White Paper Smart Cities (English version)

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IDC developed the IDC Smart Cities Index to analyze cities in two strategic areas: smartness dimensions and enabling forces. IDC considered "enabling forces," the underlying characteristics of the city, which could facilitate or hinder its evolution into a smart city, namely people, economy, and information and communication technologies.

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White Paper Smart Cities (English version)

  1. 1. WHITE PAPER Smart Cities Analysis in Spain Sponsored by: BBVA, Ferrovial Servicios, IBM, Microsoft, Sage, Telefónica, and Urbiotica Rafael Achaerandio Roberta Bigliani Gaia Gallotti Fernando Maldonado José Curto September 2011IDC España Plaza Colón, 2. Torre I. Planta 4º. 28046, Madrid Spain Tel.: (+34) 91 787 21 50 Fax: (+34) 91 787 21 65 IDC OPINION The smart city concept was born two decades ago to address emerging city sustainability issues, and was mainly focused on energy efficiency and emission reduction. More recently the term was attached to the role of ICT infrastructure. IDC considers this necessary but insufficient. IDC defines a "smart city" as a finite unit of a local entity, which declares and makes a conscious effort to have a holistic approach to employ information and communication technologies, for real-time analysis, to transform its essential modus operandi with the ultimate goal of improving the quality of life of the population living in the city, ensuring sustainable economic development. Despite the different EU policies and the efforts of city halls, Spain has yet to reap the benefits of a strong development of the smart city concept across the country. This is due to the fact that the smart city framework is not exclusive to public entities, but also requires the participation of private organizations and society maturity. Taking into account these factors, IDC undertook this Spanish smart cities project, beginning with inviting industry players in the country to analyze and assess the Spanish smart cities context. This paper explores the situation and the need for many large Spanish cities to evolve their current development and management models to establish the basis for a sustainable, intelligent, and socially acceptable future. However, in order to act it is crucial to first measure and establish a starting point. With this objective in mind, IDC carried out intensive interviews and additional complementary research on the 44 largest cities in Spain to evaluate how "smart" these cities actually are at present and how "smart" their future roadmaps are. IDC developed the IDC Smart Cities Index to analyze cities in two strategic areas: smartness dimensions and enabling forces. IDC considered "enabling forces," the underlying characteristics of the city, which could facilitate or hinder its evolution into a smart city, namely people, economy, and information and communication technologies. IDC considered smart dimensions, projects, and policies put in place by the various city stakeholders concerning smart government, smart buildings, smart mobility, smart energy and environment, and smart services — actions in the right direction for a future evolution of a smart city. The IDC Smart Cities Index produced two end results — a ranking and a matrix of the cities. The ranking combines the enabling forces and smartness dimensions, while the matrix plots the cities based on their separate enabling forces and smartness dimension scores.
  2. 2. METHODOLOGYThis IDC White Paper provides an objective and independent analysis of the smartcities market in Spain, in terms of both demand and offering. IDC included as manycity halls as possible, as well as relevant private companies acting as catalysts inSpain, in the smart cities value chain. The paper includes the following sections: The smart city concept. IDC outlines the smart city concept, taking into account the opinions of different market players and offering IDCs own perspective. Smart cities international context. IDC briefly assesses the international context in order to establish a framework for the local analysis. Smart cities index analysis in Spain. IDC provides a Spanish assessment, benchmarking the top 44 cities in terms of population, assessing and analyzing their initiatives, maturity, and developments in predefined areas. Smart cities value chain in Spain. IDC interviewed the top executives in the companies involved in this white paper in order to analyze, assess, and explain their specific smart city viewpoints, strategies, and offerings. Recommendations. IDC provides recommendations for both city halls and smart city solution and service providers in order to promote and develop the smart cities in Spain.The IDC Smart Cities Index: Overview ofMethodologyThe IDC Smart Cities Index is built on the following methodological steps (see Figure1): Identification of the key smartness building blocks covered by the analysis Identification for each smartness building block, of the evaluation criteria and their relative weighting Identification for each evaluation criterion, of the detailed indicators to assessThe building blocks of smartness to be used for the analysis are shown in Figure 2.They are organized into two macro-groups: Smartness dimensions. Smart government, smart buildings, smart mobility, smart energy and environment, and smart services. These are the domains for which initiatives can be developed and deployed. Enabling forces. People, economy, and information and communication technologies. While it is true that the population and local economies benefit from the development of smart cities, they also act as enabling factors creating more attractive conditions for successful implementations. Considering IDCs smart city definition — a local entity which declares and makes a conscious effort to adopt information and communication technologies to transform its essential modus operandi — ICT plays a key enabling role. For this reason its relative weighting is higher (40%) than those assigned to people (30%) and economy (30%).2 #IDCWP38T ©2011 IDC
  3. 3. For both smartness dimensions and enabling forces, relevant and syntheticevaluation criteria were developed and weighted. The 23 criteria included in themodel range from city population dynamics to education level and average populationage, local economic composition and dynamism, local government transparency,environment protection policies, access to eservices, residential and commercialbuilding efficiency standards, clean energy development, remote working, trafficmanagement, low carbon mobility, and the level and quality of ICT adoption. Toappropriately assess these criteria, the model includes a set of 94 indicators.FIGURE 1IDC Smart Cities Index ComponentsSource: IDC, 2011©2011 IDC #IDCWP38T 3
  4. 4. FIGURE 2IDC Smart Cities FrameworkSource: IDC, 2011Applying the IDC Smart Cities IndexThe following section describes the application of the IDC Smart Cities Index. Thefirst step is identifying which cities, in this case in Spain, can be considered forevaluation, scoring, and ranking. In this context, IDC considered the 44 biggest citiesin Spain by population (those with more than 150,000 inhabitants). While the smartcity concept can be applied to cities of any size, the greatest challenges andcomplexities often lie in the larger cities.4 #IDCWP38T ©2011 IDC
  5. 5. FIGURE 3IDCs Smart Cities Index of Spanish Cities Gijón Bilbao Coruña (A) Santander Oviedo Donostia-San Sebastián Vitoria-Gasteiz Vigo Pamplona/Iruña Burgos Logroño Valladolid Terrassa Zaragoza Sabadell Badalona Barcelona Alcorcón Hospitalet de Salamanca Móstoles Madrid Llobregat Leganés Getafe Alcalá de Henares Castellón de la Plana Fuenlabrada Albacete Palma de Mallorca Valencia Badajoz Alicante Elche Murcia Córdoba Cartagena Sevilla Granada Almería Jerez de la Frontera Malaga San Cristóbal de la Laguna Las Palmas de Gran Canaria Santa Cruz de TenerifeSource: IDC, 2011Having identified the cities to include in the evaluation, scoring, and ranking, the nextstep is the information-gathering process, to populate the 94 key indicators that makeup the 23 evaluation criteria and eight smartness building blocks (five smartnessdimensions plus three enabling forces). This step was carried out with a mix of deskresearch — to collect available data from all national statistics or other public datasources — and a significant primary research effort. Interviews with cityrepresentatives were carried out in July–August 2011. IDC also used its proprietarydatabase on ICT data. Where information was not available, best-effort estimateswere made.The city information and data was normalized and turned into standardized values toenable comparisons of non-homogeneous parameters. Finally, a score for each citywas calculated to complete the ranking exercise.©2011 IDC #IDCWP38T 5
  6. 6. Smart City Vendor Profiling MethodologyDuring July and August, a second set of interviews was carried out by IDC, with topexecutives from the companies involved in this white paper. IDC prepared theinformation-gathering meetings for these companies around the smart city concept.IDC interviewed them to analyze and assess their smart city concept, mainchallenges and opportunities for the development of smart cities in Spain, their valueproposition and competitive advantages, and a future outlook for the country.THE SMART CITY CONCEPTWhy Focus on Cities?Cities play a pivotal role in the socioeconomic development of any nation. Cities areessential drivers of economic growth, innovation, social progress, culture, knowledge,and diversity. A citys attractiveness is related to its capability to offer basic servicesand provide quality of life and better conditions for business creativity andprofessional development. In essence, cities are competing to attract the best citizensand enterprises.Due to the continuous growth of urbanization, today on a global level one person outof every two lives in a city (50%). According to the United Nations Department ofEconomic and Social Affairs (DESA), this is forecast to hit 70% by 2050. Europe, andto an even greater extent Western Europe, has already reached a tipping point, andby 2020 more than 80% of Europes population will be living in urban areas.This high level of urbanization is posing a number of significant new challenges,specifically regarding sustainability. Cities are currently using more than two-thirds ofthe worlds energy, while housing 50% of the population. They account for about 70%of global CO2 emissions, and generate a greater quantity of waste than their ruralcounterparts, which greatly impacts the environment at all levels.As most of the worlds resources are finite, cities will have to find strategies to copewith this, becoming more efficient and encouraging citizens to make better use ofenergy and water, as well as reducing greenhouse gas emissions. At the same timecities need to effectively handle the increasing population and its impact on mobilityand public infrastructure and services utilization.What is a Smart City?IDC defines a "smart city" as a finite unit of a local entity (district, city, region, or smallcountry), which declares its intent and then makes a conscious effort to have aholistic approach to employ information and communication technologies, for real-time analysis, to transform its essential modus operandi in one or more of thefollowing areas: energy generation, delivery and usage, environment, government,mobility, and buildings. The ultimate goal is to improve the quality of life of thepopulation living in the city, ensuring sustainable economic development.If a city is a system of man-made systems that come together and interact with eachother, then one of the basics of a smart city is one where intelligence (ICT) is6 #IDCWP38T ©2011 IDC
