• Share
  • Email
  • Embed
  • Like
  • Save
  • Private Content
Information Marketplaces: The New Economics of Cities
 

Information Marketplaces: The New Economics of Cities

on

  • 1,829 views

As part of the SMART2020 program, Information Marketplaces: The New Economics of Cities, is written in partnership with The Climate Group, Arup, Accenture, Horizon and the University of Nottingham, ...

As part of the SMART2020 program, Information Marketplaces: The New Economics of Cities, is written in partnership with The Climate Group, Arup, Accenture, Horizon and the University of Nottingham, and investigates how technology can be used in cities to meet the growing challenges of expanding urbanization.

Statistics

Views

Total Views
1,829
Views on SlideShare
1,829
Embed Views
0

Actions

Likes
1
Downloads
15
Comments
0

0 Embeds 0

No embeds

Accessibility

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    Information Marketplaces: The New Economics of Cities Information Marketplaces: The New Economics of Cities Document Transcript

    • InformationMarketplacesThe New Economicsof Cities
    • This report is a research Acknowledgements: Philipp Rode, Executivepartnership between Many thanks to Tashweka Director of LSE Cities, LondonThe Climate Group, Arup, Anderson and Alaa Khourdajie School of EconomicsAccenture and Horizon, at The Climate Group and Josep Roig, Secretary General,University of Nottingham. Ece Ozdemiroglu and Zara Metropolis Phang at EFTEC for earlyEditorial and Research work on a more detailed Jerry Sheehan, Chief ofTeam: approach. Thanks to those Staff, California InstituteThe Climate Group we consulted or interviewed for Telecommunications andMolly Webb, including Tom Plant, former Information Technology, UCSDHead of Smart Technologies Energy Advisor in Colorado, Chris Tuppen, SustainabilityReuben Finighan, Project Regis Hourdouillie, Smart Consultantand Research Manager Grid lead, Alstom, Martin Powell, London Development Dimitri Zenghelis, SeniorArup Agency, Peter North and Visiting Fellow, GranthamVolker Buscher, Director, Peter Daw, Greater London Institute, LSESmart Cities Authority, Geoff SnelsonLéan Doody, Associate, and Barry O’Brien, Milton SMART 2020 InitiativeSmart Cities Keynes, Henrietta Foster and Working Group:Ellie Cosgrave, Research Gunjan Parik, Transport for Martyna Kurcz-Jenn, DirectorEngineer London, Dipak Kripalani, Tata EU Regulatory Affairs, AlstomAccenture Consultancy Services, Bas Amaia Beloki, EU Affairs Boorsma, Cisco Systems, andSimon Giles, Global Senior Advisor, Basque Country Peter Head and Tim Gammons,Principal, Intelligent Cities Arup. And many thanks to our Ian Pulford, Director, BTJen Hawes-Hewitt, Advisory Group and memberGlobal Strategy Manager, Graham Seabrook, Head of Working Group for their input.Intelligent Cities Sustainability Research, BTNicola Walt, Global SMART 2020 Initiative Shane Mitchell, GlobalConsultant, Intelligent Cities Advisory Group: Program Manager, IBSG,University of Nottingham Cristina Bueti, Policy Cisco SystemsCatherine Mulligan Analyst, Corporate Strategy Nicola Villa, Senior Director of Division, International Urban Innovation, IBSG, CiscoWith thanks to: Ben McClure Telecommunication Uniom, ITU John Pflueger, Head of Environmental Strategy, DellThis report is part of The Paul Dickinson, CEO,Climate Group’s SMART Carbon Disclosure Project Benjamin Kott, Clean Energy2020 Initiative Advocacy, Google Graham Floater, Director, The Climate Centre Armin Mayer, SustainabilityThanks to our partners: Program Manager, Johnson Nicky Gavron, Former DeputyHSBC Climate Partnership Controls Mayor, City of LondonCisco Clay Nesler, Vice President, Sascha Haselmayer, Global Energy and Founder, Living Labs Global Sustainability, Johnson Dan Hoornweg, Lead Urban Controls Specialist, The World Bank Partrick Philips, CEO, Urban Land Institute Carlo Ratti, Director, MIT Senseable cities Lab ©2011 The Climate Group, ARUP, Accenture and The University of Nottingham. All rights reserved.
    • ForewordMark Kenber | The Climate GroupA Clean Revolution is quietly underway Our SMART 2020 report found thataround the world. deploying smart technologies in key areas of electricity grids, transport, logistics,In city halls, boardrooms and cabinet buildings, and industrial motors could saveoffices, government and business leaders are 15% of global emissions in 2020, and aroundembracing what humanity has been doing $900 billion a year by 2020 in energy savingsbest throughout its history: Change. They are to global industry.changing the way we produce and consumeenergy and natural resources. Their motives The report you hold in your hands outlinesfor embracing change vary: from ensuring how smart cities could pay off hugely incorporate profitability to meeting the the coming decades if we act now. Thischallenge of an expanding urban populace isn’t only a technical challenge, it is ato ensuring energy security in an uncertain leadership challenge. As the report shows,world. Whatever their reasons, they all cities are already making investments inrealise the opportunities in the low carbon low carbon ‘smart’ services from cycle hireeconomy – and they are already benefiting schemes to real time transportation apps,from them. and are increasingly the site for smart grid and distributed electricity generation pilotBut what precisely is the Clean Revolution? projects. But the explosion in access to data – 400% growth since 2005 – means thatIn short, it is a swift and massive scaling-up more low carbon services could be developedof clean technologies and infrastructure, today. To make this opportunity real, citiescombined with a fundamental shift to can set ambitious visions, measure track andsustainable production and consumption manage their progress to sustainability goalspatterns. It is the only viable route to cut enabled by the digital infrastructure, and testglobal emissions and avoid dangerous new business models to scale up solutions.climate change. It can create jobs,strengthen economic growth and enhance We hope this report inspires city leadersenergy security. It is a revolution based on across the world in their efforts to takeleadership and the belief in a better, more transformational action on the low carbonprosperous future for the 9 billion people economy and bring on board in the processthat will be on the planet by 2050. private sector partners who will benefit by providing “smart” solutions.And most of those 9 billion people are goingto be living in cities. The 21st century is an The Clean Revolution is underway. It is oururban century. Cities are going to be in the best hope for the future. And cities all overforefront of driving the Clean Revolution the world are driving the effort for a smarter,forward. cleaner better world. For all.Information Marketplaces | The New Economics of Cities The Climate Group | Arup | Accenture | Horizon | 3
    • Foreword Volker Buscher | Arup Time for change Technology as a driver of change Cities deliver opportunities; providing The technology has reached a critical point; efficient access to essential services as well as cloud computing, the internet of things, a rich tapestry of culture and entertainment. hyper connectivity and modern analytics But cities and their citizens face new are providing opportunities at affordable challenges. Economic uncertainty, austerity, cost that only a few years ago would have growth within a new ecological context and been described as science fiction. The the demands of citizens for a great place success of Information and Communications to live and work is driving leaders to seek Technologies (ICT) at home and at work opportunities to innovate. has meant that citizens now have access to powerful smart devices wherever they go. Over centuries, cities have developed sophisticated solutions for many of the Time for leadership physical aspects of urbanity: architecture, transport, utilities and the public realm to Continuing with the status quo will not name a few. However the use of information capture this opportunity. Our research has and the role of technology in cities has shown that the city that makes the change barely progressed. from fragmented use of technology projects to a systemic approach will improve local Some leaders in cities around the globe are conditions and gain export opportunities for starting to move beyond the physical city; the solutions they develop. they are conceiving Digital Infrastructures and Information Products as a platform for Leaders in government, small to large economic development. This is the missing businesses and academia need to redefine link in the ecological age and in creating great their roles in this emerging world. Civic urban centres for people to live and work in. leaders can determine priorities and set strategic frameworks. Industry is providing Politicians around the world are faced with innovative combinations of capabilities, new choices due to emerging technologies, products and services in new partnerships. how they respond to these has become a Academia is developing the human capital and factor in how people will vote. demonstrator campuses for all to learn from. We produced this report with our partners to help cities capture this opportunity. Our aim was to provide a coherent framework that government, academia and industry can use to move forward in this exciting new world of: “New Economics of Cities”.4 | The Climate Group | Arup | Accenture | Horizon
    • ForewordMark Spelman | AccentureWe are at a point of inflection. As the processing power and storage capacity of computer chips double every 18 months4The size and economic output of cities is and the global sales of smart phones is set tobecoming on par with small nations. Today rise to over 1 billion by 20165 – we have theonly 600 urban centres generate about 60% ability to apply technological innovation. ICTof global GDP1. Tokyo, with 35 million people can be applied to our built environment andand nearly $1.2 trillion in economic output, will not only help address the problems thatranks among the world’s top 15 economies, we see in our cities today – like congestionlarger than India and Mexico2. and wasted energy – but also offer exciting new consumer experiences and convenience,The pace and scale of the change is and help to stimulate the much neededunprecedented. economic growth and job creation, that is particularly required in the Western world.Cities alone will have to spend a staggering$350 trillion or 7 times current global GDP Whilst technology is a core enabler, Smartin the next 30 years on urban infrastructure. Cities are not just a technological issue;With 180,000 new people moving into cities they also require innovative business andeach day3, the 21st Century will be a century operating models.of urbanisation. 1 http://www.mckinsey.com/mgi/ publications/urban_world/index.asp For any city, the first step is to understand 2 http://www.theatlanticcities.com/The challenges posed to our national and the diverse value that smart technologies jobs-and-economy/2011/09/25- most-economically-powerful-cities-municipal governments, to businesses can deliver. City leaders need the tools and world/109/and individual citizens are immense. vocabulary to be able to translate the value 3 http://youthink.worldbank.org/ issues/urbanizationThe interconnectedness of our national of their technology investments in to terms 4 http://www.economist.com/economies, supply chains, talent and that resonate with their voters and to the node/15557443 5 http://imsresearch.com/press-resource pools, means that this is a businesses that would like to invest in their release/Global_Smartphones_Sales_collective problem to solve. Fortunately, the city. City leaders will need to nurture their Will_Top_420_Million_Devices_ in_2011_Taking_28_Percent_of_all_opportunity of technology to help address digital economies. Leaders will need to step Handsets_According_to_IMS_these challenges has also never been greater. outside of their traditional focus on the Research physical footprint of their cities and put in place the appropriate strategic direction, operating frameworks, and incentives that will enable the digital aspects to flourish.Information Marketplaces | The New Economics of Cities The Climate Group | Arup | Accenture | Horizon | 5
    • Contents Executive Summary 7 Chapter 1: Cities in Transition 11 Chapter 2: Connecting Smart Cities to Value 21 Chapter 3: The Smart City Value Chain 31 Chapter 4: Smart City Vision and Leadership 37 Appendix 1 476 | The Climate Group | Arup | Accenture | Horizon
    • Executive SummaryNow is the time for government and business leaders to recognisethe value created by smart city thinking. The technology-enabledcity is an untapped source of sustainable growth and representsa powerful approach for tackling unprecedented environmentaland economic challenges. By unlocking technology, infrastructureand public data, cities can open up new value chains that spawninnovative applications and information products that make possiblesustainable modes of city living and working. While smart initiativesare underway in urban centres around the world, most cities haveyet to realise the enormous potential value from fully-integrated,strategically-designed smart city development programmes. Webelieve that through clear vision and, most of all, leadership,civic leaders and executives can help cities make the transition toinitiatives that maximise the smart city value opportunity.Home to more than half of the world’s Cities that face choking congestion frompopulation, cities around the world must traffic, rising CO2 emissions, or brown-outsthink ‘smart’ to deal with the growing during times of peak energy demand nowpressures of urbanisation. Cities are have new options to solve those challengeseconomic drivers and places of opportunity; by building on this digital infrastructure.but they also face unprecedented An ‘intelligent’ or ‘smart’ city is one thatenvironmental and social challenges as meets its challenges through the strategicmore and more people migrate to cities and application of ICTs to provide new servicesdemand ever higher standards of living. to citizens or to manage its existing infrastructure.Information and CommunicationsTechnologies (ICTs) are also transforming Cities are already ‘smart’ in tackling theirour lives. Social media, the internet, ‘cloud’ challenges by implementing cycle and carcomputing, sensors and mobile phones are hire schemes to get vehicles off the road,creating a ‘smart’ or digital infrastructure and building performance monitoring tothat is more powerful every year, allowing us drive down peak demand. While more ofto do everything from communicating with this should be encouraged, our findingsone another to solve problems collectively, to show that cities may be missing some of themaking our electricity grids more efficient, value that is at stake if they do not thinkto providing new options for services such as strategically about how to manage technologyusing video conference instead of driving to innovation. Beyond the visible roads andthe office. building infrastructure of the city is a hidden set of complex interactions from resource use, to consumption and waste, where huge inefficiencies are occurring all the time.Information Marketplaces | The New Economics of Cities The Climate Group | Arup | Accenture | Horizon | 7
    • Sources: We call this the ‘surplus’ city where value The risk is that this potential for valuehttp://www.sustainable-innovations. is not being recognised or captured today. creation does not come to pass, and benefitsorg/GE/UNEP%20%5B2009%5D%20A%20global%20green%20new%20 Tackling this complexity and delivering for citizens are not realised. A key first stepdeal.pdf value is a leadership opportunity that brings to realising the potential is to set a vision andhttp://www.itif.org/files/2010-1-27- vast rewards. Cities will be able to access create common metrics for cities, allowingITS_Leadership.pdf economic, social and environmental benefits them to access new financing options and from economies of scale in combining build new partnerships and business models resources across projects, stimulating their that involve the private sector. As cities economies and international competitiveness, improve their ability to manage the digital improving existing services, mitigating risk infrastructure, they will be able to not only to through better planning and prediction, and build an ecosystem of service providers and engaging citizens in the process. value chain at home, but will be able to take the lead internationally, learn from what has Our findings show that there is an explosion been invented elsewhere, collaborate, and of interest in ‘smart’ solutions and we are at transfer knowledge to reap the most benefits. the first stage of realising this opportunity today. Open Application Interfaces (APIs), It is time for cities to step in and create a (the interfaces between developers that market, or citizens will lose out. enable new data-driven services) have grown A smart city can’t be measured by internet at 400% since 2005 and government, retail, connectivity alone, and it will be just as transportation and utility APIs have grown important to have a Chief Information Officer faster than any other area. In addition, or policy for including small businesses existing literature shows the potential for (SMEs) in their procurement process as it is smart grid investments to yield 50% more to have ubiquitous broadband. It is time for jobs than the typical infrastructure projects, political and private executives to achieve and Integrated Transportation Systems to a strategic view of innovation to meet its drive economic benefits 25 times the original challenges, setting a high level vision and investment. working iteratively to manage a process of organisational change to unlock benefits for citizens.8 | The Climate Group | Arup | Accenture | Horizon
