White Paper TransportationThe state ofsmarter transportationSmarter Industries Symposium, Barcelona, November 2010
1 The state of smarter transportationThe possibility of smarter industries business to Barcelona to share their stories of a SmarterTwo years ago, IBM first introduced the concept of a Smarter Planet. We called the event Smarter Industries SymposiumPlanet, a world in which collaboration, systems thinking and because while the notion of a Smarter Planet may be global indata analytics improve the efficiency and effectiveness of the scope, the work of building it happens industry by industry,many systems that facilitate life on earth. It was a bold idea, company by company, government by government, andbut one that resonated within the business and government process by process.communities because it is rooted in a deep understanding ofwhat’s possible with today’s technologies and capabilities. For Representatives from ten different industries attended thethis reason, our clients and business partners immediately event, including banking, communications, energy andembraced and echoed the concept. utilities, healthcare, government, insurance, oil and gas, retail, transportation and electronics. And though each of theseTwo years later, IBM has collaborated with more than 600 industries faces unique circumstances in today’s economicdifferent organizations worldwide that are each doing their environment, the most advanced organizations in each fieldpart in making this vision a reality. In November 2010, we share a common outlook. They are the organizations that havebrought many of these world leaders in government and stopped seeing change as a threat and started seeing it as an opportunity. They have changed the conversation from one about problems to one about possibilities.
2“We are climbing out of a global downturn in an environment A path to possibilitiesof accelerating complexity and uncertainty, with an explosion Having the design point of the customer is important becauseof data all around us,” said Frank Kern, Senior Vice President without it, all the innovation in the world has no purpose.and Managing Partner at IBM Global Business Services. “Yet John Kao, Chairman of the World Economic Forum’s Globalthe question on the mind of global business leaders is shifting Advisory Council on Innovation, explained it to symposiumfrom ‘What’s my biggest problem?’ to ‘What’s my greatest attendees like this: “Creativity and innovation are not theopportunity? What are my prospects? What’s available to my same thing. Creativity is the ability to generate new ideas. Butenterprise now that wasn’t before?’” innovation requires a goal to move forward.”Analytics, ROI and the customer Kao advocates having a plan, or a system, when pursuing anyDuring the course of the Symposium, attendees saw many innovation. And smarter industries are no different – which isexamples of how organizations are answering those questions why IBM has produced more than 30 industry-specificwith action. In particular, they saw the power of data and progression paths that identify key transformation milestones,analytics in making smarter industries a reality. “Analytics: outline the return and benefits of each step, and simplify theThe New Path to Value,” a study jointly conducted by IBM journey to getting smarter. The progression paths addressand the MIT Sloan Management Review, found organizations specific aspects of various industries, from building a collab-that utilize analytics outperform those that are just beginning orative care model in healthcare to meeting regulatoryto adopt analytics by a factor of three.1 They use them to requirements for municipal water systems.understand historical trends, to model current conditions andto predict the return on investment of different courses of Not surprisingly, some consistent patterns emerge at eachaction. stage of transformation, which Ginni Rometty, Senior Vice President and Group Executive for Sales, Marketing andAnd though the approaches to analytics vary, every organiza- Strategy at IBM, noted to attendees of the symposium:tion shared a remarkably consistent design point: thecustomer. From Fundacio TicSalut, an institution of the 1. Instrument to manage – The collection of data toregional healthcare administrator in Spain that has built a measure, monitor and understand a systemshared electronic medical records system to improve health 2. Integrate to innovate – The analysis of that data to seeservices for its citizens, to Best Buy, the electronics retailer patterns and identify opportunitythat is listening to its customers across multiple channels and 3. Optimize to transform – The action of reaching system-engaging them over social networks, smarter industries are specific goals and redefining what’s possible.being built around serving the needs of the customer. Throughout this report, you will read about what was shared“Our customers are asking us to know them, empower them, at the Smarter Industries Symposium and the stories of howoffer them and support them,” said John Thompson, Senior many organizations in your industry are applying this progres-Vice President and General Manager at BestBuy.com. “We’re sion path. It’s a path that is helping improve the efficiency andinclined to listen to them.” operations of hundreds of IBM clients and business partners around the world. It is a path to possibility. And it’s a path to a Smarter Planet, one industry at a time.