  7. 7. embedded into the citys core infrastructure to make it more efficient, responsive, andless costly. One of the keys for the successful implementation of a smart city is that itbe created in an open environment, with an interoperable and scalable platform, onebased on non-proprietary code and interfaces.The methodology section in this paper identified the building blocks of smartnessused for this analysis (see Figure 2). The building blocks are organized into twomacro-groups: smartness dimensions and enabling forces.The reasoning behind the selection of the three enabling forces (people, economy,and information and communication technologies) for the IDC Smart Cities Indexmodel is elaborated there as well. Concerning a citys "people," aspects such aspopulation size, age, education, and population dynamism all play a crucial role in thesuccess of a citys attempt to become smart. Concerning a citys "economy," aspectssuch as economic wealth and make-up and economic dynamics also contribute tosuccessful development of a smart city. The adoption of ICT and mobile solutionsalso plays a key enabling role in the future of smart cities.The smartness dimensions (smart government, smart buildings, smart mobility, smartenergy and environment, and smart services) were selected as the major smart citydomains for which initiatives can be developed and deployed.For smart government, aspects such as the existence of an environmental protectionpolicy and offering of eservices to citizens were considered in the evaluation process.If a local city government scored high in IDCs indicators then it was deemed "smart."For IDC, if a government is being smart, then it is leading by example, which will helpcreate awareness and push forward the rest of the community.According to the European Commission, buildings are responsible for 40% of energyconsumption and 36% of EU CO2 emissions; obviously there are great possibilities forimprovements. To reduce the negative environmental impacts of construction andbuilding operations, some cities are using building retrofits and certifications that canreduce energy and water use; they are also using smart metering and smart buildingtechnologies to help optimize consumption. For smart buildings, for example, qualityof construction through the existence or not of minimum levels of energy classstandards was considered.Transportation is responsible for about a quarter of the EUs greenhouse gasemissions, with 71.3% of this from road transport (2008). For smart mobility, plug-inelectric vehicle adoption or the existence of intelligent traffic systems and sensors arejust two examples of how a citys mobility can be made "smart." The adoption of lowcarbon vehicles for public transportation and incentives for the uptake of electricvehicles are becoming very popular initiatives, not only among Spanish cities, butthroughout Europe, in order to reduce CO2 emissions and hopefully in future to alsoact as energy storage reserves for shaving peak loads.Globally, the environment, climate, and energy sectors are receiving a lot of attentiondue to climactic changes and environmental concerns such as the rapid increase inthe worlds temperature, also due to the rise in GHG emissions. According toEurostat, in 2009 the energy industries were responsible for 35% of CO2 emissions.This has led to an increased focus by governments around the world on enhancingefficiencies in the energy/climate and environment sectors. Considering smart energyand the environment, development of clean energies, environment management©2011 IDC #IDCWP38T 7
  8. 8. measures, and improving the reliability of supply and delivery networks are just a fewexamples considered in the evaluation of a citys smartness in the sector.Considering smart services, various services to citizens were considered as well asaspects related to security. IDC believes that the more services are offered to citizens,in a safe environment, the more likely it will be for good habits to spread, making thisaspect of a city smarter.SMART CITIES IN THE INTERNATIONALCONTEXTThe Smart City RealitySeveral "smart city" initiatives have been launched globally or are currently beingevaluated. Even if not all of them are already fully succeeding in delivering theplanned results, or sometimes suffer from lack of fresh funding, the vast majority aregradually developing.There are a number of international projects executing one or more of the areas of"smartness." Generally, the initiatives can be classified into three main clusters: Advanced services for citizens (i.e., mobility, traffic management, advanced payment systems for parking, etc.) Pervasive technologies (i.e., broadband and communication infrastructures, advanced systems for recycling, etc.) Climate/energy sustainability (i.e., use of solar panels, implementation of smart metering and smart distribution grids, etc.)Within the context of smart cities, energy infrastructure (electricity, heating, andcooling) often plays a pivotal role, and is also used to support other components suchas transportation and buildings.In Europe, Amsterdam led the way, followed by many others such as Malta, theMalaga Smart City in Spain, and Évora InovCity in Portugal. Madrid is also promotinga smart environment (waste and air quality), urban services, and mobility. The districtof Vauban in Freiburg (Germany) is a good example of how to implement theprinciples of sustainability with a holistic approach to urban planning and buildingdesign (passive houses). Linz, in Austria, designed and developed Solar City, anentire district exclusively using solar power for its energy needs. Many other cities,including Milan (Italy), Southampton (the U.K.), and Salzburg (Austria), introducedmultifunctional cards which enable access to a range of products and services, suchas bus passes, library cards, museum passes, bike sharing, and even electric vehiclerental. Other cities, such as Stockholm (Sweden) and Toulouse (France), haveinvested in pervasive technologies to enable smarter mobility.Examples from outside Europe include the well-known Boulder Smart City project inColorado and Austin Energys Pecan Street Project in Texas. But there are alsoMasdar in Dubai (United Arab Emirates), Singapore, and Kochi (India); Durban,meanwhile, with its broadband strategy and significant infrastructure investment, ismoving closer to its goal of becoming the "smartest" city in Africa.8 #IDCWP38T ©2011 IDC
  9. 9. Amsterdam Smart CityFollowing the introduction of the European Unions 20-20-20 climate targets,Amsterdam set itself even more ambitious goals: to have municipal organizationsclimate-impact neutral before 2015, to have 20% renewable energy by 2025, and toachieve a 40% reduction in CO2 emissions by 2025 compared with 1990. To achievethese goals, the City of Amsterdam has developed the ambitious "New AmsterdamClimate" program — a platform for the city and many public and private partners towork closely together to achieve the climate goals. Amsterdam Smart City (ASC) isone such public-private partnership that has committed itself to the New AmsterdamClimate program.ASC focuses on four areas to tackle the largest CO2 emitters in the city: Sustainable living. Creating awareness and reducing energy consumption in households (with smart meters, energy display devices, energy advice, energy storage, distributed generation, etc.) Sustainable working. Creating awareness and reducing energy consumption in office buildings (with smart buildings, energy advice, smart working, smart lighting, etc.) Sustainable public space. Creating awareness and reducing energy consumption in municipal buildings and public areas (with smart meters, energy displays, energy advice, electric vehicles, etc.) Sustainable transport. Creating awareness and reducing energy consumption in transport (with electric vehicles, mobile charge points, new logistic solutions, etc.)Project partners include grid operators, local government, housing corporations, thePort of Amsterdam, techno starters, universities, financial institutions, ICT vendors,and transport and waste companies. Since 2009, the municipality, utilities, and privatecompanies have invested several hundred million euros into the ASC project. TheEuropean Commission has also provided financial support through the EuropeanRegional Development Fund (ERDF). Efforts include investment by local electricitynetwork operator Liander in "smart grid" technology that uses network sensors andsmart metering to trim electricity use. ASC has designed more than 20 target pilotsinvolving the following technologies: smart meters, energy displays/feedback, newlogistics/waste models, smart (LED/saving) lighting, electric vehicles and chargingterminals, and energy advice.Málaga Smart CityMálaga launched a pioneering Spanish project to create an eco-efficient city. Itsobjective is to achieve an optimal integration of renewable energies into the powergrid. It brings the generators closer to the consumers through the establishment ofnew models of distributed energy resources management. Batteries will be used tostore the energy generated, so that some of the energy can later be used for climatecontrol of buildings, public lighting, and electric transport. Recharging stations will beinstalled and a small fleet of vehicles dispatched to encourage the use of electricvehicles. New smart meters are being used in the context of remote management toenable more sustainable electricity consumption. Also, the installation of advancedcommunications systems and real-time control will transform electric distributionnetwork operations, enabling new energy management and increasing the quality of©2011 IDC #IDCWP38T 9