    • 5billion people will be living in cities in 2020 Buildings use40% of world’s energy Smarter savings and up to 40% of energy savings are logistics not captured today€27billion 15%Access to public data is estimated to be worth could yield 27% fuel savings in the EU of emissions can be saved in ICT-enabled energy efficiency 2020 through ICT-enabled €600billion could translate into over energy efficiency worth of cost savings for the public and private sector Smart grid creates South Korea’s Green New Deal50% more jobs than the average infrastructure project and low carbon strategy create over 500,000 jobs Smart grid initiatives 5billion people have mobile More than have created over 12,000 jobs in Silicon Valley 50% phones today of web connections will be mobile by 20131 http://www.smartgridnews.com/artman/publish/Business_Strategy/ Smart-grid-equals-jobs-at-least-for-Silicon-Valley-4128.htmlInformation Marketplaces | The New Economics of Cities The Climate Group | Arup | Accenture | Horizon | 9
    • The promise of a data-driven city is to measure and manage progress toward a city’s sustainability goals Interview with Adam Freed, Deputy Director of Long Term Planning and Sustainability, New York City, October 2011 Already, 3,000 government buildings in New York City benchmark and publicly disclose their energy use. Next year, under New York City’s Greener Greater Buildings Plan, every building in the city over 50,000 square feet will be required to annually benchmark and disclose their energy use. This is one of 132 initiatives in PlaNYC, Mayor Michael Bloomberg’s data-driven strategy to create a greener, greater New York. Adam sees the benefits of this approach, but knows it will not be easy. Cities aren’t built to collect the data to make that cost benefit analysis work: “There used to be one energy bill for the city of New York. Now, the major city departments are getting charged separately so that they can figure out how to save money.” In addition, utilities are not set up to easily provide detailed data—often facing regulatory obstacles and legacy data systems. But measurement is a key part of knowing how to effectively reduce energy use and greenhouse gas emissions, two of the key goals of PlaNYC. That is why the City has adopted a data-driven approach to target investments and track progress toward its sustainability goals. The City uses its GHG inventory, benchmarking data, and energy audits to prioritize $100 million in annual energy efficiency investments to reduce municipal government GHG emissions. “We need the data, to show what could be saved, and then we can make it happen.” Adam’s approach is to carefully sequence the interventions they can implement based on the data they have collected. “If you don’t have a good understanding of your buildings, which begins with benchmarking, you shouldn’t be investing in a ‘bells and whistles’ system to manage an entire network.” The carbon inventory is the city’s roadmap, but they are starting with what they are able to tackle first. In transportation, the Midtown in Motion project uses algorithms to speed up traffic and GPS units were placed in cabs to better understand how drivers were using the streets and what caused congestion. With 90,000 miles of underground cables in the city today, the smart grid has to be done gradually. “We need an incremental system or retrofit, so that when we have a high impact area or challenge, we can tackle that first. This is also why when we get pitched a ‘smart grid for the city’ it doesn’t work. The wholesale rebuilding of an enormous system like New York City’s energy grid just isn’t practical from a fiscal or regulatory standpoint.” Adam also sees the benefits to industry beyond a cost benefit analysis. He wants to create the energy efficiency industry in New York – where companies can be located near world class engineering schools, to drive the market. The case for the Greener, Greater Buildings Plan showed that 17,000 jobs could be maintained or created while saving New Yorkers $750 million a year in energy costs. Technology and data are necessary enablers of solutions. And the benefits can be measured: On September 19, Mayor Bloomberg announced that city-wide Greenhouse Gas (GHG) Emissions are down 12% since 2005, and the government’s own emissions fell 5% in the last year.10 | The Climate Group | Arup | Accenture | Horizon
    • Chapter 1Cities inTransition
    • Smart thinking holds great promise for urban centres; it’s time city leaders recognise the opportunities If you are a city leader looking for ‘smart’ What is a smart city? solutions to meet sustainability challenges, you are not alone. The problems of The technology-enabled city is mass urbanisation – from overburdened an untapped source of sustainable infrastructure and transport congestion to growth soaring energy consumption and inter-city competition for investment – are becoming Cities now represent the core hubs of the6 http://ec.europa.eu/information_ so complex that those offering solutions global economy, acting as hives of innovation society/activities/ sustainable_growth/green_digital_ are finding a receptive audience willing in technical, financial and other services. charter/index_en.htm to listen and act. Indeed, the proliferation Globalisation has led to the creation of a7 Egger, Determining a Sustainable City Model, 2006 of smart grid, smart city and sustainable hierarchy of cities across the world7 within8 Nolan, Global Business Revolution, city initiatives announced by all levels of which cities compete for access to natural Cascade Effect and the Challenges for Catch-up for Large Indigenous Chinese government is creating an audible ‘smart’ resources and skilled workers. Cities must Enterprises, 2006 and ‘sustainable’ city buzz. In cities around not only create traditional employment9 http://www.theclimategroup.org/_ assets/files//BTCDJune08Report.Fin. the world, such as Lavasa in India, Songdo in opportunities, but also help create and pdf, p.20 Korea and Masdar in Abu Dhabi, ambitious attract new industries to their areas. To10 http://www.unfpa.org/swp/1996/ ch3.htm attempts are being made to build new ‘smart maintain and secure global competitiveness,11 http://www.brookings.edu/~/ and sustainable’ cities from the ground up. cities today must tackle their own challenges media/Files/rc/papers/2010/03_ china_middle_class_kharas/03_ In Europe, 23 cities have signed up to the while also maintaining growth. china_middle_class_kharas.pdf Green Digital Charter mission of developing12 http://m2m.vodafone.com/ insight_news/2010_12_03_m2m_ ‘green digital’ pilot projects that meet the Technology has already had a profound and_enterprise_innovation.jsp greenhouse gas (GHG) emissions reduction impact on the way corporations do goal of 30%6. For the C40 global network of business, leading to the creation of global city mayors, measurement and monitoring conglomerates that sit atop the ‘apex’ of tools are regarded as underpinning thriving, massive value chains that span the world. sustainable cities. 17 of the C40 cities have This helps to make those companies more smart metering projects underway, 18 have productive through more efficient use made real-time traffic information available of resources.8 to citizens. The value chains achieved in the world of Smart thinking holds huge potential for business, however, have yet to be realised in cities, but the full value of smart cities is not cities. The connected, technology-enabled being realised. While it is encouraging to ‘smart city’ is today more vision than reality, see pilot initiatives and even some large- and its features are as varied as the citizens scale projects, few cities are maximising who reside in them. For some, the smart city the full opportunities offered by digital is about its infrastructure: how efficiently infrastructure development. It is time for are its services delivered? For some it is city leaders – working with other levels of about the knowledge and information that is government, universities and large and small available to citizens and what they do with companies – to recognise the opportunities it to create new services and become more and take the lead in creating strategies and sustainable. policies for managing the wave of innovation that comes from citizens who have greater access to new technologies.12 | The Climate Group | Arup | Accenture | Horizon
    • In the context of this report, we use the Cities share a set of challenges relatedfollowing definition: to climate change, globalisation and sustainability. They have the challenge ofA city that uses data, information and maintaining and raising living standards for acommunications technologies strategically to: growing population with only 1/10th of the Greenhouse Gas (GHG) emissions we emit• provide more efficient, new or enhanced today9. As one million rural people resettle services to citizens, in cities every week, cities will be home to Information Product:• monitor and track government’s progress almost 5 billion people in 202010, with more A tangible asset to drive the toward policy outcomes, including than 3 billion people moving into the middle economy forward. meeting climate change mitigation and class11. Such explosive growth will escalate adaptation goals, the need for upgrading aging infrastructure, tackling rising costs of service delivery, and• manage and optimise the existing infrastructure, and plan for new more meeting ambitious targets for innovation and sustainability agendas. Cities must do this Smart cities effectively, all within a post-financial crisis, risk-averse are driven by• reduce organisational silos and employ new levels of cross-sector collaboration, funding environment. the need to• enable innovative business models At the same time, Information and tackle long for public and private sector service Communications Technologies (ICTs) are rapidly changing our world. 5 billion people term challenges provision. have access to mobile phones, and 2 billion such asBy aligning the interests of stakeholders, of these are ‘smart’ phones with an internet connection. In India alone, there are 20 climate changeemploying new technologies and new marketmechanisms, cities will be better able to million new mobile subscribers each month. and agingobtain the full value of the smart city. This More than 50% of web connections will be mobile by 2013. Furthermore, ICT is infrastructure,report explores specifically how cities andcompanies can begin to capture value by becoming part of the citizens’ expectations and shortmaking infrastructure management more of a great place to live and work. term problemsefficient and by supporting the market for anentirely new kind of digital infrastructure- Computing in ‘the cloud’ means crunching such as trafficbased product: the information product. data is cheaper and data services are more powerful than ever. Communications are congestion,Why do we need smart cities? increasingly possible not only between peak energy people but also between sensor-embedded digital devices, appliances and databases, demand andCities today need the tools to tackleunprecedented environmental and a system known as the Internet of Things rising energyeconomic challenges (IoT). Ubiquitous connectivity, super fast internet access, and falling costs of sensors costs. and instrumentation mean that ‘big data’ will grow in size while better mining and management of that data will be possible. As many as 412 million ‘machine to machine’ applications are expected by 2014, enabled by 50 billion connections by 2025.12Information Marketplaces | The New Economics of Cities The Climate Group | Arup | Accenture | Horizon | 13
    • In 2050 cities will need to meet the needs of future citizens with 1/10th of the carbon we generate today ‘Smart‘ holds the promise of finding new How is this value actually ways for citizens get the services they realised? crave, without using exponentially more resources. The marriage of technology with By unlocking information, ideas and the physical and built environment enables energies, smart city applications more efficient construction and management and services create more sustainable of infrastructure, and the potential to change modes of living and working behaviour for personal or public good.In economic Through better use of information andterms, ICT The SMART 2020 Report13, the definitive communications, our cities have the potential report on ICT and climate change, highlightsenabled energy the promise created by the convergence of to be ‘mined’ for surplus capacity, by using data and information to improve services forefficiency could the environment and digital infrastructure. citizens at a low cost. The report found that globally, ICT-enabledtransalte into solutions of smart grid, smart buildings, Opportunities arise from:over €600 smart logistics and industrial processes can • Measurement, automation and potentially reduce urban global greenhousebillion worth of gas emissions by as much as 7.8 Gigatonnes feedback to decision-makers, creatingcost savings for in 2020 – a reduction larger than total more efficient use of infrastructure, including buildings and roads, emissions produced by China in 2010.the public and In economic terms, ICT enabled energy enabling both short term benefitsprivate sector efficiency could translate into over €600 from crisis management and long term benefits from better planning. billion worth of costs savings for the public and private sector. Some of this value is For instance, as we better understand being captured today, but not all, as we will energy use in buildings through explore in Chapter 2. benchmarking and monitoring, building operations can be better managed. The Recent research conducted global by Booz tools used plan and construct buildings & Co. finds that cities alone will have to can be fine-tuned to match intended spend a staggering $350 trillion, or 7 times use with operational realities, saving current global gross domestic product over construction time and material costs the next 30 years, on urban infrastructure, along the way. Smart grid solutions including energy systems, residential and enable utilities to have more transparency commercial buildings, water and waste over the electricity distribution networks systems, roads and transportation, and and manage supply and demand supporting information and communications dynamically, a crucial tool for managing technology.14 To do so without applying the growing peaks in demand from home transformative solutions will be appliances. In future, utilities will need unsustainable. The same research shows to manage the growth in electric vehicles that additional $22 trillion invested today in as a mobile energy storage option to help ICT to improve building and transportation balance supply and demand for power. efficiency would save cities $33 trillion and reduce future emissions by as much as 50%.14 | The Climate Group | Arup | Accenture | Horizon
    • • Making both public and private work network in place, it could build a city- datasets about the interaction wide, city-employee smart work strategy to between people, infrastructure and allow people to work from home. This will technology systems available to allow the city’s 20,000 workers to occupy third-party service providers and 120 buildings instead of 200, a direct savings developers. in energy and carbon, and save people time For instance, city transportation sitting in traffic,” says Bas Boorsma, Cisco departments, in a bid to reduce road Systems, who has been working on smart congestion, are seeking to get people working solutions for the last five years. The ‘Surplus out of their cars and into public City’ is our transportation and onto their bicycles. Digital access to energy information similarly Already, developers are creating mobile is opening up service provision options opportunity phone apps that draw on city data that to non-traditional suppliers17, with the to turn helps people use public transportation potential to create services and associated more easily15. We will explore this further jobs and benefits beyond what the energy inefficiencies in Chapter 3. industry could predict today. Cities that have into value by participated in the Living Labs Global AwardBut cities can do more than manage the process over the past 2 years have seen over understandingconstruction, automation and use of 500 digital and IT service providers vie to the city asinfrastructure in cities. They can build an solve their challenges. See Appendix 1 forindustry around creating new services a list of solutions and enabling technologies a system,for their citizens. In 2010, Clay Shirky envisioned in the coming decade. breakingobserved a phenomenon he called ‘CognitiveSurplus’16, in which new digital technologies What are cities already doing? down silosallow people to aggregate their individual and reducingcreativity with others online (sometimes The signs are encouraging: smart citycalled ‘crowdsourcing’), creating valuable initiatives are underway in many fragmentationprojects such as open source software. urban centresToday we can link not only people, but also Cities are already beginning to link solutions 13 The Climate Group and GeSI, SMART 2020: Enabling the lowdata and information to a city’s challenges, to policy goals and initiatives, assessing carbon economy in the informationto unlock a new untapped resource for smart city value either based on individual age, 2008 14 WWF- Booz, Reinventing the City,solutions and economic growth, what we technology analysis, such as smart meters, or 2011are calling the ‘surplus city’. Cities are vast grouping technologies as solution sets, such 15 http://www.mta.info/apps/ 16 Shirky, Cognitive Surplus, 2010interactions between people, infrastructure as smart grid systems. San Diego’s benefits 17 http://www.ey.com/GL/en/and technology that can be accessed, shared from a planned smart grid implementation Newsroom/News-releases/Energy- companies-must-reinvent-themselves-and inter-connected thanks to new digital were estimated to be US$2.7 billion over to-competetechnology. Giving policymakers and citizens 20 years with an internal rate of return up 18 San Diego School of Law, San Diego Smart Grid Study – Final Reportthe opportunity to tap these resources, to 75% and payback period of 3.5 years18. Energy Policy Initiatives Centre, 2006technology can ignite new applications and Some cities are also improving pricingservices, and, in turn, create better ways policies, through initiatives such as mobileof living and working. In Amsterdam, for parking payment options, and infrastructureinstance, a new application service helps city management, such as smart buildingworkers find a ‘smart work centre’ to avoid management systems.travelling during rush hour. “Amsterdamrealised a year ago that if the city had a smartInformation Marketplaces | The New Economics of Cities The Climate Group | Arup | Accenture | Horizon | 15
