way, without respecting natural barriers and mostlywith very poor planning. This rapid urbanisation process is commonly seen in emerging economics,where most of the so-called new megalopolis arises. In most cases, security in maturing citiescannot catch up with urban growth, which creates an inherent security and safety problem.The accelerated growth process demands local authorities to allocate funding to cope with generalinfrastructure needs, meaning that security cannot be the fundamental priority and political will isstrongly compromised.In this type of Safe City project, market opportunities can be very volatile. Firstly, it is expected tobe extremely hard to design a sustainable technology strategy, and the multiple stakeholdersinvolved might hamper the process.© 2011 Frost & Sullivan Page 9
  10. 10. The Rise of Safe Cities Market Insight Initiatives are likely to promote short-term solutions and start from enhanced, large-coverage security solutions as opposed to the smart, fully integrated approach. “Most Defence These three main clusters of Safe City projects differ in essence from each other; however, most & Security of them will see a large number of technology and solution suppliers involved in the process. This companies will require different levels of partnership from all organisations competing in this market. Most interested in theSafe City market Defence & Security companies interested in the Safe City market will deal with a whole new will deal with a competitive environment and partner with companies from different industry sectors as never whole new before. competitiveenvironment and Figure 4: Industry Participants in the Safe City Market partner with companies fromdifferent industry sectors as never before.” Market participants are not restricted to the organisations hereby listed. This chart uses examples of companies that participate in the Safe City market and simply illustrates which industry sector these companies traditionally belong to. This brings opportunities and challenges for the sector. The Defence & Security industry most likely will have to adapt its business model, reconsider its market approach and potentially redesign its value creation process to partner with other industry sectors (i.e., Energy, Building Technologies, etc). At the same time, working alongside new partners can open doors for the sector to enjoy new verticals and start channelling its existing capabilities to markets never before part of their strategies. © 2011 Frost & Sullivan Page 10
  11. 11. The Rise of Safe Cities Market InsightKey ConclusionThe efforts to move the Safe City idea forward is linked much more to its challenges than itsbenefits. However, this is gradually changing and a new market is emerging.In order to speed up the process, it is important to understand its concept and characteristics. Itis not only industry that is confused about Safe City; planners are also struggling to betterunderstand how this initiative can solve security and safety problems in an ever changing urbanenvironment, where everyday expected and unexpected events shape the lives of millions of people.A few considerations must be taken from both end-users and industry participants: - Urbanisation, industries and technologies are driving the market for Safe City solutions. As evolving forces, these three major drivers are likely to face different challenges as Safe Cities are being formed. In other words, as concepts, solution architectures and technologies are being tested. Both end-users and industry participants must understand this market to better adapt their respective roles. - City operators/planners must account for the whos and hows of cities in order to come up with a sustainable technology strategy and deploy a Safe City initiative. Technology/solution suppliers also need to understand these dynamics in order to design the best solution for potential customers. This can be the initial trigger to make the ideas become real projects. - Defence & Security companies are well positioned to explore market opportunities in the Safe City domain by bringing their expertise in system integration and interoperability. It is important to evaluate what types of projects are worth the investment and what types of initiatives are best for Defence & Security organisations. - The over-tailored aspect of Safe City projects might soon result in industry participants focusing their efforts on a particular type that seems more compatible with their solution offerings (planned, mature or maturing cities). This will not only bring more clarity in terms of competitive environment and commercial alliances, but also will facilitate the process of designing a Safe City project for those end-users who have the budget but have no strategy in place. In other words, definitions from the industry can be the trigger to jump start this promising market. About Frost & Sullivan Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best-in-class positions in growth, innovation and leadership. The companys Growth Partnership Service provides the CEO and the CEOs Growth Team with disciplined research and best-practice models to drive the generation, evaluation and implementation of powerful growth strategies. Frost & Sullivan leverages 50 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from more than 40 offices on six continents. To join our Growth Partnership, please visit http://www.frost.com. contact us Tel: 44 (0) 20 7730 3438 | enquiries@frost.com | www.frost.com

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