  10. 10. service. The ultimate goal of the project is to demonstrate that with the developmentof these technologies it is possible to achieve 20% energy savings.The city of Málaga was selected by Endesa for the project because of its excellentelectrical infrastructure, its universities and businesses, and strong support from thelocal government. The budget is partly financed by the ERDF with backing from theSpanish Junta de Andalucía, the Ministry of Science, and the Centre for theDevelopment of Industrial Technology (CDTI).The project covers the Playa de la Misericordia area of Málaga, and will benefit 300industrial customers, 900 service providers, and 12,000 households over four years.StockholmThe city of Stockholm invested in predictive analytics technologies to implement asmarter way of managing its traffic and city mobility. The system collects real-timeinformation from global positioning systems in about 1,500 taxis in the city, and datafrom delivery trucks, traffic sensors, transit systems, pollution monitoring equipment,and weather information. The system integrates and analyzes any type of datacoming from continuous text, voice, images, videos, databases, weather forecasts,news, sounds, market data, and application data in real time.City residents can have real-time information on traffic flow, journey times, and besttravel options for commuters. For example, residents can send a text messageindicating their location and the desired destination. The technology instantlyprocesses the real-time information on traffic and weather, and provides rail traveltimes, estimated car travel times, and public transport times, providing an instant andaccurate view of the quickest way to reach the destination.The Stockholm congestion management system has: Reduced traffic in the Swedish capital by 20% Almost halved the average time of travel Decreased the amount of emissions by 10%Additionally, Stockholm, like many other cities around the world, such as London,Tokyo, Singapore, and Milan, decided to tackle its growing traffic problem with acongestion charge. The congestion charge was first introduced as a trial in 2006, notonly to ease the citys congestion problem, but also to raise money for ancillaryservices such as public transportation. By the end of the trial, traffic had beenreduced by 25%, and public transportation authorities had to redraw their schedulesas previous transit times were significantly decreased due to a reduction in trafficlevels. Stockholm also benefited from a 40% reduction in greenhouse gas emissionssuch as CO2 , and the city has become a worldwide example of how to design asuccessful congestion charge.10 #IDCWP38T ©2011 IDC
  11. 11. Examples of Key European Programs for theDevelopment of Smart CitiesCovenant of MayorsFollowing the adoption of the EU Climate and Energy Package in 2008, the EuropeanCommission launched the Covenant of Mayors (www.eumayors.eu) to endorse andsupport the efforts deployed by local authorities in the implementation of sustainableenergy policies. By voluntarily signing the covenant, cities committed themselves toimplementing sustainable energy policies to meet and exceed the EUs 20% CO2reduction objective through increased energy efficiency and the development ofrenewable energy sources. With EU data showing that 80% of primary energyconsumption and CO2 emissions is associated with urban activity, the proactivesupport of local governments is crucial.The 2,849 signatories represent a wide range of communities, from small villages tomajor metropolitan areas, and about 130 million inhabitants. Figure 4 provides anoverview of the location of signatories. Countries such as Italy and Spain are leadingthe way, with 1,258 and 867 cities respectively signing the covenant.©2011 IDC #IDCWP38T 11
  12. 12. FIGURE 4Covenant of Mayors: Signatories MapSource: Covenant of Mayors, 2011Cities signing the covenant need to prepare an inventory of baseline emissions as abasis for the Sustainable Energy Action Plan (SEAP); submit the SEAP within a yearof formally signing up to the covenant; adapt city structures, including allocation ofsufficient human resources, in order to undertake the necessary actions; and mobilizethe civil society in their geographical areas to develop the action plan, outlining thepolicies and measures needed to implement and achieve the objectives of the plan.Cities also commit to submit an implementation report at least every second yearafter submission of the Sustainable Energy Action Plan for evaluation, monitoring,and verification.In return, the European Commission supports local authorities by giving visibility totheir efforts and providing the support of the Joint Research Center for the definitionof guidelines for the Sustainable Energy Action Plan and monitoring. Most importantly,however, it undertakes to introduce instruments to finance city initiatives, usingexisting programs and resources, such as the provisions of the 7th FrameworkProgramme, the Public Private Partnership for Energy Efficiency in Buildings, the12 #IDCWP38T ©2011 IDC
  13. 13. Green Car Recovery Plan, the Intelligent Energy Program, and RegionalDevelopment Funds (ERDF).SET Plan — Industrial Initiative on Smart CitiesAmong the industrial initiatives of the European Commissions Strategic EnergyTechnologies (SET) Plan, one is specifically dedicated to smart cities. The SmartCities Initiative aims to improve energy efficiency and to step up the deployment ofrenewable energy in large cities, going even further than the levels foreseen in the EUenergy and climate change policy. The initiative is designed to support cities andregions that take pioneering measures to progress toward a radical reduction ofgreenhouse gas emissions through the sustainable use and production of cleanenergy. This European initiative builds on existing EU and national policies andprograms, such as Civitas, Concerto, and Intelligent Energy Europe. It draws on theother SET plan industrial initiatives, in particular the Solar and Electricity Grid, as wellthe EU public-private partnership for buildings and green cars established under theEuropean Economic Plan for Recovery.The Smart Cities initiative has a budget of €11 billion, to be integrated with nationaland private investments, and is focused on three main pillars: buildings, energynetworks (including both electricity and heating and cooling networks), and transport.The 10-year program roadmap is shown in Figure 5.©2011 IDC #IDCWP38T 13
  14. 14. FIGURE 5Smart Cities Initiative Roadmap (European Commission SETPlan)Source: SETIS, 2011SMART CITIES INDEX ANALYSIS IN SPAINIDC Smart Cities Index: RankingAs discussed in the methodology section, the IDC Smart Cities Index comprises 94key indicators, which make up 23 evaluation criteria and eight smartness buildingblocks (five "smartness dimensions" and three "enabling forces"). The IDC SmartCities Index Ranking is derived from a combination of the scores for the 44 cities forthe three enabling forces and the five smartness dimensions, weighing 20% and 80%respectively. The IDC Smart Cities Ranking comprises the top 5 cities ranked, thenext 10 "contenders" clustered, 21 "players" clustered, and eight "followers" clustered.The four groups (top 5, 10 contenders, players, and followers) are color coded: red,yellow, green, and blue respectively. This color coding will also be used in the IDCSmart Cities Index Matrix in the following section.14 #IDCWP38T ©2011 IDC
  15. 15. FIGURE 6IDC Smart Cities Index RankingNote: With the exception on the top 5 cities, the remaining categories (contenders, players, andfollowers) are shown in alphabetical order.Source: IDC, 2011Top 5 CitiesThe top 5 cities in the IDC Smart Cities Index Ranking are numerically indentifiedfrom highest to lowest based on their final score in the index. The top 5 cities are alsoidentifiable in the color coding system with the color red.1. MálagaAccording to the IDC Smart Cities Index Ranking, Málaga is currently the "smartest"city in Spain. Málaga achieved the number 1 position due to its high scores in thesmartness dimensions, despite its relatively low final score for enabling forces(people, economy, ICT). Málaga scored very well in two of the smartness dimensions,namely smart energy and environment, and smart services. Its success in smartenergy and environment comes as no surprise, as it is a pioneer in becoming an eco-efficient city through its Smart City Málaga project (http://www.smartcitymalaga.es/).The Smart City Málaga project is described in detail in the "Smart Cities in theInternational Context" section above. To recap, however, in terms of the energy andenvironment domains, its ultimate goal is to make a 20% energy saving by adoptingthe following measures:©2011 IDC #IDCWP38T 15