    • Sector Actions Description Implemented Authorised or awaiting authorisation Energy Smart grid Sensors and instrumentation to improve distribution network 6 11 efficiency, in conjunction with smart metering, helps match energy demand and supply Building energy Occupants can automate the energy-consuming systems in 13 3 management buildings system Smart building Building sensors and controls allow for better use of buildings, or 12 9 sensors and prediction of faults controls Smart energy Automated meter reading enables utility and occupants to access 17 14 metering information digitally Outdoor lighting Dimming and other controls enable greater energy efficiency 3 3 smart controls Transport Smart transport Ideally smart cards link multiple forms of transport and make 18 10 cards it more convenient to use, and for transport authorities to understand mobility patterns Car clubs Users can hire or share vehicles easily, and will ideally not buy a 6 1 car, but instead simply use one when it is convenient Cycle hire Uses can hire bicycles instead of driving 10 7 programs / sharing programs Electric buses Buses that are more efficient and ideally run on renewable power 10 3 Electric trains Trains that are more efficient and ideally run on renewable power 8 3 Electric vehicles Vehicles that can become mobile storage for energy, helping to 14 14 balance peak demand Real time Telematics and communications with drivers to optimse routes 7 0 information for logistics Real time Provides the basis for mobile applications for journey planning 18 10 transport information Real time Provides visibility to users and encourages uptake of public 12 7 transport displays transportation Water Smart water Monitors and helps water managers reduce waste in the system, 12 3 metering saving 10-15% per household Total 29 28Figure 1.1 Technology-enabled actions by C40 cities. Digital infrastructure: The pockets of success at the project level are (data centre capacity, prevalence of encouraging. A survey of policies, initiatives smart grid, connectivity and bandwidth, The hardware and software assets, including mobile and activities by the C40 cities to address software and visualizations, etc.) and ‘soft networks, mobile phones, climate change in 201119 clearly shows infrastructure’ that manages this technology fixed broadband, sensors, numbers of initiatives already underway that and infrastructure. Although it is easiest to databases, visual interfaces, require ICT or are improved by a significant describe the common elements in levels or data assets generated from ICT component (see Figure 1.1). stages as shown in the framework described the movement of people and things, and open APIs. in Figure 1.2, in practice, implementation Although the specific path to a ‘smarter’ may not be necessarily a linear process. It city will depend on context of the local city may be, for example, that infrastructure challenges, such as congestion, rising costs development progresses before the of water or heat provision, or reliability management is in place. Alternatively, of electricity, for all cities some common, management and leadership capability may core features will be part of the transition be more advanced than the technological to a smarter city. One common feature is infrastructure. We will discuss the steps that the development of ‘digital infrastructure’ cities can take to manage this process in which includes the physical ICT assets chapter 4.16 | The Climate Group | Arup | Accenture | Horizon
    • Smart City Project Implementation Level 1 Level 2 Level 3 Level 4 Soft Infrastructure Value Assessment Individual project Some non-financial Holistic value Holistic value business cases value assessed assessment (social/ assessment supporting environmental/financial) diversification of funding sources Governance Departmental Some cross- Cross-departmental City-wide governance governance structures departmental ‘Smart City’ management structures and collaboration positions in place shared performance targets combined with international collaboration Strategic ICT Focus Limited ICT capability Some strategic focus on ICT vision for the city ICT vision and strategy ICT overseen by dedicated City CIO Citizen Engagement Limited citizen Project-level, basic needs Citizen feedback loops Citizen participation in with Service Design engagement analysis, pilots established integrated service design Hard Infrastructure IT project focus Little or no ICT projects Targeted ICT project Integrated ICT Real-time city investments (e.g. Smart investments (including operations optimisation Grid) embedded sensing, control and actuation) Integration of No data integration Small scale data Creative data mash Open data and crowd- Data Streams integration ups pulling data to a sourcing initiatives common platform Digital Service Little or no digital Handful of digital Integrated digital Diversity of cloud-based Provision service provision services services around the city citizen services environmentFigure 1.2 Framework for a Smarter CityWhy is the value not being city development programmes. Media hype 19 http://www.arup.com/Publications/ Climate_Action_in_Megacities.aspxrealised? and the political rhetoric aside, deployment 20 http://www.arup.com/Publications/ of smart city initiatives that maximise Climate_Action_in_Megacities.aspxSeveral challenges are holding back integration opportunities is still limited.the promise of smart city planningand development Of the 36 cities interviewed for the C40 report20, very few had made the connectionWhile many smart city technologies – between the initiatives listed in Figure 1.1including smart electricity grids, smart meters and ICT strategy. None had a strategic plan inand real-time transportation information place to set a vision or policy framework for– are already in pilot programmes and some putting major technology trends into theircities are even implementing large-scale city planning. The vast majority of citiessmart transportation and grid projects, there are not more than level 2 on our smart cityare no examples to date of cities launching framework sketched in Figure 1.2.fully-integrated, strategically-designed, smartInformation Marketplaces | The New Economics of Cities The Climate Group | Arup | Accenture | Horizon | 17
    • This is perhaps not surprising. Capturing • Value objectives for one stakeholder the benefits of converging technology to may not be aligned with social, solve social, economic and environmental economic, environmental value for the challenges is not straightforward in practice, city. European utilities, for instance, and will happen once those technologies are estimated to gain between €22 and make ‘common sense’. However, given the €29.3 billion annually from smart grid urgency of the challenges cities are facing, it investments. However, the same smart “We have so many service is worth accelerating the pace of innovation grid projects could produce energy for providers coming to us with when the benefits are so vast. European consumers worth €3.6 - €18.2 a ‘smart city’ offer, but they billion, potentially cutting into utility don’t seem to understand sales. The gap between utilities’ and that it’s not just a matter of The implementation gap stems from several cities’ societal value goals could slow finding the newest, most challenges that we see within the smart complex system available. development plans22. cities context today, which arise from the They know they have the interaction between citizens and consumers, • Cities are complex organisations product to sell and cities know they would like to cities, national government and companies. and decisions that involve multiple be smarter, but there are a departments can take time and can • Smart city dialogue and plans that are number of competing factors often be at odds with the sales cycles of that go into making a match.” technology-led, rather than needs and companies. Procurement cycles for cities values-led, run the risk of compromising Adam Freed, Director for can take up to three years from initiation Long Term Planning and development plans. Smart metering to sale, which can prevent innovative Sustainability in New York is a case in point. In US markets, a under-resourced companies from technology-driven approach has led to a participating in smart city development backlash amongst consumers who do not opportunities. see the benefits of energy savings that were promised21. We point to possible ways through these • The value of digital investments is challenges in later chapters. not being clearly articulated for all stakeholders. Cities may be unsure of the Given the size of the challenge ahead, we payback or may not possess mechanisms need to proactively nurture smart city to pay for up-front costs even if payback initiatives that are already underway and is certain in the long term. support city leaders who are driving change, especially those who are looking across departmental silos in an effort to make connections and achieve greater innovation.18 | The Climate Group | Arup | Accenture | Horizon
    • The vast majority of citiesare not yet developing fullyintegrated physical, economicand digital master planningMaking the Smart City Transition Meeting cities’ challenges will only possible if the role of Information andMaking the move towards smart city Communications Technologies are madedevelopment requires a full understanding of explicit. ICTs or ‘smart’ solutions are no silverits strategic value bullet, and must be seen within the context of what they can achieve.The smart city offers a holistic, strategicvision for bringing together innovative Real transformation in cities will require us 21 http://gigaom.com/cleantech/why- the-smart-meter-backlash-story-isnt-digital infrastructure solutions that address to look at the ‘surplus city’ hidden within the going-away/a multitude of issues facing modern urban city. Beyond the public transport systems, 22 Geert-Jan van der Zanden, The Smart Grid in Europe: The impact ofcentres and communities. But if the smart micro-wind turbines, and parks there is an consumer engagement on the value ofcity is to evolve from an infrastructure underlying system, connecting resources to the European smart grid, IIIEE Theses, 2011:33concern to a strategic part of the urban waste to consumption in a set of complexdevelopment, then city leaders will need to interactions. ICT can begin to help us managerecognise its full value opportunities. this complexity – and redefine how we operate our energy networks, our transportThis report intends to help address some of infrastructure, and the buildings in which wethe open questions within the industry today work and live.and help expedite the transition to a smart,more sustainable future. Within each chapter 3we will work to uncover:1. What value is derived from a ‘smart’ city and how can it be better captured?2. What is the “product” of a smart city and how can we maximise its value?3. What leadership and softer infrastructure is required to realise the opportunity? billion people will move to cities by 2050Information Marketplaces | The New Economics of Cities The Climate Group | Arup | Accenture | Horizon | 19
    • Transparency helps departments in Rio de Janeiro work together for better city services and outcomes Interview with Rodrigo Rosa, Special Advisor to the Mayor on Sustainability, Rio, Brazil, May 2011 As Rio prepares to host one of the most anticipated climate change events in 2012, Rio+20, marking the 20th anniversary of the 1992 Earth Summit, the city is also gearing up to launch its own new sustainability initiatives. One of these is the sustainable favela project, “Morar Carioca Verde”, a policy of urbanising, retrofitting and improving the city’s favela slum areas. “We would love solutions to be brought to us, and we can see how we could incorporate them,” says Rodrigo. He hopes to find innovative ideas that will involve both public and private sector. Rio’s power utility Light, which now provides service to Rio’s favela neighbourhoods, offers discounted electricity bills to customers who recycle – a low-tech solution to the problem of too much trash in the neighborhood. For a city whose mayor was awarded a national prize for his innovative use of IT to solve the city’s challenges last year, technology is also part of that sustainability agenda. Indeed, one of the most advanced operations centres has recently opened in Rio. Built with the help of IBM and Oracle, it is a high tech ‘situation room’ designed to support the city in managing its services. Another promise of an operations centre is in delivering support crisis management, increasingly important following the devastating mud slides that have hit Rio state in recent years. “Our biggest challenge is flooding and landslides. We are learning a lot about crisis management and coordination. 25 people were killed last year in the city, and 800 in the state. Better weather prediction will help avoid this. And we can better collaborate with state officials.” The operations centre is a powerful decision-support tool. “Sometimes we don’t even know what it can do for us.” Rodrigo is considering the necessary training for municipal government employees who are not used to the high tech tools they now have access to. “We have people out there on the ground working on their issue, such as transport or security, but aren’t used to looking at the data to do something different.” Rodrigo is sure that the city is better off just by having transparency between the different departments that may not have worked together before. “Information is more clear - you can see it on screen. You have the concept of geo-referencing everything that makes it easier to understand. If traffic is bad in a particular part of the city and you know a waste management truck can help quickly to clean something up, that truck can be routed to the location to avoid traffic.” Rodrigo looks forward to seeing how the project develops and to measuring its impact. He hopes that it will support knowledge-sharing between city officials and sub-national government that will ultimately lead to better services for Rio’s citizens through more efficient use of resources.20 | The Climate Group | Arup | Accenture | Horizon
    • Chapter 2ConnectingSmart Citiesto Value
    • The time has come to clearly understand and articulate the smart city value proposition The previous chapter introduced the Smart Measuring within a Common City and its environmental, economic and Framework social drivers, and explored reasons why the value of the smart city is not fully exploited Setting common metrics will enable today. In this chapter we look at how cities cities to evaluate different projects can better recognise, capture, communicate on a like-for-like basis and commercialise the value of their smart city initiatives.Use of a single Smart city initiatives are typically evaluated using metrics that are specific to a sector orset of metrics We introduce several limitations to department. For instance, smart grid projects current approaches for valuing smart citysheds light investments and highlight opportunities to are measured by a reduction in energy losses and efficiency gains, and Variableon a smart provide a more holistic methodology for Road Pricing is measured by reduced traffic assessing value. The value of smart citytechnology’s projects is often assessed on an individual, congestion. While the value of each project can be readily assessed at the departmentalrate of return case-by-case basis, rather than as part of level, it is less easy to understand the the greater jigsaw of the city. As a result,on investment the benefits of economies of scope and contribution of the project to the city’s overarching objectives. For example, howand enable scale created by smart projects are often would a city compare the relative value not measured and consequently, notcomparison communicated. Value assessments tend contributions of a Smart Grid and Variable Road Pricing towards its city-wide aimsagainst other to overlook core benefits of smart city of economic development, livability, and initiatives, such as cleaner air, new jobs,technologies and entrepreneurship. City leaders need environmental sustainability? Such questions present a challenge to city leaders who need to be able to better crystallise the benefits to make capital allocation decisions across a of a smarter, faster, more environmental- portfolio of smart city initiatives. Cities do friendly city and then, by applying business not yet have the necessary tools to deploy model innovation, translate these desirable their finite resources in the most capital outcomes into city revenues that support efficient way. new financing mechanisms. For the value of smart city projects to be effectively compared, a common suite of metrics needs to be developed that tie the performance of individual initiatives to the city’s long-term strategic aims. The aims of a city will be unique to the challenges it faces. Mexico City, for example, may aim for greater public security, job creation and reliability of electricity networks, while Copenhagen may have its sights set on being CO2 neutral capital by 2025. A single city scorecard, based on specific objectives, enables the city to understand the relative22 | The Climate Group | Arup | Accenture | Horizon