3 The state of smarter transportation Seamless possibilities Customer expectations The travel industry is defined by Like other sectors, the travel industry is awash in data that can diversity but unified by a common be used to achieve more seamless travel, but the incentives purpose. From public entities to to take on the challenge of analyzing and coordinating this private companies and from airports data are more difficult to come by. Both well-established and to subways to railways, these emerging technologies already collect data about passengers ecosystem members leverage a diverse as they move through the travel process, from toll chargingrange of assets to move passengers and freight across cities, systems to subway and bus cards, to airport check-ins. But verywithin countries and around the globe. little of this data is used to integrate the end-to-end experience on behalf of the travelers. Travel providers do their best toNot surprisingly, contributors to the Smarter Industries optimize the travel experience within their individual travelSymposium brought divergent perspectives and paradigms to silos, but they have not seized the opportunity to leveragethe table. But they share a strong commitment to improving data across travel modes to further improve the experience forthe travel experience for their customers. Indeed, many customers.participants acknowledged that delivering interconnectedtravel and a superb traveler experience across all modes Recent IBM research has found that some customers feel theyof commercial and public passenger transportation is the should be able to pay a single provider to take them from theiruniversal end game of the travel and transportation industry. origin all the way to their final destination, without having to manage the coordination of modes on their own. OtherAt the outset of the travel-focused symposium sessions, IBM travelers simply expect that schedules for commuter trainsset forth a vision for the future of travel: with tighter coupling and buses, for example, should align with departure times atand coordination among travel modes, providers can deliver airports for common destinations.seamless journeys to travelers, alleviating many of the mostcommon challenges that plague the travel sector today. IBM Conference participants amplified these findings with storiesasked participants to advance this vision through discussion of customers who, having conferred with other travelersand debate during the sessions. through social media, have come to expect more seamless journeys. Because travelers expect that more is possible, IBM asked conference participants what plans they have in place to remedy these challenges and suggested that providers that resolve such issues have much to gain in the way of increased revenue and traveler loyalty.
4Traveler-centric innovation Standards and the role of governmentIndustry participants expressed near-universal concurrence Travel providers acknowledged that the concept of seamlessthat the time for convergence in the travel industry has arrived. travel can and will be realized by sub-sectors of the industrySeamless travel is not only desirable but, in the words of over time, but they also observed that many of the mostone participant, “It is clear that eventually this vision will be significant barriers will be difficult to overcome. In particular,brought to life. The question is who in this room will make it while participants agreed that sharing data about passengerhappen – and what happens to the rest of us when they do.” schedules, operational changes and recovery plans is essential for the development and delivery of seamless travel solutions,Participants shared valuable insights from their own they acknowledged it will be difficult to justify theseorganizations, which helped guide the thinking about how best investments without confidence that the standards to whichto accomplish this. Many stressed that it is vitally important to they develop these solutions are common across providers.bring customers into the design process early because, in thewords of Ab Oosting, Senior Project Manager, City Region of This is where governments have played an important role inEindhoven, The Netherlands, “You can’t manage innovation,” the past, assisting travel providers to align incentives; it is alsobut rather you can “create an environment where innovation where government leaders offered other members of the travelcan be formulated and developed by the travel ecosystem.” ecosystem significant insight during the conference. AlessioIndeed, conference participants agreed that travelers are the Chiavetta, Mayor of Comune di Nettuno, Italy, observed, “Thebest source of innovation and are the most important resource surest way of ensuring cooperation among public and privatein resolving the challenges facing the travel industry. Lise entities is to have a published and endorsed master plan toFournel, Senior Vice President of E-Commerce and CIO bring in Smarter cities.” This sentiment was echoed by Dennisat Air Canada, and Koos Noordeloos, Senior Manager of Christiansen, of the Texas Transportation Institute, whoCapacity and Innovation at Amsterdam’s Schiphol Airport, reasoned, “The most appropriate contribution governmentboth made it clear that their most successful initiatives were can make to Smarter Transportation is to set down standardsderived and implemented in close partnership with customer to make the system interconnect and to highlight examples ofgroups. successes so that other organizations and entities can see the value in moving forward on this vision.”Of course, the real challenge in bringing the seamless travelvision to life is finding a business model or public motive that Critically, industry participants also recognized that smarterinduces participants to define standards, share data and design travel will depend on the flexibility of the solutions and systemssystems to facilitate a more integrated journey across travel that are put in place; despite providers’ best efforts to predictmodes. The Singapore Land Transport Authority successfully the future of the travel industry, unforeseen circumstances mayembodied this vision when it developed a predictive traffic derail any specific plans to implement cross-modal seamlesssystem to integrate multiple modes of travel around the travel. For this reason, participants suggested that despite thecommon objective of improving the traveler experience. This challenges created by unconnected public and private systems,system calculates optimal routes and schedules to reduce organic evolution should be encouraged when possible so thatcongestion. Not only has the system increased the appeal of many competing solutions are forced to vie for customers.public transit and cut fare leakage by 80 percent, it has alsoreduced the cost of fare processing by 2 percent.