  16. 16. Achieving optimal integration of renewable energies into the power grid Bringing generators closer to consumers by establishing new models of distributed energy resources management Using batteries to store the energy generated, so that some of the energy can be used later for climate control of buildings, public lighting, and electric transport Leveraging new smart meters, advanced communication systems, and real-time control to transform electric distribution network operations, enabling new energy management and improving quality of serviceConcerning smart services, Málaga scored high on the security and emergencyservices offered to its citizens, and on the strong availability of e-education.Considering its relatively low final score for enabling forces, Málaga should be anexample to other Spanish cities that do not have a foundation of best enabling forces(people, economy, ICT) to become a smart city.2. BarcelonaAccording IDCs Smart Cities Index Ranking, Barcelona is the second "smartest" cityin Spain. In relation to Málaga, Barcelona scores less high in the smartnessdimensions, but compensated with a much better starting position (the enablingforces). From the outset, Barcelona benefitted from high adoption of ICT and mobilesolutions. In the smartness dimensions, Barcelona excels in smart mobility.Barcelona is a leader in Spain in terms of revolutionizing its transport sector, and hasbeen designated the hub of innovation for electric vehicles. Spains transport sector isresponsible for 37.9% of final consumption of energy and accounts for more than aquarter of total CO2 emissions. Spain is actively facilitating the acquisition of low-emission vehicles, for instance by offering subsidies (of up to €7,000 per vehicle) forplug-in hybrid or pure electric plug-in vehicles.Barcelonas LIVE project (Logística per a la Implementació del Vehicle Elèctric,http://w41.bcn.cat/) has made it the innovation hub for electric vehicles. LIVE is apublic-private platform which aims to support and promote the development of electricmobility in the city and metropolitan area of Barcelona. The development partners inthe project are Barcelona City Council (Environment, Mobility, and EconomicPromotion), the Government of Catalonia (Catalan Energy Institute), Endesa, andSeat. Other partners and collaborators include IDAE (the Institute for theDiversification and Saving of Energy, Ministry of Industry), UPC, IREC, Leitat, STA(Technical Automotive Society), Barcelona Digital, TMB, BSM, Regesa, Tabasa,Saba-Abertis, Catmoto, Nissan/Renault, Toyota, Siemens, Volt-Tour, Avele/Avere,Altran, Quimera, Idiada, RACC, Circutor, and Initzia.LIVE has 234 current charging points, with additional points planned for the nearfuture. On its Web site, supported by Google Maps, LIVE shows all the current,future, and temporarily unavailable charging points. In some cases, there is morethan one charging point (socket) in each charging station. LIVEs charging points mapcan also be accessed remotely via Apples iPhone and Googles Android.LIVEs Electric Vehicle Card is the ID card for electric vehicle users in the city ofBarcelona, enabling users to carry out electric charges in any point in the city. Fornow, the charging service is free, but the charging card has limited credit. When thecredit runs out, users will have to add more credit to the card.16 #IDCWP38T ©2011 IDC
  17. 17. With the LIVE electric vehicle card, users can access a myriad of other benefitsbesides free charging, such as: Up to 75% of vehicle registration tax Free parking in any regulated area of the city, according to regulated criteria, for Barcelona residents New public car parking lots with 3% of spaces reserved for electric vehicles and facilities ready for the future inclusion of points in the rest of the spacesThe municipality of Barcelona is also evaluating other incentives to further promotethe uptake of electric vehicles in the area, including: Fewer tolls and a reduction in the level of tolls Promotions with the Generalitat (FGC) and RENFE to encourage the use of public transport Preferential access to restricted areas (low emission areas) and overnight services Permission to use bus and carpool lanes3. SantanderAccording to IDCs Smart Cities Index Ranking, Santander is currently the third"smartest" city in Spain. Similar to Málaga, Santander placed in the top 5 even thoughit did not excel in the enabling forces criteria, scoring just above average for all threeevaluation criteria. But the city made up for this with a very strong performance in thesmartness dimensions, specifically for smart buildings and smart energy andenvironment.Santander is one of the smallest cities in the top 5 cities index, along with Donostia-San Sebastián, with fewer than 200,000 inhabitants. But Santander has beenproactive in trying to position itself as a future smart city through its SmartSantanderproject (http://www.smartsantander.eu/). SmartSantander won a bid under the 7thFramework Programme ICT, and started on September 1, 2010. ThroughSmartSantander, Santander will serve as a live test-bed for large-scaleexperimentation and evaluation for the Future Internet and Internet of Things,beginning with the deployment of 20,000 sensors throughout the city.SmartSantander plans to introduce projects for environmental monitoring, trafficcontrol, public transportation efficiencies, and urban waste management. The projectwill last 36 months and will involve a consortium of 15 companies across eight EUcountries as well as Australia. Project partners include Telefónica I+D, Alcatel-Lucent,Ericsson, TTI Norte, Universidad de Cantabria, the University of Surrey, Universitatzu Lubeck, Lancaster University, Commissariat a lEnergie Atomique, ComputerTechnology Instritute, Alexandra Institute, Santander Council, Sociedad para elDesarrollo de Cantabria, and the University of Melbourne.4. MadridAccording to IDCs Smart Cities Index Ranking, Madrid is the fourth "smartest" city inSpain. The index showed that Madrid has very strong enabling forces in comparisonwith other Spanish cities being evaluated, specifically with regards to its economy andits ICT base. Besides being the most economically powerful city in Spain, Madrid was©2011 IDC #IDCWP38T 17
  18. 18. also identified by the Global Economic Power Index as the 14th most economicallypowerful city in the world in 2011, with an economic output of $188 billion.In the overall smartness dimensions, Madrid scored below Málaga, Barcelona, andSantander, but it scored highest in the smart government evaluation criteria and highin the smart services and smart mobility evaluation criteria. A very strongperformance in the smart government evaluation criteria clearly benefits all of Spain,not just Madrid, the nations capital. Similar to Barcelona, Madrid, Spains largest city,is also heavily focused on improving its mobility and traffic situation.Concerning smart services, Madrid has fully integrated its emergency managementsystems under the "Centro Integrado de Servicios de Emergencia (CISEM)," allowingcoordination between fire, police, and medical emergency (SAMUR) departments,optimizing their actions. They are integrated under the same command and controlcenter, improving their response time and effectiveness. Responsiveness increased25% in the last few years under the new management system, enabling police andfire services to attend an emergency in less than 8 minutes and SAMUR in less than7 minutes.Concerning smart mobility, Madrid was chosen by Spains Institute for EnergyDiversification and Savings (IDEA — Instituto para la Diversificacion y Ahorro de laEnergía) as the testing bed for its Movele (electric mobility) project. The project is alsotesting electric vehicle deployment in Barcelona and Sevilla. As well as IDEA, theMovele project also includes Spains largest utility companies Endesa, gasNaturalFenosa, and Iberdrola. Madrid aims to have a network of 280 charging points forelectric vehicles around the city, located on both public roads and outside (parking,etc.). Electric vehicles will be able to charge for free, for up to three hours at a time,until December 31, 2011. A Movele Madrid Card is required to access the chargingstations.In April 2011, the Movele project announced a delay in reaching its target ofdeploying 2,000 plug-in electric vehicles due to slower than expected supply frommanufacturers. The project is collaborating with Spanish automotive manufacturerSeat, as well as Toyota and the Renault-Nissan Alliance.Madrid also scored high on the smart mobility smartness dimension due to itssuccessful car sharing program. The program does not have fixed costs for programsubscribers and only charges for actual car-use time. There are three major operatorsof the program in Madrid: Respiro "Breathe" Car Sharing (www.respiromadrid.es),Connect by Hertz (www.connectbyhertz.com), and Hello Bye Cars(www.hellobyecars.com).Besides being an eco-friendly solution to transportation, Madrids car sharing programwas also a success during the recession, becoming a popular option for occasionalcar users.Additionally, the city of Madrid has also undertaken the development of the "Catedralde las Nuevas Tecnologías" (Cathedral of New Technologies), a 13,000-square-meter area fully dedicated to innovation. Holding 700 people, the auditorium will bringtogether the citys citizens from business, education, and government. Enhancing thephysical "Catedral de las Nuevas Tecnologías" is a virtual Internet space(http://www.lacatedralonline.es), all of which is expected to be ready by 2012.18 #IDCWP38T ©2011 IDC
  19. 19. 5. Donostia-San SebastiánAccording to IDCs Smart Cities Index Ranking, Donostia-San Sebastián (DSS) is thefifth "smartest" city in Spain, with a good balance between enabling forces and a veryhigh score in the people, economy, and ICT evaluation criteria. Like Santander,Donostia-San Sebastián has a smaller population base than the other top 5 IDCSmart Cities Index cities, with fewer than 200,000 inhabitants. While scoring belowthe other top 5 cities in the smartness dimensions, Donostia-San Sebastián stillscored well above average, scoring especially high for smart services and, to a lesserextent, in smart mobility.Donostia-San Sebastián laid out its smart city plans in the Estrategia 2020 Donostia-San Sebastián (E2020DSS) project, creating a Web site(http://donostiafuture.com/cas/portada.php) with strategy updates and encouragingcitizen participation. The E2020DSS is based on four strategic axes: Connected City,Designed in DSS, People and Values, and Live-Enjoy.10 ContendersThe 10 "contenders" in the IDC Smart Cities Index are identified in yellow in the colorcoding system. The 10 contenders in the IDC Smart Cities Index are cities that scoredrelatively high in the smartness dimension indicators, but were not excelling in any ofthem. They greatly differ in their scores for enabling forces, from below average to thehighest possible score, namely Coruña (A). These cities were identified as"contenders" due to their potential to break into the top 5 if the right mechanisms areput in place by their respective governments, utilities, and industries. The cities ofZaragoza and Bilbao, for example, are both very well positioned from an enablingforces perspective; if backed by positive actions in the fields of smart government,smart buildings, smart mobility, smart energy and environment, and smart servicesthey could rapidly climb up the rankings.PlayersThe "players" (21 cities) in the IDC Smart Cities Index are identified in green in thecolor coding system. Players are cities that are average from an enabling forcesperspective and scored around average in the smartness dimensions. In general,these cities are taking some actions toward becoming a smart city, like signing theCovenant of Mayors, but are not particularly proactive or leading the pack in theirinitiatives.FollowersFinally, the "followers" (eight cities) in the IDC Smart Cities Index are identified in bluein the color coding system. Followers have below average scores for both enablingforces and the smartness dimensions building blocks. It is worth reiterating that lowscores in enabling forces do not prevent strong performances in the smartnessdimensions (smart government, smart buildings, smart mobility, smart energy andenvironment, and smart services), as demonstrated by Málaga, which scoredrelatively very low in the enabling forces criteria but was still able to achieve thenumber 1 position in the IDC Smart Cities Index Ranking.©2011 IDC #IDCWP38T 19