    • value of different smart technology context. While selecting and implementinginitiatives based on how well each delivers benchmarking metrics is no easy task,on the city’s overall strategy. It helps city the benefits of greater understanding andleaders decipher whether a smart buildings international credibility will only increasescheme, for example, is more or less valuable over time as historical data is accumulated tothan an electric vehicles pilot to their city’s drive new insights about the city.needs. As the value of smart city initiativeschange over time, using a single set of In the corporate world it is becomingmetrics sheds light on a smart technology’s common practice for companies to It is importantrate of return on investment and enable measure their performance against a set for city leaderscomparison against other technologies. of sustainability measures; the number of companies producing sustainability reports to understandAs well as helping to select initiatives, a has increased by 600% between 1999 and which disclosurecommon set of metrics enables the city 201028. To support this process, companiesto monitor its overall performance over have developed automated sustainability platforms besttime and compare this against other cities. measurement tools, such as Enterprise suits the city’sHistorical analysis of a city’s performance Resource Planning (ERP) of reportingcan reveal useful results that generate modules. Cities such as Singapore29 and needsunderstanding and provide evidence for Abu Dhabi30 are starting to partner withhow well the city is meeting its targets. software vendors to create web-based 24 http://www.cityindicators.orgAround the world, cities are increasingly management solutions. While cities may not 25 http://www.cdproject.net/en-US/participating in benchmarking activities be willing to invest in developing their own Respond/Pages/CDP-Cities.aspx 26 http://www.citiesprogramme.org/to better understand their performance measurement tools, options are available index.php/about/#ungcand to share lessons with other cities, for cities to purchase similar software as a 28 http://fm.sap.com/data/ UPLOAD/files/EIU_-_Sustainability_from the Global City Indicators Program24, service. As more and more companies and Performance_Management[1].pdfwhich now has over 180 city members, to cities recognise the value of having a single 29 http://www.carbonneutral.com/ about-us/media-centre/press-the environmentally-focused disclosure set of sustainability metrics, the barriers to releases/singapore-to-lead-the-way-platforms, including the Carbon Disclosure adopting measurement tool are decreasing. with-carbon-management-tool-pilot/ 30 http://www.thenational.ae/news/Project for Cities25 and the United Nations Soon all cities will be able to measure and uae-news/environment/abu-dhabi-Global Compact Cities Programme26. benchmark the performance of their smart to-monitor- greenhouse-gas-emissions#The proliferation of methodologies and initiatives, giving them a greater, connectedreporting frameworks in the marketplace understanding of their operations.can, however, make the decision on whereand how to disclose potentially confusingfor cities. It is important that city leaderschoose the disclosure platform that bestsuits their city’s needs. Once selected,city leaders can then create customisedmethodologies to gather local data againstthe chosen set of standardised metrics. Thisapproach would enable a city to effectivelybenchmark itself against a global audiencewhilst still incorporating the city’s uniqueInformation Marketplaces | The New Economics of Cities The Climate Group | Arup | Accenture | Horizon | 23
    • City goals Grow sustainably Be a safe, clean Reduce the city’s impact on and create and liveable city the environment economic prosperityCity metrics = Project impact Economic prosperity Livability Current Target Current Target Business innovation and workforce Environmental impact Current Target Current TargetProject metrics Smart grid Variable road pricing Mobile payments Smart water Distance learning • Energy • Resource • Emissions • GDP uplift • Skilled • Emissions efficiency • Congestion • Job creation workforce • Energy • Energy • Productivity • Social mobility • Social mobility security • EmissionsFigure 2.1 Measuring city projects against a common set of metrics Capturing the value of a city-wide The potential for smart technologies to approach enable economies of scope and scale is great. Sensing and control capabilities embedded in Identifying and capturing the smart technologies produce a vast quantity incremental value from connecting of data, and the collation and analysis of infrastructure projects across the city this data from different infrastructure layers can generate powerful insights about a Smart city initiatives tend to be assessed, city’s operations. Imagine a real-time view planned and implemented at the department- of the city that simultaneously shows the level of city administrations and relatively flow of transport, electricity, communication small pilots are often used to estimate the networks and retail transactions. Such an benefits of each project. However, new integrated picture, magnified at the city level, technology is changing the dynamics of reveals new social, economic and mobility how and where value is created. Smart patterns and drive efficiency gains and grids are bringing together our energy and resource savings. The power of this smart telecommunication grids, electric vehicles city view is beginning to be recognised; the are bridging our transport systems with European Union is offering funding for cities our energy networks, datastores making in Europe to develop comprehensive urban energy and transport data more accessible. planning tools and “models for strategic A single departmental assessment of a sustainability planning”31. Smart cities smart initiative’s value doesn’t capture will harness the value generated by more these broader benefits and, as a result, informed planning and use of resources. The opportunities to realise economies of scope value of a smart city is greater than the sum and scale across departments get missed. For of its parts. example, the telecommunications backbone deployed for a smarter energy grid may also The ability to collate data from different serve as the communications backbone for a infrastructure layers and to plan and smarter water grid. Without a broader, more operate the city as a united ‘system of lateral understanding of the systemic value systems’ brings unexpected and broad- of smart projects, the city can miss such ranging benefits beyond economies of valuable opportunities.24 | The Climate Group | Arup | Accenture | Horizon
    • The value of a smartcity is greater than thesum of its partsscale. Not currently captured by traditional upcoming rainstorms and demand surgesvalue cases, the environmental, social and in specific parts of the city areas, the MITeconomic benefits are known as positive team combined short-term (ten minutesexternalities: in advance) weather forecasts with GPS taxi location data. By using existing• Economic stimulation – Technology technologies in an integrated fashion, is quickly becoming an indispensable the city was able to provide a useful, enabler of innovation. Digital and new service to citizens33. At the same 31 http://ec.europa.eu/research/ internet technologies provide cities participants/portal/page/ time, high quality services of this kind cooperation?callIdentifier=FP7- with opportunities for service help to increase tourism and attract new ENERGY-SMARTCITIES-2012 innovation and business models. City 32 http://ideas.nycbigapps.com/ businesses, supporting the city’s overall 33 http://senseable.mit.edu/ open data initiatives, such as the economic growth. livesingapore/ ‘apps competitions’ or ‘hackathons’, are examples of efforts to promote • Citizen engagement – By relying on ad technology-driven innovation within hoc opinion surveys or relatively small cities. These initiatives bring together scale focus groups to gauge citizens’ citizens, businesses, organisations and opinions, governments can often be technology developers to build new ‘out of touch’ with people’s needs. ICT mobile and web applications using can provide city leaders with tools for public data provided by the government. widespread citizen engagement and new Many cities around the world have run ways of interacting and collaborating. events to encourage entrepreneurialism New York City’s 311 Customer Service as well as collective problem-solving. Centre is an example of how ICT can The resulting apps often solve citizen enable a two-way conversation between problems that have not yet been governments and citizens. The 311 addressed by the market. The winner of centre provides citizens with 24 hour the first New York City BigApps contest is access to government information and now a venture capitalist-funded startup, non-emergency services through various MyCityWay, which offers a digital city portals (e.g. telephone line, website, guide to help citizens and visitors to blog). In addition to 311, a growing better navigate and experience the city32. number of online forums are collecting Even if all of the apps do not succeed citizen feedback on city services and commercially, the competitions often planning. The real-time and widespread guide industry development and allow feedback collected through these forums the testing of new ideas and systems. can be invaluable for city administrations and companies. In this way ICT can both• Service innovation – As well as empower citizens by providing them with improving the efficiency of city transparency and accountability while services, smart technologies enable the also enhancing the reflexivity of city creation of new services for citizens and services. businesses. Just one example is a project being carried out in Singapore by the • Greenhouse gas reduction – Climate Massachusetts Institute of Technology. change impacts cities all over the world, Because Singapore rainfall often comes in regardless of where greenhouse gas intense, localised downpours, the demand emissions are emitted. As more cities feel for taxis can often outstrip supply the effects of climate change, transparent in storm areas. To help warn taxis of management of a city’s services andInformation Marketplaces | The New Economics of Cities The Climate Group | Arup | Accenture | Horizon | 25
    • adaptation become increasingly valuable, By driving resource-efficiency gains, as we are already seeing in Rio de Janeiro smart initiatives contribute to the (see interview with Rodrigo Rosa). creation of a cleaner environment. A smart city approach gives cities Smart traffic management together with the tools to track their emissions and smarter buildings, transport and waste manage them over time. While the management reduces air pollution. value of cutting CO2 emissions is today Copenhagen’s main seaport used to be34 http:// www.chicagoclimateaction. underestimated, in some states and permanently closed for bathing as the org/pages/adaptation/49.php35 http://www.ecoinnovation.dk/ countries legislation is increasing the high levels of water pollution posed NR/rdonlyres/9FEEE910- price of carbon. The monitoring and a health risk. In a long-term effort, 27A4-4BE7-8A01- DD17BE0C072E/0/ reduction of emissions through a smart the Copenhagen municipality used KBH_havn_baggrundsartikel_1.pdf city approach will drive immediate cost- smart systems to control wastewater36 http://www.oecd.org/ document/56/0,3746, en_2649_3746 savings as well as the long-term benefits management and control and forecast 5_48033720_1_1_1_37465.00.html of monitoring the impact of the city’s the water quality. Today, public outdoor37 http://www.globalreporting. org/ReportingFramework/ operations on greenhouse gas emissions. swimming at the port has become one of ReportingFrameworkDownloads/ Accounting for carbon at the city-level the most popular recreational activities in today will pave the way to realising value the city. Realising the health and quality from carbon savings. of life benefits associated with clean water surrounding the city, Copenhagen • Risk mitigation – Greater information continues to explore the use of smart about a city’s operations and technologies, including the electric infrastructure facilitates the identification charging of cargo ships at port in order to and management of risks to the city. For reduce the release of pollution into the example, real-time information about water35. Smart city technologies provide the flow of citizens around the city from great potential to increase the health combined smart transport and mobile data of residents. can help cities to deploy security services during emergencies. Climate change risks This is not a comprehensive list, for can also be managed more efficiently using example some cities must prioritise resource smart technologies. Information on the efficiency or education. The positive local climate and urban fabric has helped externalities described above drive economic, communities in Chicago mitigate the “heat political, social and environmental benefits island” effect through urban landscape that city leaders consider when making ICT modifications such as planting trees or investment decisions. The costs of inaction shrubs on parkways, replacing asphalt when a city does not invest in ICT should surfaces, and creating rooftop gardens34. also be taken into account. For example, a In addition to mitigating physical risks, lack of ICT investment can put a brake on the measuring and reporting capabilities the transition to a low carbon economy and of smart technologies can offer assurances hamper a city’s ability to attract talented to bond issuers, insurance companies and individuals and companies. corporate investors, which would, in turn, reduce premiums and increase investor To realise the full value of a smart city and confidence. reap all of the benefits, cities need to adopt • Health benefits – As the pace of life a more holistic approach that captures the increases and the nutritional value positive externalities, economies of scope of our food decreases, good health is and scale, and value of individual smart increasingly valued in today’s world. projects:26 | The Climate Group | Arup | Accenture | Horizon
    • Positive Externalities: Positive The incremental benefits Externalities of smart project investments, such as economic stimulation, service innovation and citizen engagement. Value not typically captured Economies of Economies of Scope & Scale: today Scope & Scale The cost‐savings and efficiency gains of smart city initiatives that are realised across smart projects. Individual Smart Project Value Individual Smart Project Value: The impacts of investments in Value infrastructure‐related ICT, such typically as smart buildings, electricity captured grids, logistics and transport, or today industrial process management.Figure 2.2 Layers of Smart City ValueChallenges must be overcome when adoptingthis holistic approach. The outcomes of the Tailoring value cases to different audiences A truly smartpositive externalities and economies of scope city will involveand scale can be difficult to ascribe value to,largely because they: Using quantitative measures and vocabulary that resonates across unprecedented• are distributed across multiple different actors levels of citizen stakeholders, Smart city stakeholders assess value in very engagement• arise from confluence of factors, making different ways: and behavioural it difficult distinguish cause and effect, • Businesses focus on driving shareholder change• may have a long time delay before returns and maximising profits, realisation. • City municipalities, politicians andThis is not to say a holistic approach regulators are motivated to delivershouldn’t be attempted. Some forward- societal benefits and high quality servicesthinking agencies are already helping whilst driving operational efficiencies,to capture some of this value. They • Citizens are looking for improvementshave developed auditing and indicator in services, greater choice, andsystems that capture economic, social, opportunities to save money.and environmental outcomes to helporganisations gain a broader view of While smart city initiatives often delivertheir own activities. The Organisation for benefits to meet the needs of these differentEconomic Co-operation and Development groups, current techniques for measuring(OECD), for instance, is developing Green and communicating value are often notGrowth indicators to measure the holistic sufficiently tailored for each audience. Forvalue of environmental initiatives36. a smart city to be successful, it will requireIn addition, the United Nations’ GRI collaboration and participation from all theseSustainability Reporting G3 Guidelines stakeholder groups. Each participant needsare designed specifically for use by public to understand “what’s in it for them”.agencies to assess and monitor their policiesand practices in relation to sustainable Currently the public sector tends todevelopment on an external, standardised, communicate smart city investmentinclusive platform37. Measuring and opportunities in terms that do not alwaysunderstanding value are just the first resonate with the private sector. Thissteps. To fully realise this value, smart makes it difficult for the private sector tocity initiatives need to be quantified to identify opportunities that will prompt itsaddress the needs of potential investors and participation and shared value creation.stakeholders.Information Marketplaces | The New Economics of Cities The Climate Group | Arup | Accenture | Horizon | 27