  20. 20. IDC Smart Cities Index: MatrixIn addition to the ranking produced by the IDC Smart Cities Index, IDC also produceda matrix showing the relative position of the 44 Spanish cities under evaluation. Incontrast to the ranking, which combines the results of the enabling forces and thesmartness dimensions, weighing 20% and 80% respectively, the matrix plots eachcitys scores for the two sets of data separately. In the matrix, cities smartnessdimensions score is plotted on the Y-axis, while the enabling forces score is plottedon the X-axis. As with the IDC Smart Cities Index Ranking, which categorized the 44cities into four color-coded groups (top 5: red, 10 contenders: yellow, players: green,and followers: blue), the matrix also uses a color-coded system.The IDC Smart Cities Index Matrix shows the individual citys performance for thesmartness building blocks (enabling forces and smartness dimensions),demonstrating the uniqueness of each city with regards to its people, economy, andICT, as well as its smart government, smart buildings, smart mobility, smart energyand environment, and smart services initiatives.FIGURE 7IDC Smart Cities Index Matrix = Top 5 = 10 Contenders = Players = FollowersSource: IDC, 201120 #IDCWP38T ©2011 IDC
  21. 21. SMART CITY VALUE CHAIN IN SPAINIDC interviewed senior management at the major smart city industry players in Spainto get a better understanding of their thoughts on the following: Positioning. IDC wanted to understand the players positioning; what are they standing for in the smart city market? What is their strategy? Challenges and opportunities. We asked about the main challenges and opportunities for smart cities. Proposals. IDC wanted to get a better understanding of their smart city proposals and highlight their offerings and capabilities. Differentiators. We asked them about the capabilities and assets that give them an advantage over their competitors in order to offer readers a global picture of every player. Looking forward. IDC finally asked them about the future of the industry and their strategy to promote and develop the smart city concept in Spain.With these objectives in mind, IDC interviewed the following companies in the valuechain: BBVA. One of the biggest banks in Spain and worldwide, BBVA manages a lot of digital city and individuals information that could be shared under a common platform to create smart services for the city. Ferrovial Servicios. One of the biggest infrastructure, management, and maintenance players in the world, Ferrovial proposes a new city service management framework to address the smart city concept. IBM. One of the biggest IT players worldwide, with a strong offering in smart cities, IBM encourages cities to adopt solutions and technologies to manage data consistently in order to make smarter decisions and create sustainable services. Microsoft. One of the leading software vendors worldwide, Microsoft offers a technological framework to manage infrastructure and networks, access to data, services and components, service and integration processes, and security and identity. Sage. One of the leading application software vendors worldwide, Sage offers a strong portfolio of egovernment and e-administration solutions to enhance the smart city concept in Spain. Telefónica. One of the biggest telecom operators worldwide, it is promoting the development and improvement of mobility, government, quality of life, environment, energy, and communication in the city using the right platforms, services, and technologies. Urbiotica. Urbiotica is a technology based company focused on providing cities with dynamic data, using sensor-based technology to improve management of public services to achieve the corresponding benefits for the city.©2011 IDC #IDCWP38T 21
  22. 22. BBVAAt the end of 2009, the innovation department of the BBVA Group, as part of theBusiness Discovery initiative, created a smart cities workgroup to explore thepotential impact of smart cities on the banks business, as well as the banks potentialrole in the value chain.The intelligent use of information is characterized by decision making that is: Based on evidence. From an integrated vision that combines the data generated by the citys activity, not just by the infrastructure, for example sensors, but also by the behavior of its agents — economic transactions, travel, communication, etc. In real time. Information can be collected and used exactly when it is required in order to act on a resource — for example, management of traffic, energy, water, etc. — or to make an individual decision, for example where to go, what transportation to take, where to shop, etc.The main benefit for cities is that a new management paradigm is created, whichtranslates into efficient use of resources, better management of demand, the creationof new markets, improved city planning, and generally a better quality of life forcitizens.The elements that have begun to come together and that make it possible for us totalk about the concept of smart cities are varied and include technological factors (thegrowing ubiquity of Internet access), geo-demographics (the unstoppable growth ofpopulations in cities, "personal insights" (greater decision-making power on the part ofindividuals), and economic factors (scarcity of resources, for example). Theseelements are in turn the same ones that make up the 2020 Vision on which BBVA hasbased part of its strategy for its future evolution.Smart City Challenges and OpportunitiesSmart cities offer the opportunity to optimize the functioning of cities and achieve thebenefits mentioned above. This paradigm of the generation and use of informationalso opens doors to new business models based on the capacity to manageresources better, which will increase efficiency, with the consequent reduction incosts, and generate new services of value to citizens that open up new sources ofrevenue.However, the real challenge that cities face to take advantage of these benefits is notonly the collection of data, but also how to combine different sources of information toextract the maximum value by creating services based on it.The data generated by the citys activity is being under-utilized due to: Data collection from infrastructure. There are a large number of data sources that "talk" to us about the city, but that are not being used from this perspective. Also, at this point, a minimal number of sensors have been deployed in infrastructure to enable the reporting of their status. This is mainly a short-term challenge. Combination of data from different agents. The different agents to which the data is provided are not yet conscious of the value that it provides for the city, or22 #IDCWP38T ©2011 IDC
  23. 23. the data is simply not collected, or if it is, they are not willing to share it. Incentives are therefore needed to encourage collaboration between citizens, companies, and administrations when shedding light on these aspects. Identification of business models. Lack of definition of the business models that make it possible to create applications based on the data, as well as on the content of the applications themselves.BBVAs ProposalBBVAs proposal consists of the creation of an urban platform for the real-timeexchange of data that will make it possible to extract, combine, and analyze theinformation generated by the city, so that all of the agents can create services andapplications based on this data, generating a feedback process that will make the citya better place.This platform must be created in collaboration with both public and private entities.FIGURE 8Real-Time Data Exchange PlatformSource: BBVA, 2011BBVA is working to participate in the value chain of smart cities, sharing data oneconomic activity and combining it with third-party data to generate new services or toimprove the existing ones.BBVA is able to play an active role in this because: It has proven experience in the management of large volumes of information in real time with 100% security. It is a large-scale generator of data and information, with real-time access to the economic behavior of millions of citizens around the world.©2011 IDC #IDCWP38T 23
  24. 24. It is a service provider with the capability to create and offer personalized services to millions of clients — 48 million people in 32 countries.BBVAs DiferentiatorsBBVA as a source of data on the economic activity of the city: Strong ties with cities through 17,500 ATMs, 7,500 offices, 500,000 point-of-sale terminals, and 30 million cards, which generate more than 24 million transactions a day and enable it to classify streets, neighborhoods, and the activity of a city. Comprehensive knowledge of the characteristics and behavior of citizens through the aggregation of the information that they generate with their transaction activity (e.g., profile, source, movements, behavior, etc.), all through aggregated, anonymous information.BBVAs firm commitment to smart cities: Internal team and dedicated budget that is flexible depending on the pilots/projects to be carried out. Collaboration agreement with MITs SENSEable City Lab as an Industrial Member, and recent launch of a three-year joint project to develop urban applications and define the characteristics of the data exchange platform. Stakeholder in the European Unions Smart Cities Outsmart project. Willingness to collaborate with other private companies and with public administrations and city councils to make this vision a reality, with some initiatives that are already underway.Looking Forward"In order to make sustainable use of resources compatible with the increase inpopulation growth and activity in urban centers, the information that is now availablethanks to technology must be used differently. And the truth is that thanks totechnology, we can bring the necessary knowledge to the cities agents (citizens,companies, and administrations) to allow all of us to make better decisions. Webelieve in the transformational capacity of this new system of generating and usingknowledge, and our smart cities initiative has grown out of this belief" — Beatriz Lara,BBVA Group Chief Innovation Officer.Ferrovial ServiciosFerrovial Servicios has been developing the smart city idea and assessing the contextfor two years. This process recently led to the creation of the new Cities Divisionwithin Ferrovial Servicios, reporting to the CEO and integrated into the ExecutiveCommittee. Ferrovial Servicios sees the concept of smart cities as a new citymanagement model that enables the generation of cost efficiencies and enhances thequality of life of the citizens through innovation and sustainable integration of thedifferent services provided to cities. Ferrovial Servicios promotes engagement andcollaboration with city councils to improve management of public services.This new concept of smart cities addresses the need to provide solutions for thedevelopment of a macro model in cities. This is a new city management model that24 #IDCWP38T ©2011 IDC
  25. 25. goes beyond the installation of sensors and technology in the city. The frameworkimplies a model developed jointly with city councils and other institutions, such asuniversities. Ferrovial Servicios proposes a very practical approach, based onreducing costs, improving energy efficiency, and enhancing the quality of life ofcitizens.Opportunities and ChallengesFerrovial Servicios sees the smart city model as a requirement for future urbandevelopment in Spain. From the companys perspective, there are many challengesthat represent opportunities and requirements: Service quality expectations. Citizens and society in general have increasingly higher expectations in regard to the quality and quantity of services, and are demanding more participation and interaction. Overcoming economic restrictions. City expenditures are surpassing revenues, putting stress on city budgets. It is critical to adjust expenditure by improving public service levels. Open administrations. Administrations have shown a willingness to embrace new management models to address these requirements. There is a need for politicians who are committed to long-term transformation to enable city sustainability. Administrative reorganization. Cities are now defining new organizational models that are required to address this new context. Consolidation and professionalization favor the implementation of new service management frameworks. In the past, city labor forces were narrowly focused on specific tasks, but to improve efficiency, a multidisciplinary workforce is now becoming key to support and sustain city services. Economic recovery and sustainability. Cities are encouraging local employment and promoting innovation. With city size increasing year after year, energy and mobility efficiency are becoming mandatory. Environmentally friendly cities are also becoming essential for sustainability.Ferrovial Servicios ProposalFerrovial Servicios proposes a new management framework based on three mainconcepts: New, efficient model. Through its service management practice, Ferrovial Servicios has gained the experience to dramatically decrease a citys service delivery costs while increasing service quality. The generation of economies of scale through service integration is key to achieving this. Service fragmentation is already one of the biggest sources of inefficiency on which Ferrovial Servicios focuses, with different providers delivering different services with no communication, coordination, or scale. Service management and participation. City service contracts are "input based," defining the service provider involvement in terms of workforce and resources to provide the service with no communication with the service user. Within this service management framework, Ferrovial Servicios proposes a new definition based on "service output," measured through KPIs, with payment©2011 IDC #IDCWP38T 25
  26. 26. based on results and the quality of service delivered. KPIs are both internal and external to the service; Ferrovial Servicios includes the quality of service perceived by the citizens and even involves the service users to continuously improve the service. Collaboration and sustainability. Ferrovial Servicios feels that this new framework requires a structural change, rather than a temporary one. For this reason, Ferrovial Servicios considers the current two-year contract to be insufficient to establish the required trust and collaboration framework with the city council, to make large long-term investments in the city, and to change processes to achieve the expected efficiencies. Ferrovial Servicios proposes long-term contracts (minimum 10 years) to transform city services and make them sustainable and smart.FIGURE 9Savings Layers 1 Budget constraints overcome Cost reduction through enabling synergies between services Creation of economies of scale Sustainability 4 2 Energetic efficiency Maximizing the Investment in hi-tech Mobility improvement value to cities Networking: local partners, Environmentally committed institutions … Innovation promotion Improve service quality to citizens 3 Boost qualified local job creation Integrated solutions Outcomes oriented Communication improvement with communitySource: IDC, 2011Ferrovial Servicios DifferentiatorsFerrovial Servicios already provides an extensive city services portfolio, facilitatingservice integration and enabling cities to provide end-to-end services. It has an entirecentralized division focused on city service management, focusing internalmanagement to provide integrated management of city services.Ferrovial Servicios has already implemented this model in a number of cities,including Birmingham with a 20-year contract and a high level of investment. Theexperience has been positive so far and has been well received by both local laborunions and the city workforce that has joined Ferrovial Servicios.26 #IDCWP38T ©2011 IDC
  27. 27. Ferrovial Servicios is also an integrator, partnering with the city administration to findthe best solutions, technologies, and innovations to improve service delivery in termsof efficiency and user requirements. To do this, Ferrovial Servicios establishes localalliances with local city agents applying the companys global framework andtechnology alliances, to benefit from local expertise while at the same time applyingglobal practices.Preliminary estimates anticipate savings of around 20% of the current urban servicescost base. Savings depend on the services portfolio being transferred to FerrovialServicios and how efficiently they are managed. Additional savings can be obtainedfrom releasing municipal resources allocated to contract monitoring and supervision,bidding, and procurement activities.Looking ForwardFerrovial Servicios is currently evaluating which cities are ready to implement thisnew service management framework. The company will continue investing ininnovation to enhance its service offering. It is collaborating with universities such asMIT in the U.S. in order to add new solutions and innovations to its service portfolio.Ferrovial Servicios is firmly committed to the smart city concept and has acomprehensive strategic plan to implement its experience and address the needs ofcities in Spain.Santiago Olivares, Ferrovial Servicios chief executive, and Enrique Sánchez,managing director of cities, both feel that the smart city movement is already inmotion and cannot be reversed, and also that over time it will become a balancedcombination between technology and efficiency.IBMThe process of urban development is requiring cities to take greater political andeconomic control over their own development, but their progress and competitivenesswill depend increasingly on people and their qualifications, creativity, and knowledge.In this context, one of the fundamental differentiating factors will be the ability of citiesto create and absorb talent and innovation through citizen-oriented services.Cities have the chance to improve their existing capabilities to provide services bygiving their basic systems "intelligence." This is done by applying new technologiesand analytical tools that make it possible to optimize the functioning of the city andcreate a prosperous economy.Transforming cities into smart entities means gathering and using all of the availableinformation to improve decision making, forecast potential problems to prevent them,and coordinate existing resources to achieve greater operational efficiency.The objective is therefore to improve city processes by taking advantage of existingtechnology and using the massive quantity of information that the city generates tobenefit all parts of its ecosystem: companies, citizens, universities, hospitals, waterand power supply, etc. The city can be seen as a system of systems that achievesoptimization by increasing the efficiency of the interaction between all of thosesystems.©2011 IDC #IDCWP38T 27
  28. 28. Obviously, in the present economic situation, cities are facing serious economicproblems. However, this does not mean that investment must necessarily be at oddswith short-term economic goals. The opposite is true: investment aimed at improvingcity systems will significantly reduce costs and will increase the citys efficiency, whileat the same time generating long-term economic growth.Challenges and Opportunities for CitiesThe main challenges that cities face are related to the deficiencies in their basicsystems, such as transportation, energy, and water: Several estimates suggest that the price of traffic jams in developed and developing cities equals 1%–3% of GDP. (Brian Carisma and Sarah Lowder, Economic Costs of Traffic Congestion: A Literature Review for Multiple Locations, 2008.) Leaks in the water supply often account for up to 60% of water supplied. (Bill Kingdom, Roland Liemberger, and Philippe Marin, The Challenge of Reducing Non-Revenue Water in Developing Countries, December 2006.) Every year, more than 1.2 million people die in traffic accidents worldwide and there are more than 50 million accidents. (World Report on Road Traffic Injury Prevention: Main Messages, World Health Organization, 2004.) The challenges and threats to sustainability are not only significant individually, but are also interconnected. For example, buildings and transportation alone account for 25% of emissions and traffic congestion poses an increased risk to physical safety. (Global Anthropogenic GHG Emissions on Global Climate Change.)To improve the services to citizens and sustainable and economic development, citiesmust study systems holistically and make them more efficient through intelligent useof technology, facilitating the integration between the different systems. Cities need toapply a new focus that seeks: Efficient gathering of information through rational installation of sensors in the city Integration of all data sources, including sensors, video, and voice, allowing them to be concentrated The application of intelligence to this data, converting it into information by applying prediction techniques, short-term decision-making analysis, or simply displaying the data so that specific actions can be carried out Coordination and integration of people in different departments and agencies to increase operational efficiencySmart cities are defined not only by the use of available information, but also by thetranslation of that information into specific actions that are executed in such a way asto optimize resources.IBMs ProposalIBMs approach involves identifying the priorities of each city, increasing the value ofthe actions that will be undertaken with the support of the best available practices,28 #IDCWP38T ©2011 IDC