    • Public sector value • Citi en uality of life • Cost to serve • Sustainability targets Another key source of funding for cities comes from the developmental sector. Multilateral financial institutions and development banks, such as the United Nations, European Bank for Reconstruction and Development, Global Environment Shareholder value Consumer value Facility, and Green Climate Fund, provide • Net present value • etter services funding to cities and organisations • Revenue growth • Average bill whose projects demonstrate a positive • Productivity • uality of life societal impact. To access this funding, Figure 2.3 Multi-dimensional Value Case value needs to be communicated in the terms of the philanthropic organisations’ desired investment returns, which are€2.9 likely to overlap with the societal and The disconnect is weakening the flow of environmental returns sought by cities. In private sector investment and the transition addition, value should also be articulated towards a smarter, more sustainable future. for the development sector in terms of Given that many of the world’s economies long-term outcomes to provide certainty are capital constrained, now, more than for the funding, and should include clear,trillion is ever, the public sector needs to translate quantifiable targets to encourage investment.required to outcomes into a language that the private sector can recognise. Value cases that Citizens’ hopes and goals are distinct fromfinance the cross the public-private sector divide those of both the private and public sector.development demonstrate value in terms that both Around the world, citizen’s expectations parties can connect with, such as access to are rising for customised, high qualityand roll-out of information, new consumer segments, the services. Increasingly tech savvy, citizensnew low carbon impact of operational efficiency to their are demanding increased transparency from bottom line, and new revenue opportunities companies and governments. A truly smarttechnologies such as the development of new services or city will involve unprecedented levels ofin Europe intellectual property. The New Economics citizen engagement and behavioural change. Foundation and the Scottish Government When cities fail to articulate the value-add have designed a progressive framework, of investments to their citizens they risk not38 http://www.neweconomics.org/ publications/guide-social-return- called the Social Return on Investment realising the full potential of their technology investment (SROI), to help organisations capture social investments and disillusioning their voters.39 http://ukpolicymatters.thelancet. com/?p=1323 and environmental value and translate Cities therefore need to communicate to40 http://www.adlittle.com/uploads/ it into financeable, private sector terms. their citizens in a language that has direct tx_extthoughtleadership/ ADL_E-Mobility_02.pdf “SROI is about value, rather than money. relevance to citizens’ lifestyle and that41 http://www.rwe.com/web/cms/ Money is simply a common unit and as they can connect with. A smart transport en/113648/rwe/press-news/press- release/?pmid=4002466 such is a useful and widely accepted way of initiative, for example, should be articulated conveying value.”38 For the private sector, in terms of the time saved in a citizen’s daily tools like this will generate understanding of commute or in terms of decreased levels of the adequate investment returns that can be air pollution and road accidents. generated from smart initiatives; only when this understanding is gained will the private sector commit capital.28 | The Climate Group | Arup | Accenture | Horizon
    • Translating value into financeable societal issues that aligns public sector E-Mobility Berlin:solutions funding with private sector incentives so An innovative city that there is a mutual benefit from the private-public sector business modelInnovating around business models improved outcomes.to monetise positive externalities 3. Leveraging the procurement power of With the average European household spending €500 onand increase access to a diversity of the public sector. Long term concession- transportation each month,capital sources based contracts can provide attractive mobility is a more attractive propositions for both the private and market than ever40. RecentCommunicating in the right language is only public sectors. For example, a street developments in e-mobilitythe first step in unleashing the potential are changing the structure lighting concession, based upon a 20% of the industry with newof private sector capital. Appropriate energy efficiency improvement as part of business models that gobusiness models also need to be in place. the service provision, could prove a draw beyond the traditionalToday, significant investment is required to for private investors. automotive value chain.finance the low carbon technologies that The “e-mobility Berlin”cities desperately need. A recent report by 4. Providing greater opportunities for social initiative is a joint project enterprise. An enormous opportunity between Daimler, the carAccenture and Barclays Capital demonstrated manufacturer, and RWE,that from now until 2020, €2.9 trillion is exists for social enterprise to have a an energy utility, and therequired to finance the development and roll- bigger role in supporting cities’ efforts to German federal government,out of new low carbon technologies in Europe. achieve improvements in their social and to provide electric cars forCity leaders need to focus on what gives the environmental outcomes. the city. Daimler will provide more than 100 electric smartprivate and developmental sector sufficient cars, and services for theassurances and clarity of revenue streams so Gaining stakeholder support for vehicles. RWE is handlingthat they are comfortable co-investing. smart cities requires measuring and the development, installation communicating value and operation of the chargingA new approach is required to help city infrastructure by providing The value of smarter, more livable, more 500 charging points andleaders deliver and monetise smart city supplying the electricityinvestments. Innovative business models sustainable cities is complex. The ability and maintain central controlare needed that translate the broad range of to measure and communicate the value of of the system. The Germansmart city value into something financeable smart city ICT investments is important on federal government is also aand are aligned with the interests of two levels. Firstly it helps city leaders to key player in the initiative, make more sound choices for their citizens in encouraging investmentsstakeholders – in terms of fees, the structure from the private sector,of funds and the investment horizon. City tough economic times. It also generates the gathering stakeholders toleaders can stimulate the creation of new up-swell in citizen engagement and private explore issues and solutions,business models in the following ways: sector participation that is required to move and setting up a supportive smart cities from pilots to the main stream. policy framework. The1. Employing new technologies to create E-Mobility Berlin joint project new revenue streams for information and This chapter has put forward several is a good example of how convenience-based services. For example, different sectors can work recommendations for improving upon together towards the same a service whereby citizens can make current approaches. Understanding the goal and realise sustainable micro-payments through their mobile value of smart cities is heavily connected to and financial benefits.41 phones to know when the next bus will understanding the value of the information arrive. that is generated in a digitally-enabled built2. Encouraging market mechanisms that environment. In the next chapter we explore help to monetise societal outcomes. this concept in more detail. Social Impact Bonds39, for example, create an outcome-driven system for solvingInformation Marketplaces | The New Economics of Cities The Climate Group | Arup | Accenture | Horizon | 29
    • Cities need a digital infrastructure to drive innovation in services and the economy Interview with Emer Coleman, Director of Digital Projects, London, October 2011 Londoners checking the iTunes App Store will find a plethora of mobile applications that bring transport information to their mobile phones, letting them navigate the city easily and saving time, money and CO2 emissions along the way. One of them, Tube Deluxe, an iPhone guide to the London Underground transport system, has 50,000 active daily users and 350,000 downloads. The best apps are in fact not necessarily built by Transport for London, but instead by a growing group of digital service providers, like Tube Deluxe, that mine London’s datasets to provide new options for citizens. It is Emer Coleman’s job to see that London’s digital infrastructure is growing, driven by the city’s desire to be transparent, accountable and open to new opportunities for economic growth. She started by opening up a London Datastore. For under £15,000, she set up a web interface that allowed developers to access ready-to-use datasets that have been cleaned up and meta tagged by the data management asset group. While she acknowledges there are more costs for more dynamic data that gets updated every few seconds, releasing the static data was an important first step. “Don’t let the perfect be the enemy of the good” she says, “It is better to get the data out there, ugly and early”. To develop and test a methodology for encouraging early interaction between technologists and policy makers, London, together with Barcelona, Genoa and Bologna, will be part of the European iCity programme. London will look at stimulating the ecosystem around city data. Emer is also looking at how best to partner with mobile operators and other private sector data holders, how to engage with developers early in policy strategy, and how to encourage the involvement of small -and medium- sized enterprises (SMEs) in contracting, all with the aim of helping London’s citizens. She recognises that she’s part of a global trend. “To a certain extent, it is a global business,” Emer said. “Developers could come from Japan or Singapore.” But, she says, it will be in London where citizens will benefit most.30 | The Climate Group | Arup | Accenture | Horizon
    • Chapter 3The Smart CityValue Chain
    • Smart cities create digital value chains for the creation and marketing of information products Cities wishing to understand how to obtain raw material such as coal or titanium, data is full value from their ICT investments need not used up in the processes of production. to address smart city technology from a total Information that flows between systems may value chain perspective rather than treating be used to develop and deliver real added- each ICT project as an individual technology value to cities and citizens the development problem. As we have shown in chapter 2, and sale of information products. aligning the interests of stakeholders andValue chain employing new technologies and new market The information that flows between mechanisms can capture the value of what systems implemented as part of a ‘smart’The links between economicactors that are generating are referred to as positive externalities. city development can develop and delivervalue, including developers, This chapter explores ways that cities and added value to cities and customers. Onebusinesses, and people who companies can begin to capture those early example, Real Time Rome, useduse applications in the city. positive externalities by understanding existing infrastructure from Telecom Italia42For a smart city, this includes and supporting the market for an entirely to capture information from the mobileunderstanding the role thatthe city government itself new kind of good that citizens, cities, and operator’s network to create real timewill take in helping foster an digital infrastructure are creating: visualisations that exposed the dynamics ofefficient value chain through the information product. the contemporary city. The city of Rome usedits interactions with these these visualisations to better understandeconomic actors. building occupancy and its relevance to Methodology energy consumption and to modify public This chapter makes use of a combination transportation to better match mobility Information products of Global Value Chain research (which patterns. In addition, the information The outputs of the value investigates how the network of labour made possible detailed mapping of mobile chain, where digital and production processes combine to networks during high load situations, infrastructure assets, exposed through APIs, are form a finished commodity) and System allowing Telecom Italia to streamline the inputs, and economic Dynamics in order to understand the its operations, reduce overall energy actors work to create value industrial structure of the information consumption and provide a better service to from the assets for a range economy. The work is based on four its subscribers. of audiences (citizens, consumers and also as years investigation of value chains improved decision making from semiconductors, equipment Collecting this kind of data has only recently for enterprises and the city manufacturers, through to mobile become possible through the advent of itself). handsets and developers. It is based mobile internet devices such as smart phones on both quantitative data analysis and and sensor-devices that connect as well as in-depth interviews with a few hundred buses, park benches or buildings. Combined people in different parts of industry. with visual interfaces, data collected through the interaction of people, mobile technology and the environment can be used for policy Understanding the Smart City decisions. Information products allow for Value Chain feedback loops to be created within and between systems. Real Time Rome creates Information flows are the source of maps that help measure the real-time usage value-added applications and services of neighbourhoods, the distribution of buses for cities and their citizens and taxis in correlation with population densities, and the ways that goods and The data and information contained in ICT services are distributed or how different systems is a unique commodity. Unlike a social groupings use or inhabit the city.32 | The Climate Group | Arup | Accenture | Horizon
    • Value Chain Governance Procedures Real-time data inputs Raw data Information component Information products • Date/Time • Location • Communication Pattern • Services Accessed Citizen Mobile device • Number of mobile subscribers on bus in Improved decision • Location and time of use neighbourhoods making • Number of passengers • Journey time • Usage patterns of public • Feedback to improve • Potential delays transport in different public transport services neighbourhoods • Reducing cost of delivery Public transport of government services • Improving crime • Location response rate • Cell Tower Information • Load on mobile network • Services Accessed in certain neighbour- • Length of time and hoods during different extent of use events, e.g. crime Product for sale • Usage patterns reporting or concerts Mobile network of subscribers • Feedback to improve public transport services • Reducing cost of delivery • Demographics of of government services • Temperature Mobile Internet Usage • Improving crime • Environmental data • Mapping of cities response rate • Usage patterns digital divide • Demographics City areas • Routes • Geospatial Information City mapsFigure 3.1 Value chain for Real-Time Rome example43Cities now have a unique opportunity to Application developers can take aggregated Data Collected for Realbuild on these new capabilities unlocked by data streams and combine them in any Time Rome includedtechnology. To benefit, however, cities must number of ways to create information • Traces of informationunderstand how to create digital supply components, small components of analysis and communicationchains based on the information contained representing one input into a decision- networks formedin their ICT systems. Figure 3.1 illustrates a making process. The final output of the value across a cityhigh level view of how such a value chain chain, however, is an information product: • Movement patterns ofmight work. a product that provides either significant citizens value for private enterprise or social benefit • Movement of transportWithin a digital value chain, several for city leadership or their citizens. From systemsunderlying digital assets exist such as sensors the simplest perspective, digital assets allow • Spatial and socialon roads and in public transport, electronic cities to not only implement cost reductions usage of streets andmaps, mobile networks and mobile devices. but to unleash the innovative capacity of neighbourhoodsReal-time data streams-off these devices and citizens and private enterprises.provides terabytes of raw data. These raw 42 http://c5.telecomitalia.com/default.data streams may be used to identify some Cities can now treat their digital aspx?idPage=458 43 Mulligan, The Communicationsof the following: infrastructure and the “big data”44 it contains Industries in the Era of Convergence, as a market creation asset that can create new 2011• Citizens and their activities, e.g. catching 44 http://www.mckinsey.com/mgi/ jobs, drive costs down, generate significant a bus or making a phone call to a taxi publications/big_data/ benefits for their citizens and promote digital pdfs/MGI_big_data_full_report.pdf company, industries within their regions.• Purchases made by citizens within the city, London has already discovered the benefit of digital infrastructure for citizens through• Mobile network activity. the development of its London Datastore, an official site providing free access to a number of data-sets from the GreaterInformation Marketplaces | The New Economics of Cities The Climate Group | Arup | Accenture | Horizon | 33