  29. 29. and taking advantage of the knowledge of current technological deploymentalternatives. Building a strategy. The goal is to identify priorities that maximize the value for the city. This requires the construction of an integrated strategy, adapted to the needs of each city, taking advantage of the new tools that are available on the market and determining what the priority objectives are, how the different systems that make up the city interact, determining their performance using different key indicators, the operational maturity level, what specific actions should be taken, and in what order. Based on best practices. Although each city has to seek its own path by establishing its own priorities, there are references from other successful initiatives in other cities that can serve as a point of reference to identify which data is most important, which analyses provide the greatest value, and which groups need to be coordinated in the execution of defined actions. Deploy the technology. Regardless of size, cities must have access to technology, either through their own resources, using shared resources, or by using cloud services, using a reference framework that includes the architecture and processes, adapted and integrated solutions, etc.To build the strategy, apply the best practices available, and deploy the technology,IBM proposes the creation of operational centers that use real-time key indicators toprovide a unified view of the agents involved, anticipate events in order to respondeffectively, and to optimize the use of the required resources.IBMs DifferentiatorsIBM has the experience gained from the execution of more than 2,000 projectsaround the world in relation to the transformation of cities of different sizes and withdifferent characteristics. A few examples: In Stockholm, rush-hour traffic has been reduced by 25% and CO2 emissions by 14% using a smart traffic-charging solution. In Madrid, emergency response time has been reduced by 25% thanks to an integrated system that provides a comprehensive, real-time view of incidents throughout the city. A major land transport authority in Asia has implemented an integrated fare system for public transport. The solution has resulted in more efficient transportation planning and nearly 70% of public transport users have benefited from cost savings through reduced fares. The solution allows the land authority to collect key data, analyze patterns, improve the planning and service of public transportation, and reduce traffic congestion. In Malta, the national electric and water companies — Enemalta and Water Services Corporation — are collaborating with IBM to help the country become the first in the world to build a smart national grid and an integrated water management and electrical system. The system will be able to identify water and electrical losses on the network, allowing both companies to manage their investments more intelligently and reduce inefficiency.©2011 IDC #IDCWP38T 29
  30. 30. In Rio de Janeiro, a smart operations center has been implemented to analyze all relevant data for weather, power, buildings, transportation, and water in real time to facilitate decision making and anticipate future problems or incidents. An alert system, for example, was created that can predict heavy rain with 48 hours notice, improving citizen safety and quality of life.IBM works with its clients, combining its business vision and advanced research anddevelopment capabilities, to give them a competitive advantage in todays rapidlychanging conditions. Its integrated focus enables IBM to help its clients in all phasesfrom the definition of the strategy through implementation. With experience in 17sectors and global capabilities in 170 countries, IBM can help organizations toanticipate changes and benefit from the new opportunities for transformation.Human ResourcesIBM considers the success of its Smarter Cities strategy to be key, and hasimplemented an organizational model worldwide to specifically support itsdevelopment. In Spain, the team comprises professionals from all sectors andbranches of knowledge, and is coordinated by Javier Gil, the director of businessdevelopment of Smarter Cities, who is in turn responsible for coordinating with therest of the global directors. With the model in place, knowledge of best practices fromother countries flows quickly.Looking ForwardIn future, cities will contain many more sensors, generating much more informationfrom different sources that could be used by everyone and that, when intelligence isapplied to it, will make it possible to significantly improve quality of life and businessdevelopment in cities. All of this requires intelligent use of technology and theapplication of standards, and, of course, the implementation of organizational modelsthat make it possible to get the most out of peoples talents.MicrosoftMicrosofts corporate labs are the source of the companys biggest innovations andwhere the R&D associated with new paradigms such as smart cities is beingdeveloped.The level of deployment of technological infrastructure needed to convert cities intosmart cities and transform data into something valuable for cities is still in its infancy.But Microsoft is participating in projects with ambitious goals that characterize thisnew paradigm of the city: More efficient cities. Maintaining the economic viability of cities is complicated because the revenue generated does not grow at the same rate as the demand for public services by citizens and companies. For this reason, more efficient management of infrastructure is needed to make it possible to cut costs while at the same time increasing the quantity and quality of the services provided to citizens and companies. Increased satisfaction of users in their interactions with the city. User influence in relation to cities is continually growing. They are participating more and demand innovative services with broad technological support that makes it possible to monitor the status of processes that are initiated and to self-manage their services in real time. From the perspective of the city, the opening of new30 #IDCWP38T ©2011 IDC
  31. 31. channels of communication allows information to be managed in real time, which translates not only into better management but also better service. Employees and public managers equipped with the resources needed to make good decisions. The people who are responsible for providing or managing public services will play a very important role in the concept of intelligent cities. Public employment will grow slower than the levels of service, so internal users will have to be equipped with advanced tools to improve productivity, internal and external collaboration, and performance monitoring, to facilitate decision making. Sustainable local development. The concept of digital cities will permit sustainable economic development of the city that is compatible with the proliferation of new applications and services, improving access to public data and citizen participation, reducing the carbon footprint, and increasing the number of local businesses and entrepreneurs.Smart City Challenges and OpportunitiesThe main challenges that cities face with this new paradigm of government andmanagement are as follows: Deployment of infrastructure. The deployment of the necessary infrastructure, such as sensors and mobile communications, to collect data on the citys activity is essential, but this alone is not enough to generate a return on investment from a smart city. The real return on investment is made at a later stage, when the data is transformed into valuable information. This means that financial justification in this phase is difficult, and it will be necessary to seek public subsidies or models of public-private collaboration as a way to overcome this barrier. Data integration and development of new applications to improve management. Integrating and exploiting the enormous amount of data and information provided by the infrastructure deployed in a digital city is a formidable challenge in terms of magnitude and cost. The complexity associated with the extraction of quality information comes from the integration with existing, inherited environments, as well as during the development of new applications and future services. Cultural change. The main barrier to the development of smart cities is the resistance to change associated with the introduction of new management models and the highly technological nature of the components. The sponsorship of managers and executives, the promotion of attractive and innovative self- services, and the availability of a technological ecosystem for public employees that is the same as what they might find in their homes or companies today will all play a key role.Cities will have to overcome these barriers because users will continue to demandhigher levels of service. For cities to respond to these demands, however, they willhave to transition to new management models.Microsofts ProposalAlthough the concept of smart cities currently revolves around the deployment of theinfrastructure needed to collect the data and parameters on the citys activity and©2011 IDC #IDCWP38T 31