    • London Authority. By providing access to should not be attempting to generate valuable city data, the site has enabled the revenue from digital infrastructure assets, creation of a number of new application but rather creating governance structures service development companies. London’s and a regulatory environment for the digital experiences, however, show that such digital value chain that encourages appropriate use assets cannot be built by the public sector of these technologies for the benefit of their alone. Emer Coleman, Director of Digital citizens47. Technologies for London’s Datastore notesThere has been that this is a cultural challenge for public London itself has seen a plethora of newan explosion of sector employees who may not be used to applications built upon government data that taking risks. “It’s not actually about data, it is “improves social equity, makes people’s livesAPI developer about organisational change,” she says, better, and ideally enables better responsesinterfaces “this requires new leadership from the public from government at potentially lower cost,” sector. Data surfaces political decisions.” says Coleman, who also says that “datasince 2005, can help us re-think services”. The Londonrising from The cost of closing the data only to those Datastore also created competition in the who can pay for it could be disastrous for information product market, with severalapproximately this nascent industry. As a 2008 report on different applications competing for similar235 publically the Economics of Public Sector Information space. Citizens receive greater choice and the found, “Digital public sector information is private sector grew as a result. For instance,available Open best funded out of a combination of ‘updater’ UK-based public transport data aggregatationAPIs in 2005 to fees and direct government contributions firm, Placr, achieved a £120,000 turnover with users permitted free and open access. within 18 months and several other companiesjust under 6700 Appropriately managed and regulated this are now following suit48.in 2011 model offers major societal benefits from increased provision and access to information- Cities therefore have much to gain through based services while imposing a very limited creating market instruments for digital assets.45 http://rufuspollock.org/economics/ funding burden upon government.”45 The next section investigates the market papers/economics_of_psi.pdf46 Gartner, Innovative use of public potential. data, report to the National IT and The Austrian national government originally Telecom Agency, and the Danish Agency for Science, Technology sold access to its datasets for profit. But, not Market Potential for Smart City and Innovation (Danish), 2009 surprisingly, after the government switched to Assets47 http://rufuspollock.org/economics/ papers/economics_of_psi.pdf a marginal cost pricing policy, which reduced48 http://placr.co.uk/blog/2011/10/ the price charged to developers for Open Open API interfaces link cities’ digital an-open-letter-to-andrew-tyrie- mp-about-the-proposed-public-data- API access, the number of datasets used in assets to the creators of information corporation/ commercial applications rose by 7000%. products49 Also known as Open APIs – i.e. APIs designed for use by parties external to the company that developed Private sector use of public data can generate The best-known markets for digital assets the platform in order to take advantage of network effects. substantial value. Denmark, for example today are the application stores for Android,50 Author’s own database estimated the business re-use of public data iPhone and iPad mobile computing devices. could amount to more than €80 million per These app stores provide sales channels for year, while the social benefits would amount developers to reach a critical mass of end- to about €14 million. 70% of this benefit was users. While iPhone component technologies, estimated to come from the private sector. such as touch screens, data connectivity, The EU Commission, meanwhile, estimates Internet access from a mobile device have an EU-wide potential from access to public been available for many years, Apple was the data of €27 billion46. Cities and governments first company to combine them in a form that34 | The Climate Group | Arup | Accenture | Horizon
    • ‘Big data’ has only recentlybecome possible through theadvent of mobile internet devicessuch as smart phonesconsumers responded to favourably. Critically, products. Citizens, meanwhile, benefit fromthe app stores provide a governance structure having access to a wider range of applications.for the digital value chain. Moreover, they Cities, in turn, gain extra returns on theirprovide revenue stability for those involved in investments. For gains of this nature to becreating the application marketplace. achieved, however, cities must take a local digital technology perspective and aMany different Internet services have started national one.to provide access to their data through Open Applicationinterfaces designed for external third party While developer interfaces have proved Programming Interfacedevelopers49 called “Open APIs”. These useful for the communications industry API:interfaces are critical components that connect over the past years, they are no longer only An interface betweendigital assets to developers, and, without related to the ICT sector itself. The greatest developers and the digitalthem, the creation of information products increase in interfaces between 2009 and infrastructure that essentiallywould not be possible. 2011 has been in city-based technologies allows software to speak to software, helping unlock with retail (550%), utilities (185%), the value of large datasetsSpecifically, such interfaces help to: transportation (2300%) and the government and lower transaction costs sector applications (278%). There is now a for developers, cities and• Reduce transaction costs in market private enterprise alike. Open distinct opportunity for developing markets creation by removing the need for APIs function to connect the around smart technologies in cities. For this detailed legal contracts between the entity digital infrastructure of cities to be realised, however, it is crucial that with the developers who can providing the data and those using it. cities understand and implement a strategic create innovation.• Establish a digital value chain by allowing vision for their digital assets, select the many developers to create products from correct Open APIs, and provide a governance the same raw data inputs. These interfaces structure for the digital value chain. create a market for innovative capacity in cities and other markets. An explosion in interest, however, is by no means a sure path to success. While thereThere has been an explosion of Open API may be many similarities between the marketdeveloper interfaces since 2005, rising from creation possibilities of the mobile deviceapproximately 235 publically available Open channels and those for smart cities, there areAPIs in 2005 to just under 6700 in 201150. also some unique aspects of the smart city environment that need to be acknowledged.The Open311 API illustrates these pointsquite well. The original 311 phone service was Within the urban environment, applicationsimplemented on well-established telephony need to evolve that run on mobile and fixedstandards and protocols. As a result, multiple ICT platforms rather than just the existingcities were able to rapidly implement the mobile channels. This leads to a role forservice once it was developed simply by cities, or an intermediary on their behalf,re-using existing phone networks. Because to support the development and creationthe Open311 API connects directly to Web of a technical platform that delivers citytechnologies, many developers can create services and applications to end-users. Suchweb-based services on the Open311 API, for a platform would need to be robust enoughinstance by combining graffiti reports with to deliver citizen services, have a simplemaps. In addition, apps developed in one city user interface, and ensure that developerscan be re-used in other cities and developers or service providers are able to monetisebenefit from economies of scale by gaining their investments or deliver free communityaccess to a much wider market for their services. In addition, due to the sheerInformation Marketplaces | The New Economics of Cities The Climate Group | Arup | Accenture | Horizon | 35
    • 40 Education 35 Entertainment 30 Events GovernmentChange in number of APIs 25 Job search Payment 20 Retail Logistics 15 Transportation 10 Travel Utility 5 Weather 0 2006 2007 2008 2009 2010 2011 Figure 3.2 Rates of change in Open APIs associated with city infrastructure Cities can number of different types of businesses that could be built on these technologies, both structure, including planning regime and zoning regulations that determine the sort of now treat the platform and channel strategy need to be stores that can be located within a particular their digital flexible enough to handle multiple business models and multiple financing strategies in area. The city does not, however, attempt to run the shopping centre itself to generate infrastructure much the same way that a shopping centre profit. Instead, operations are left to a and the ‘big handles multiple business models for the stores that use its physical platform. private developer that generally establishes a project for building the shopping centre and data’ it contains rents space to businesses. A shopping centre Smart Cities and Market Creation as a market may be viewed as a physical platform52 that connects consumers with physical goods creation asset Smart cities provide the open market, and services. the creation and use of cities’ digital assets A similar approach is necessary to help develop the market for digital assets to be While new technologies may pose new re-used and combined in the most efficient problems for cities, the development manner possible and ensures the broadest of markets is not a new one. Market possible participation from the private sector 51 Besant, The History of London, 1894 development may be viewed as the raison in as open a marketplace as possible. 52 Evans et al, The Industrial Organisation of Markets with Two- d’être of many cities in the first place: they Sided Platforms, 2005 are convenient locations for traders to meet Market creation for smart cities is about 53 Emer Coleman interview and exchange goods. London, for example, much more than data and requires a was the location of a market from the earliest structured approach to be taken by city period in its history51. leadership53. The rewards are great for cities that choose to take on the innovation It is perhaps useful to think the role of challenge. Experience to date, backed up in the public sector in digital technology the literature, shows that opening up access infrastructure as similar to its role in the to data yields greater returns than keeping it development of a shopping centre. Public closed. We turn to the governance choices for authorities provide the basic underlying cities, nations and companies in chapter 4. physical infrastructure for the shopping centre, including utilities, waste removal, water, etc, as well as the governance 36 | The Climate Group | Arup | Accenture | Horizon
    • Chapter 4Smart CityVision andLeadershipInformation Marketplaces | The New Economics of Cities
    • Creating smart cities of the future will require collaboration, clear vision and, most of all, leadership This report has shown that information Cities are now poised to take a leadership products are the tools with which cities role in defining what they want to achieve can mine the surplus capacity in the city’s and when, and drive innovation through infrastructure and unlock citizens’ creativity partnerships with citizens, national to make cities more livable. The new digital government, and the private sector. Our infrastructure – whether that is broadband recommendations focus on the three primary networks, sensors on electricity grids or areas in which city leaders should act if they public transportation data – helps cities are to capture the surplus value in their city, deliver a great place to live and work. and points towards the key messages for national governments and organisations. Our The debate until now has focused on recommendations for cities are: technology – which solutions are ‘smart’, • Set a vision and metrics, so all how much value do they provide, and departments can work effectively toward which should cities do first? Are smart grid, the same goals, electric vehicles and other infrastructure to be invested in today, or should the city • Manage for success, to make the most of focus on technologies like mobile phones to digital infrastructure, deliver some enhanced value from services in • Create the foundation – and partnerships the short term? Both short term digitisation – for a new information marketplace. of services and long term investments in infrastructure upgrades that make those systems transparent will begin to deliver Set a vision carbon and cost savings for citizens. Cities that hope to capture long term benefits from commitment to smart city development However, each city will plot a unique path, will need to create and effectively and must define their priorities based on city communicate an intuitive and compelling metrics and planning for the impacts they vision. The focus should be on measurable would like to achieve. In a city like Hong and auditable outcomes and prioritised Kong, where 89% of emissions come from investments that make life in the city more buildings54, and which boasts one of the attractive for living and working. most efficient electricity grids in the world with less than 5% losses in transmission and Devise a shared vision distribution, leaders may choose to focus first Cities may already have shared high level on tackling building emissions. A city like policy goals, such as climate change targets, Toronto however, where 40% of emissions or specific drivers of policy they have are attributed to transport and over 95% prioritised (such as saving citizens time on of its power is renewable will focus first on their commutes or bringing more jobs to the mobility solutions. city). Cities that wish to capture the value highlighted in this report should create a vision that articulates the top level policy goals and outcomes the city would like to achieve and the role of ICT in achieving them.38 | The Climate Group | Arup | Accenture | Horizon
    • In creating this vision, “urban policy- The metrics should directly relate to themakers should begin from an awareness vision and core principles. This is particularlyof local development aspirations and important in the complex system of the citypreferences, local knowledge of needs and where cause and effect relationships areoptions, local realities that shape choices difficult to assess and positive and negativeand local potential for innovation”55. As externalities are difficult to capturethis is continually explored, city leaders and measure.will become more able to interpret the 54 http://theclimategroup.org/_assets/ files/A-Low-Carbon-Vision-for-opportunities of ‘smart’ within the context A good example of a vision aligned with Hong-Kong.pdfof their own economy, culture, drivers metrics is New York City’s PlaNYC, explicitly 55 UN Habitat, Cities and Climate Change - Global Report on Humanand values. As such, every city will have designed to tackle climate change, aging Settlements, 2011a unique vision and interpretation of the infrastructure, growing population and 56 Climate Smart Precincts, The Climate Group, 2011role of ICT in their city, and should embrace economic challenges. Its 132 initiatives are 57 Eccles et al. The Impact of athis as an opportunity for innovation and being measured so the city’s planning office Corporate Culture of Sustainability on Corporatedifferentiation. knows if they are on track and how to better Behaviour and Performance, 2011 achieve their goals.The vision created should be supported by aset of core principles and guidelines. These In the corporate sector, companies that haveprinciples (e.g. opening up data, engaging been implementing sustainability metricscitizens)56 should be shared across city since 1993 are outperforming their peersdepartments and underpin all investments over the long term57. Experience in cities ismade by those departments. They should be beginning to back this up. “On average, citiesdirectly related to a city’s vision and policy that have a climate action plan have takengoals, and clearly articulated through a well twice as many actions as those that don’t,”designed and collaborative dissemination says Mark Watts, Cities Director at Arup.process. For instance, if a city has a 30%CO2 emissions savings goal, its transport Audit and benchmark currentdepartment will need to measure projects by investment in ICTtheir benefits to emissions reduction as well If cities are to set a relevant and effectiveas increased mobility. smart city vision, they must start from a firm grasp of their current ICT investment.Develop and track performance metrics All municipalities across the world currentlyThis shared vision, supported by core have some form of ICT expenditure,principles, will support cities in setting the whether it is for organisational supportmetrics that will chart their progress towards such as an email server or complicated‘smart’, as we explored in Chapter 2. An digital infrastructure project such as anunderstanding of progress is important Intelligent Transport System. Howeverboth for delivering a political message and very few cities are aware of their currentlunderstanding the policy implications overall ICT investment across the city. Thisfor certain smart city projects. This problem stems from the siloed organisationalunderstanding can be used to inform future structure of city administrations and fromprojects and ensure that progress towards the fact that, to date, ICT investment has notpolicy goals is continually made.Information Marketplaces | The New Economics of Cities The Climate Group | Arup | Accenture | Horizon | 39
    • been seen as a strategic priority but rather a Manage for Success technical support function. In order to ensure that the correct vision is in place at the Align organisational structures outset, leaders need to investigate the city’s with vision current investment in ICT, which should be It is clear that ‘technology projects’ alone achieved through engagement with all city will not deliver the benefits of the smart departments as well as ICT departments city. We need to learn lessons from previous where they exist.Cities may public sector attempts at incorporating new, transformative technology into theirchoose to Prioritise investments operations. Currently, only a third of Once a city’s vision has been articulated, cityappoint a Chief or departmental leaders will need a robust government ICT projects are successful58, which not only results in significant capitalInformation mechanism to support investment decisions. wastage, but also in inefficiently run city They need to be able to evaluate whereOfficer best to invest in order to maximise value in services. City administrators often fail to acknowledge projects as being complex or(CIO), who accordance with their vision and principles. strategic and neglect many ‘softer’ issues Decision makers will need to understand howunderstands to compare the value of seemingly unrelated that are essential for a project to succeed. In reality most government ICT projects are notthe strategic technology projects and decide which ones ICT projects at all but complex organisational bring them closest to achieving their visionimplications of using their agreed metrics. change projects that arise from the potential of a transformative technology.ICT for the city City leaders also need to understand the longas well as the term view of their smart city investments, Many cities have “developed a range of departments and agencies that have becomecity’s core goals. as well as the immediate implications. They isolated from one another, operating in need to take a view on how their smart city their own silos with less coordination of investments will create value over time and information than desirable for integrated be able to explore the systemic implications planning and goal achievement.”59 Within of their investments. For example, the roll- this kind of organisational structure, ICT out of a smart grid infrastructure should is utilised on a project-by-project basis not only consider direct energy efficiency and opportunities for synergy are rarely savings but also implications for the delivery sought or realised. Here, the approach to of an electric vehicle scheme. This could spur value creation through ICT is insular and economic growth in the automotive industry remains solely within the bounds and scope as well as in the information services for of the specific project being undertaken, as booking and charging systems. It could have we have noted in Chapter 2. Such projects implications for car sharing companies and might include the deployment of sensors to dramatically reduce the carbon intensity measure car park availability in the transport of the transport sector of the city. Where a sector or the deployment of smart energy city chooses to invest or seek investment meters. This organisational structure does depends on the core values and principles set not allow a city to take a strategic approach out in its strategic vision. to ICT investment, and cannot capitalise on the benefits of cross-departmental collaboration.40 | The Climate Group | Arup | Accenture | Horizon
    • Cities will be balancing‘inside out’ and ‘outside in’developmentLack of integration between city Choose an operating model appropriatedepartments (each with varying reliance for desired serviceson ICT), makes creating a unified vision Smart city actions are already underway,challenging. City leaders must take direct and are either within the city’s control oraction to counter discord, as it is a significant are happening within the private sector andbarrier to the success of a smart city society. The actions could be characterisedprogramme. Firstly, cities must ensure that as ‘bottom-up’ or ‘top-down’ activities, butthere is strong expertise at the strategic it may be more useful to think of them as 58 http://www.parliament.uk/ documents/post/pr200.pdflevel of the city. This might take the form activities that happen from the inside-out 59 Kanter and Litow, Informed andof a Chief Information Officer (CIO), who (i.e. from within government, out to wider Interconnected: a Manifesto for Smarter cities, 2009understands the strategic implications of ICT ecosystem), or from the outside-in.for the city as well as the city’s core goals, ora team of expert strategic advisors that can As the citizens are the central reason forsupport long term decision making. the existence of city policy, outside-in engagement can support cities in definingThe CIO capability must take responsibility and achieving their goals. This is particularlyfor ensuring that the vision and supporting relevant in a world where citizens haveprinciples are aligned with political priorities become ‘prosumers’ (producers andand adopted consistently across city consumers) rather than passive consumers ofdepartments in a way that will achieve services. The idea that the city vision shouldthe overarching vision. For most cities be co-designed by government and citizensthis will require an organisational change is particularly pertinent to the smart-cityprogramme that puts sufficient structures ideology, which holds transparency andand investment in place for transitioning to inclusivity as its central tenets.this new, more integrated way of working. Cities may not choose to transform fromFor instance, Chris Vein, former CIO of San the “inside out”, but instead to juggle theFrancisco, was responsible for the city’s first benefits of “outside in” development. Citiesfive year ICT plan. His role was to manage will take different approaches, either toall IT and telecommunications projects for actively coordinate or provide basic access to28,000 employees over 50 departments. He infrastructure. As we’ve seen in chapter 3, aacknowledged that when each department city has a role in creating a marketplace byhas its own procurement process, providing the planning that specifies spacecoordination is a challenge. However, he was the building can occupy and rules by whichable to begin a process of opening up data, trade can occur.and raising it higher on the political agenda.He then was able to work with colleaguesacross government, such as Kelly Pretzer, theNew Media, Clean Tech and IT advisor in theMayor’s office to look at how to attract talentto the city.Information Marketplaces | The New Economics of Cities The Climate Group | Arup | Accenture | Horizon | 41
    • No control over citizen or customer relationship Control over citizen or customer relationship Control Enabler Integrator over digital infrastructure Facilitating city services: can be open data initiatives or Governmental city services: somewhat more closed assets outsourcing of service creation based on provided datasets. approach, can be high cost depending on implementation Stimulating development is key Examples: Examples: 311, London cycle hire SF Data, Apps for Amsterdam, NYC Data Mine, London datastore No control Neutral Broker over digital infrastructure Unsupported City Services: City government does not take City-branded services: An unlikelier scenario that would assets initiative and relies on privately funded projects be targeted at city-branding and city-marketing, more than service provision Examples: Trip Advisors, Some EV schemes Examples: Ljubljana Tourist Card Figure 4.159 As part of the market creation process, a To manage open data, we have found that city must choose the role it will play role in the city will benefit if it: relation to new services. It should decide • makes data available at no or the extent to which it wishes to have control marginal cost, over digital infrastructure and whether it should be in greater or lesser control over • collaborates with other cities and the relationship with citizens. Specifically organisations on Open APIs for key city60 Adapted from, Walravens and for mobile services, the city could be an services, e.g. Open 311, Pieter, The city as a Platform Exploring the Potential integrator or enabler, with differing levels of • creates a reference architecture for Role(s) of the City in Mobile control over ‘assets’ or the data that is used Service Provision through a Mobile services to allow for integration with Service Platform Typology, 2011 by developers (see Figure 4.1).61 http://www.salixfinance.co.uk/ backend systems, e.g. problems that62 http://smartgridcity.xcelenergy.com/ are reported via a FixMyStreet app go63 Tom Plant, former energy advisor to This operating model will require a city to directly into the municipal maintenance Governor Ritter, Interviewed on July think about how it manages its own data 7, 2010 systems for scheduling.64 http://www.energystar.gov/ia/ and what policies it might want to adopt in business/challenge/learn_more/ relation to private sector data. For instance, HigherEducation.pdf Cities have a two main options for65 http://www.epa.gov/reg3wcmd/ utilities will soon be accessing much more infrastructure investments. One is to work solidwasterecyclingprograms.htm information from smart meters. Mobile with sub-national governments to find low- operators will have access to valuable data interest investments. For instance, Milton on how we move through the city, and even Keynes in the UK is accessing a recycling what mode of transport we might be using, fund option via Salix61 Finance Ltd up by set as we saw in the Real Time Rome example up by national government via the Carbon in chapter 3. This is an issue of increasing Trust. The council is given match funding by interest and research attention, but has Salix for energy efficient investments and not been within the scope of this report. the savings are recycled into the funds for Cities need to be able to think ahead to further upgrades. The council additionally when issues of privacy and security of data funds energy efficiency measures in older become more mainstream. homes through a carbon offset tariff on newly built homes. In Colorado, the city of Use digital assets to unlock economic Boulder has saved 3% of grid electricity for growth 50,000 homes taking part in the Xcel Smart Once the city has articulated the role that it Grid City project62 and has attracted start-ups wishes to play in the creation and nurturing like energy management company, Tendril. of the new market, it will need to support Over 50 energy related bills passed since the production of digital products and 2007 at state level have helped drive these services as described in chapter 3. It must benefits, and have created over 3,000 jobs in also look at coordinating a wider set of the state63. digital infrastructure investments in cities such as buildings, energy and transport, and Cities can also work with the private sector, link this to economic growth. or a combination of national government and private sector partners. One example is in Manchester, one of the UK’s awarded ‘Plugged in Places’ (PIP) projects, part of the UK government’s initiative to create a national charging network for EVs. The Manchester Electric Car Company is a private42| The Climate Group | Arup | Accenture | Horizon
    • Becoming a smart cityis a process rather thana destinationsector company formed by The Association deployment. Cities should use pilots to testof Greater Manchester Authorities (AGMA) and develop business models so that theywhich has brought together a consortium can access the capital they need to roll-outof private sector companies to privately these services more widely. Cities shouldfund the PIP bid. In January 2011, AGMA work with the private sector to understandreceived matched grant funding from where value is created, who benefits, andcentral government roll out the first public how to communicate value to differentelectric vehicle (EV) infrastructure across stakeholders. In particular cities and theGreater Manchester. The scheme will private sector need to identify value that canprovide charging points and 5 ‘Pod centres’ be translated into financeable projects.(multi-purpose charge stations similar to atraditional petrol station) which showcase Universities can be test bedsdifferent types of EV’s from cars, scooters Modern universities act as a source ofand vans. The Pods also lets consumers ‘try scientific and social innovations. Manybefore you buy’ by hosting car club and universities also have complex municipalrental facilities, and informing customers infrastructure systems including physicalon home charging requirements. The plants for power generation, oversightmembership scheme will be launched in early of lighting and environmental systemsin 2012, and will be aligned with the Greater for hundreds of buildings, independentManchester smart-ticketing architecture transportation fleets, and often operatecurrently being developed, so customers their own police departments and hospitals.can move hassle-free from public to private These “campus cities” consume substantialsector transport. resources, spending over $14 billion a year on energy64 in the US and they consumeCreate the foundation – and resources and generate waste streamspartnerships – for a new equivalent to a small city65. Universitiesinformation marketplace also have many of the technical and organisational skills to run effective pilots.Becoming a smart city is a process rather Cities should consider partnering with theirthan an end state. Cities will continually universities to implement certain pilots.learn from projects, discover newopportunities for investment, develop Recognise the need for new partnershipsrelationships with stakeholders and have to to achieve growthrespond to evolving priorities. Furthermore, As part of the evolution towards a smart city,it is not a linear process: cities will achieve cities will be building relationships with newdifferent levels of maturity in different areas and existing players in order to deliver theat different times. Therefore, an emphasis digital platform for services. Firstly, citiesmust be placed on seeking to adapt and learn need to work with various actors in thefrom early deployments. private sector, from individual developers to large corporations, as well as developLook for opportunities to pilot new business models (as highlighted in thebusiness models Manchester ‘Plugged in Places exampleToo many pilots test technology but not above). New procurement models may bebusiness models. These pilots then fail to required to ensure participation from smallbecome mainstream services because cities innovative organisations. As more citizensare unable to pay for them or manage their start to depend on services offered onInformation Marketplaces | The New Economics of Cities The Climate Group | Arup | Accenture | Horizon | 43
    • the city platform (e.g. realtime transport Recommendations for National/ apps), cities will need to offer service level Subnational Governments agreements guaranteeing certain levels of reliability to companies using their data to National governments have overarching provide services. This will also place different visions and strategies in which urban demands on city ICT infrastructure and back municipalities play an important part. end systems, which could lead to different They will be setting their own high level66 http://www.upi.com/Business_ ways of working for the ICT department. policy goals and targets, such as the UK’s News/Energy- Resources/2011/10/20/Singapore- Cities will also need to build new relationships 80% GHG emissions reduction target by poised-as-lab-for-green-energy/UPI- with other cities to collaborate on Open APIs 2050. They own core infrastructure and set 66961319134810/67 http://www.theclimategroup.org/ and other standards that may be required. policies that directly affect the operational publications/2011/6/14/ Such partnerships enable cities to take full and strategic direction of cities. As a result, climate-smart-precincts--adelaide- workshop-report/ advantage of the economies of scale which a national and sub-national governments have68 http://www.aceee.org/ widely adopted standard could bring. a responsibility to ensure that they support blog/2011/10/state- progress-energy-efficiency-crea and nurture cities to achieve locally set69 Adam Freed interview, September Engage early and actively with citizens targets. National governments should: 201170 http://www.whitehouse.gov/sites/ Finally, cities have an opportunity to build default/files/microsites/ostp/nstc- new relationships with citizens, by providing 1. Encourage cities to use common, smart-grid-june2011.pdf tools and applications for them to collaborate international metrics. This will help71 http://www.ibm.com/smarterplanet/ us/en/ with city government to solve problems and decision-makers assess how smart city identify opportunities for improving the city. initiatives are performing, and can be used to inform investment priorities, policies, An example of a city driving collaboration and infrastructure and procurement etc. innovation through a concerted investment 2. Lead by example. Governments can focus programme is the Singapore, where a Living on the infrastructure they already control Labs initiative is being implemented by its at national or subnational level to get the Economic Development Board. Looking to ball rolling. The Climate Smart Precincts attract the world’s best talent, companies work in Australia is led by sub-national and solutions, Singapore plans to spend $1 governments who would like these billion on clean tech solutions with an urban precincts to be exemplars of sustainable focus, aiming for 35 percent energy efficiency development67. Governments can provide by 2014, including in smart grid and urban zero interest loans or revolving funds solutions66. for hospitals, schools or other municipal buildings to become more energy efficient. Capturing the surplus value in cities through embedding ‘smart’ is beneficial for the city 3. Identify regulatory barriers to cities’ and for national and subnational governments success. National governments should and the private sector, which play a significant identify areas of national policy that are role in successful smart city development. hampering cities’ efforts to implement As such, each of these stakeholders should smart city visions. Consider the utilities participate in driving the smart city, work sector, which plays such an important together to align their goals and activities, and role in integrated smart city strategies. collaborate on projects and pilots. In order to The sector regulated at the national or achieve these positive collaboration outcomes, state-level with its activities outside these stakeholders should identify the role in the bounds of city influence or control. the smart city ecosystem.44 | The Climate Group | Arup | Accenture | Horizon