  32. 32. consumption, it is also helpful at the same time to develop and integrate the newsoftware applications that make it possible to take advantage of this immensepotential: the real return lies in the transformation of the data into managementinformation, which will require the creation of a software platform in the environmentof the public services.As part of the Connected Government Framework Microsoft offers administrations areference framework to support the transformation of their management models andservice to citizens to convert them into smart cities.This framework provides a series of standards, tools, and milestones for thetechnological evolution that is needed to scale as the needs of the cities evolve overtime. For example, it describes a basic model for interoperability, expressed throughfive main concepts: Infrastructure and networks Access to data Service and components Service and integration process Security and identityAs a global software manufacturer, Microsoft provides a single platform thatseamlessly connects all of the functions, agencies, and jurisdictions to offer efficientservices to citizens and companies through an extensive ecosystem of partners andmanufacturers.Deployment can also take place like traditional ICT solutions, taking advantage of theobvious efficiency of cloud computing, or making use of a hybrid model.Microsofts Differentiators Presence at all points in the smart city value chain. Microsoft is a manufacturer of solutions for system infrastructure, productivity, collaboration, open government, data management and performance, and the development and integration of applications, with partners and manufacturers present throughout the entire value chain related to smart cities, from manufacturers of embedded electronic systems, including ISVs with business intelligence solutions, management ERP, or CRM, to telecommunication operators that provide mobility or unified communication solutions. Freedom to choose the technology deployed. Microsoft is approaching the provision of public services in the future as an irrepressible combination of services or processes provided from the city halls own datacenter, along with other services from aggregators over the Internet. Microsofts current offering of cloud services aimed at both consumers (Windows Live) and public and private organizations (Office 365 and Windows Azure) represents an opportunity to develop the smart city services at the lowest cost in terms of timeframe, the capacities offered, and the resources involved. References in the local market. In Spain, Microsoft has been collaborating with public administrations for more than 20 years, participating in significant and32 #IDCWP38T ©2011 IDC
  33. 33. innovative egovernment initiatives at the national, regional, and local levels, including the recent cases of the integrated municipal management system in a private cloud for the BiscayTIK Foundation of the Vizcaya government, and the opening up of data and citizen collaboration for the urban tree service for the Madrid City Council. In addition, Microsoft has real experience providing support to public services in a private-cloud model in the Ministry of Development, AENA, and the Generalitat de Catalunya, and using a public cloud for the Government of Aragon, the Regional Government of Castilla y Leon, and the Court of Auditors.SageSages vision of smart cities is important due to its strategy based on the generationof service experiences in its relations with an organization at all levels. In the smartcity area, this is transferred to local entities as the generators of the experience oftheir "end clients" — citizens and companies.The concept of smart cities seeks to apply intelligence to reduce the economic, social,and environmental impact of our daily activities, and the best lever for achieving thisis technology.The user or end client must always be the greatest beneficiary. This means that if thetaxes paid by each one of these citizens are seen as the investment that they make intheir cities, those cities must be profitable.Sage believes that egovernment, or e-administration, offers many opportunities forboth citizens and companies, and for local institutions. eGovernment is the fastest,most effective, and most profitable means of communication between citizens andcompanies and their respective local entities.Among the various benefits for citizens, Sage highlights the following initiatives:For citizens: Flexibility. Coordination of personal and work time. Speed. Processes carried out in real time with no travel, waiting in line, or delays. Positive perception of the public administration. This type of initiative engenders a greater level of assurance that the local institutions are investing their taxes in citizens and companies.For entities: Greater productivity, control, efficiency, and therefore increased organizational capabilities of public employees. Greater citizen focus. Also, and most importantly, the fulfillment of governments responsibility to service its citizens and companies.Smart City Challenges and OpportunitiesOne of the greatest current challenges for local entities is to improve economicefficiency. This means improving the budget deficit, but it also means improvinginvestments in the future to continue investing in citizens and companies.©2011 IDC #IDCWP38T 33
  34. 34. The investment in technology for egovernment makes it possible to generateprofitability in the very near term, with direct and very positive consequences for bothbalance sheets and society. Automation of processes: offering service 24 x 7 and generating savings of more than 40% (by eliminating paper and the need for filing), and tripling the speed of the processes. Reduction of CO2 emissions: not only due to the elimination of paper, but also by reducing travel in both public and private vehicles. Increased efficiency of processes and user satisfaction.Sages ProposalSages vision consists of generating better experiences through thinking, innovation,and development of solutions for end clients, citizens, and companies. This vision isimplemented through close collaboration with public entities, both the centralgovernment and local administrations, to continue developing and providing high-value solutions.With the vision as the starting point, Sages proposal is based on a set of initiatives tocarry out actions within the smart city area. Since 2007, Sage has been working in theegovernment are, helping entities and institutions to incorporate egovernment andadapt to the Electronic Administration Law 11/2007, monitoring and promoting theadoption of laws that natively promote the smart cities concept.As a result of these initiatives over the last year, Sage España has providedconnectivity to 1.5 million citizens through portals implemented in a number ofmunicipal governments.Sages Differentiators Although its initiative is much more expansive, Sage considers the public administration to be the main point of action for smart cities. Under this premise, Sage focuses on egovernment, providing specific solutions aimed at the management and processing of all administrative procedures transparently for both citizens and companies, as well as for local institutions in their internal daily work. Sage has an integrated vision of egovernment that includes electronic internal processing and management (taxation, residence registration, tendering, incoming/outgoing document registry), building permit applications, and online tax services through the citizen and provider portals. All these procedures are processed under the established certification standards, closing the circle with document management, using the Accede and Firmadoc platform that is part of Sages egovernment catalogue.Looking Forward"To continue the innovation of our solutions, working together with the centraladministration, local entities, and citizens and companies, adapting to all the specificneeds of the different situations. Our corporate DNA is imprinted with the need forcontinuous development with this aim, and every year we develop more surprising34 #IDCWP38T ©2011 IDC
  35. 35. new applications and services under the concept of smart cities" — Luis Pardo,Director of Public Administrations.TelefónicaTelefónica has been working with the concept of smart cities for about five years. It isbeing implemented using the same development cycles of any innovative concept,starting with initial developments in R&D and progressing through the stages toproducts and services managed by the business units.Telefónica began with exploratory developments, generating prototypes and proofs ofconcept in the middle of the last decade, then toward converting these intomarketable products.Given the different facets of smart cities and the wide range of potential services,there are varying degrees of development. Business models are being fine-tuned andthe technology is mature, so a large number of integrated products that are currentlypassing through the R&D phase to pre-commercialization and commercialization areexpected to be launched in coming years. The importance of smart city serviceswithin the company is seen in its decision to assign responsibility for the launch to arecently created global unit, the Global M2M Unit. The unit is responsible forconceiving, designing, and deploying homogeneous services at the worldwide level inall of the groups business units.Telefónica sees smart cities as the new urban ecosystems that are capable ofmaximizing economic, social, and environmental welfare by properly assigningresources and enabling more sustainable and efficient functioning. The intensive useof ICT, which facilitates the gathering of large amounts of data, combined with thelarge number of interconnected systems, makes it possible to improve decisionmaking in a wide range of aspects related to city management (from handlinginfrastructure, to improved transportation, and even the management of the citycouncils themselves). All of this will improve the provision of services while at thesame time bringing them closer to the citizens.Telefónica believes that smart cities are an excellent opportunity because they makeit possible to attract large investments, generate jobs, and position cities as centralpoints of reference in innovation. The quality of life of citizens is also improved,offering a socially cohesive city with sustainable development and growth. Likewise,smart cities also act as magnets for talent.Challenges and OpportunitiesFor Telefónica, the fundamental challenges lie in the collaboration between the citysagencies and the agents involved in the value chain. Developing the smart cityconcept should not be done by individual entities, and an ecosystem of IT providersand integrators, operators, infrastructure owners, city councils etc. should be createdto tackle the issue.Business models for smart cities involve a complex multiparty stakeholder ecosystemand require a cooperative and open market approach. For this reason, it is essentialto have a unified global vision to make intensive use of ICT and connectivity,promoting innovation and technological leadership.©2011 IDC #IDCWP38T 35

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