    • With leadership, we can tap intothe surplus city to provide moreopportunity for all citizens Incentives for power companies to sell 6. Initiate goals for access to data more power or build new generation and information. We explored data capacity instead of upgrading existing access and its importance to the new infrastructure can become step with information product industry in chapter city’s ambitious energy efficiency plans. 3. National governments can support It is critical, therefore, that sub-national this nascent industry by encouraging and national governments take a lead clear goals for access to information. For role in changing these incentives so that instance, in June 2011, the US White they are aligned with cities’ needs68. In House released a report entitled “A Policy addition, where national government framework for the 21st Century grid: procurement processes will impact on Enabling Our Secure Energy Future”70 city innovation, leaders could encourage and it calls on states and their regulators reform in the procurement process, to design policies that provide consumers including taking steps to open up with timely, predictable digitally-available options for consortia or small, innovative information in a standard format, thereby companies to join the process. enabling consumers to save energy and use it more efficiently. Consumers4. Create platforms/opportunities will then in turn be able to allow this for collaboration and knowledge- information to be used by third parties to sharing between cities. This is provide energy services on their behalf. imperative if cities are to capitalise on the opportunities offered by smart city Recommendations for Companies services, especially when the concepts, technologies and emerging market Large scale multinational organisations structures are still largely unknowns. as well as local SMEs and entrepreneurial5. Engage cities in the process of start-ups all have a role to play in the developing the smart utilities, smart emerging ecosystem of information services buildings and smart transport. within the city. This has been made explicit Building codes or technical standards through both the large investment from are often set at national level, and companies such as IBM with its ‘smarter will have a huge impact on a cities’ planet’ campaign71 and as demonstrated by environmental performance. Though the wealth of small scale app creators that some of these standards can take provide services integral to city life (such as many years to change, and voluntary travel information services, tourist apps etc). standards such as LEED play a role in the transition, government action today If these companies are to continue thriving can help make projects easier to deliver. in the information economy and genuinely For example, New York City has worked contribute to the delivery of better urban with the US Environmental Protection quality of life, they must engage cities with Agency to develop standards for building the following principles: performance data and support training for implementing the Greener Greater Buildings Initiative69.Information Marketplaces | The New Economics of Cities The Climate Group | Arup | Accenture | Horizon | 45
    • 1. Understand the decision-making Innovation & Demonstration Projects at process of cities. Companies may Alstom Grid called this a ‘Russian Doll have done their homework on technical Approach’. First he trialed their solution solutions, but need to also be aware of in a few buildings, then at Versailles the procurement processes, timescales University they tested how their system and legal process cities need to follow could support developing new electric when engaging with the private sector. vehicle business models and services. Companies should also research the Finally they are part of a consortiaBoth short term mayoral powers and specific policy goals. delivering the NiceGrid project, a smartdigitisation Understanding city control structures will city project located near Paris72. help companies identify opportunitiesof services for innovation and development of novel We have shown that the sustainability andand long term services. urban challenges cities face will require trillions of dollars of investment, newinvestments in 2. Proactively engage with the public partnerships and the ability to manage a sector. This will ensure that privateinfrastructure sector service provision aligns to new digital infrastructure that is not just broadband and mobile phones, but the ‘bigupgrades city goals, encourage public sector data’ that will allow decision-makers to investment, and help city leadershipsthat make align their plans with private sector do more with less, and provide enhanced services for billions of new urbanites.those systems needs. For example, proactive engagement between developers andtransparent will city datastore owners could encourage We are just at the beginning of managing that process of deriving more value frombegin to deliver the release of datasets that foster the our interactions with technology to meet development of new private-sectorcarbon and products. Here we see that active society’s needs. We have seen in chapter 3 that public data is growing in importance,cost savings for collaboration can be mutually beneficial. but this is just part of the story. As morecitizens, and 3. Encourage pre-procurement task buildings are measured and monitored, and forces. Industry leaders often have as our energy, waste and water networks arelivable cities for technical knowledge and skills that instrumented, we will also be able to derivethe future public sector investors lack. If the private public value from private data, with the sector wishes to create and participate caveat that it be managed properly to protect in a sustainable industry that can citizens’ privacy. support their activities in the long term, they must encourage and participate in Cities can only do this in partnership with pre-procurement task-forces. This will others – their sub-national or national increase the success of public sector ICT governments, universities and the private projects and encourage the development sector. With leadership, we can tap into the of the market. ‘surplus city’ to provide more opportunities for all citizens. 4. Structure learning from trials that are72 http:// www.publispeak.com/ appropriate for scaling up. Consider alstom/sustainable-development- scaling trials and pilots in a way that is report-2010-11/18.html appropriate for the city administration’s process of implementation. Regis Hourdouillie, Smart Grid Director, Accenture and its logo are trademarks of Accenture46 | The Climate Group | Arup | Accenture | Horizon
    • Appendix 1Technologies and Solutionsthat enable or deliverenvironmental, economicand social value
    • Sector Technologies and Years to Description Benefits? solutions mainstream adoption Buildings Reporting and 2 to 5 years Requiring basic reporting on Public data is available for a benchmarking building performance range of uses by developers, building data building owners save energy and carbon Continuous 2 to 5 years Frequent optimisation of Building owners save on energy commissioning building use, fit out and retrofit and carbon continuously Integrated building 5 to 10 years Integration and optimization Building owners see 40% automation and of the management of improvements or more, control systems heterogeneous building infra paybacks within 3 years or less equipment using IP and open standards Home energy 5 to 10 years Help consumers optimise Homes avoid grid electricity management, energy use (passively, peer when the price is right, retail consumer-energy pressure, optimise generation metering and demand response management and consumption based providers benefit on pricing sgnals, weather conditions and consumption patters) Smart appliances 5-10 years Appliances that become part of Retailers benefit, and the home area network and can homeowners save on energy be optimised within demand costs response Energy Mobile and web 2.0 5 to 10 years Social, business and technology Citizens can switch providers, for utilities evolutions for collaboration provide far more information and participation on products Microgrids 5 to 10 years Small-scale low voltage power Utilities reduce T&D losses, systems with distributed improve reliability, opeational energy sources, storage, benefits, cost-effective asset controllable loads, connected to management grid or ‘islanded’ Distributed 5 to 10 years Supply solution that can be at Benefits non-traditional energy generation or near retail load, 99.999% suppliers and saves energy and reliability emissions Thermal or more than 10 years Solar thermal storage Benefits utilities with concentrated solar increased low carbon demand, power decarbonisation of electricity Demand side 2 - 5 years Manage peak load through Society benefits in the form of management peak shaving, better matching lower energy prices, and saves supply and demand energy for customers Distribution 2-5 years Reduce distribution losses Utilities can save average of network 3-7% grid electricity management, control Energy, Water Advanced metering 2 to 5 years 2-way data comms to manage Utilities benefit from billing infrastructure meter data life cycle revenue management, time of use pricing, DR, prepayment, distribution network analysis, outage reporting; customers can switch easily, save money and carbon Health Mobile health 5 to 10 years Remote monitoring of health Citizens avoid travel and have monitoring care regular contact with doctors Home health 5 to 10 years Home monitoring of health Citizens avoid travel and have monitoring care regular contact with doctors48 | The Climate Group | Arup | Accenture | Horizon
    • Lighting Intelligent lamppost more than 10 years Outdoor lighting intelligence Streetlamp vendors and manufacturers benefit; cities could sell data to recover costs Remote dimming 5-10 years Remote control of lighting Savings of up to 20% of and control systems to match conditions electricity is possible and occupancy Transport Intelligent transport 2-5 years A collection of solutions for Citizens benefit from lower systems (ITS) transportation management congestion and pollutants Congestion charging 2-5 years Pricing of inner city travel to Citizens benefit from lower reduce congestion congestion and pollutants Cycle hire schemes 2-5 years Public access bicycles to Citizens benefit from encourage modal shift convenience and lower emissions Location-based 2 to 5 years Enable vehicle tracking, Automotive and navigation services in services etc industries benefit; cities can automotive offer public transportation options Vehicle information 2 to 5 years Link between vehicles and Owner benefits from revenue hub portable devices increase from information Plug-in hybrid 5 to 10 years Vehicles and batteries Utilities defer investment in electric vehicles peak geneartion; operational technology sales, billing, settlement and pre-sales Wireless electric more than 10 years Inductive charging (road to Citizens and utilities benefit vehicle charging vehicle) from peak demand-reduction Electric vehicle more than 10 years ‘Wired’ charging infrastructure, Distribution and retail reduce charging with smart grid capability for peak demand infrastructure scheduling charging Car-to- more than 10 years Autonomous ad hoc Citizens benefit from lower infrastructure information networks between congestion and pollutants vehciles and road infrastructure Electric vehicles more than 10 years More effcient motors that run Electric vehicles can be up on electricity for passenger, to 80% more efficient than buses and other vehicles internal combustion engines with green electricity supply Mobile and Web 2.0 2-5 years Websites that find alternative Citizens have new service for transport routes, support location-based options, and lower congestion services and associated emissions Water Smart water 2 to 5 years Analyse and manage City benefits from saving on management quantity and quality of water water costs throughout all portions of the hydroplogical cycle Waste Smart waste 2-5 years Waste process optimisation and City benefits from more management pickup efficient use of vehicles for waste pickup, resource savings Mobile and Web 2.0 2-5 years Social networking tools to Citizens and cities benefit with for waste allow sharing of goods and options for citizens to recycle more optimal recycling and re-use ICT Cloud computing 2 to 5 years Scalable computing using Changing user/vendor internet technologies relationships and enable further services Smart governance 2 to 5 years An administration that aplies Integration of operations, new operating and integrates infomration, services, faster response to framework comms and operational techs citizen to planning, management and operations to generate sustainable public valueInformation Marketplaces | The New Economics of Cities The Climate Group | Arup | Accenture | Horizon | 49
    • ‘Big data’ 2 to 5 years Management of extremely Those who can better use and extreme large datasets information to outperform information competitors processing & management Augmented reality 5 to 10 years Voice, audio, visual integration Enhanced user interfaces, complete solutions for schools, hospitals etc Master data 5 to 10 years MDM - business and IT Cities, citizens and businesses management work together to ensure benefit the uniformity, accuracy, stewardship and semantic consistency of the enterprises shared datasets Machine- 5 to 10 years Automated data transmission Opens up new applications for to-machine and measurement between service providers communications mechanical or electrical devices services Customer gateways 5 to 10 years Allow consumers to become Consumers benefit from new part of the smart grid by services enabling CEM, smart appliances etc Near field 5 to 10 years Short range wireless tech Consumers benefit from new communication that interacts with consumer services, including mobile electronics payments Consumer 5 to 10 years End-user-targeted vehcile- Consumers benefit from new telematics centric ICT systems and services services, enabling GPS, traffic information, local search etc Public telematics more than 10 years Government sponsored IT Citizens and city benefit from services to improve traffic flow new service options and congestion Sensor networks more than 10 years Sensor networks that Citizens and city benefit from communicate data from around new service options a city to a decision-maker Metrics and 5 to 10 years Link reporting to accounting Cities benefit by creating performance practices to enhance jobs, growth, and enhanced management operational efficiency and environmental and health performance benefits Internet of things 5 to 10 years 1st phase, value from data Cities benefit by creating from sensors, 2nd phase, jobs, growth, and enhanced combining with people, environmental and health processes and systems - the benefits true ‘smart city’ as buildings, lamps, parking spots and infra become connected Information 5 to 10 years Rule engine for application Enabler of the information semantic services rights, information economy management hierarchy, in what order do you manage applications, data warehouses, readings from ERP, event processing etc Datastore or 5 to 10 years Structured approach to City and citizens benefit from data stewardship enterprise information new service options applications management Sources: Team Analysis, Gartner Smart City Hype Cycle, 2011 Accenture and its logo are trademarks of Accenture50 | The Climate Group | Arup | Accenture | Horizon
    • Information Marketplaces | The New Economics of Cities The Climate Group | Arup | Accenture | Horizon | 51
    • The Climate GroupMolly Webb, Head of Smart Technologiesmwebb@theclimategroup.orgArupVolker Buscher, Director, Smart Citiesvolker.buscher@arup.comAccentureSimon Giles, Global Senior Principal,Intelligent Citiessimon.w.giles@accenture.comHorizonCatherine Mulligan, Transitional Fellowcatherine.mulligan@nottingham.ac.uk