Smarter Planet: Transportation


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Success will depend on deeper, more holistic and informed planning, collaboration and execution. Transportation providers will need to become smarter. (1) Predict demand and optimize capacity and assets, (2) Improve operational efficiency while reducing environmental impact, (3) Dramatically improve the end-to-end traveler or customer experience, (4) Assure safety and security.

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Smarter Planet: Transportation

  1. 1. George Mattathil -4/21/2011Let’s Build a Smarter Planet:Transportation © 2010 IBM Corporation
  2. 2. Let’s build a smarter planet: TransportationTransportation: The big picture. Mode of transportation Infrastructure Air Land Sea  Automobiles  Roads  Airlines  Passenger  Ships and  Ports  Trucks  Parking terminals ferries  Cargo  Buses  Tolls  Air cargo terminals  Railroads  Rails terminals  Metro transit  Terminals  Bridges  Tunnels  Signals and communications Passengers and freight  Vehicle and infrastructure manufacturers Local and long distance  Supporting service providers for travel and freight Commercial or publicly owned © 2010 IBM Corporation
  3. 3. Let’s build a smarter planet: TransportationTransportation is critically important to civilization.Across town or across the globe… Freight: Food, clothing, shelter, fuel, materials, manufactured products. People: Travel to work, school, shopping, healthcare, recreation. Economic vitality depends on the availability of transportation. Quality of transportation improves quality of life. Cities could not exist without transportation of goods into the city. © 2010 IBM Corporation
  4. 4. Let’s build a smarter planet: TransportationDemands on transportation providers will increase over time, drivingthe need for new intelligence and insight, greater connectivity andtransparency, and improved customer service. DRIVERS OF CHANGE CHALLENGES STRATEGIC IMPERATIVES Population explosion Capacity and congestion Predict demand and World population is growing and Meet the growing, changing transportation providers will need demand efficiently, consistently optimize capacity and to expand capacity to keep up. and profitably? assets. Urbanization Empowered customers Dramatically improve As the number and size of cities Deliver transportation choices grows, pressure on transportation and information in the way that the end-to-end customer systems to move people and end customers value. experience. materials between and within those cities grows. Globalization Efficient, green operations Improve operational The growing interconnectedness Reduce cost and dependency on of the world is driving inter-city and scarce resources while reducing efficiency while reducing international growth in demand, with environmental impact. environmental impact. an expectation of improved service. Technology Safety and security Assure safety and security. Technology now enables the capture Unobtrusively reduce exposure and analysis of real-time information to security risks and increase the about the status, location and safety of operations, with less condition of everything. cost and impact on customers. © 2010 IBM Corporation
  5. 5. Let’s build a smarter planet: TransportationDrivers of changeExploding populations, urbanization, globalization and technologyare driving change, which creates unique challenges andopportunities for transportation providers.2 billion / 7 billion 476 cities over 1 millionIt took all of history for human In 2010 there are 476 urban areas withpopulation to reach 2 billion, and only at least 1 million people. That’s anone generation to more than triple to increase of 573% from 1950 when therenearly 7 billion. were 83. Over half the world’s population now lives in urban areas.>100x growth 4 billion / 1 billionInternational trade in manufactured Today, there are over 4 billion mobilegoods increased more than 100 times phone users, and over 1 billion internet(from $95 billion to $112 trillion) in the users, growing rapidly to 2 billion.50 years following 1955. © 2010 IBM Corporation
  6. 6. Let’s build a smarter planet: TransportationThe need for progress is clear.Capacity and congestion Empowered customers100 billion Euros 30,000 in 6 daysTraffic congestion costs the European 30,000 people from 47 countriesUnion over 1% of GDP, or over 100 downloaded an airline’s new smartphonebillion Euros per year. application in the first 6 days.7 billion / 6 billion 87% use the WebBy 2020 there may be global demand for 7 87% of U.S. travelers use the Web.billion air passenger trips. Yet airports andairlines will only have capacity for 6 billion.(Organization for Economic Cooperation and Development) 4.6 billion cell phones 4.6 billion worldwide by the end of 2009.$30 trillion 60% and -19%The world will spend about $30 trillion overthe next two decades on new roads and 60% of consumer sentiment around the U.S.similar projects according to CIBC air travel industry is negative, and there areeconomist Benjamin Tal. 19% fewer brand-loyal travelers in 2008 than in 2006—a recipe for commoditization. © 2010 IBM Corporation
  7. 7. Let’s build a smarter planet: TransportationThe need for progress is clear.Efficient, green operations Safety and security2.8 billion gallons >41 thousand lives The U.S. Department of Transportation reports over 41,000 road fatalities every4.2 billion hours year from 1995 to 2007.U.S. road traffic congestion during 2007wasted 2.8 billion gallons of fuel and4.2 billion hours. Total cost of wasted $5.9 billionfuel and time was $87.2 billion.3% or 13% >60% of operating costAirlines worldwide generate 3% of all Airlines spend $5.9 billion per year ongreenhouse gas emissions. Some say security (IATA). Airports spend >60% of theirthat because aircraft operate in the upper operating cost on safety and security (ACI).atmosphere, the impact may be equivalentto 13% of emissions from all sources. © 2010 IBM Corporation
  8. 8. Let’s build a smarter planet: TransportationThe opportunity for progress is clear.18% less traffic 423 miles using 1 gallonA European city reduced traffic by up to One ton of rail freight can be moved 423 miles18%, and increased use of public transit by using one gallon of fuel, and a single freight80,000 passengers per day. Citizens voted train can replace 280 trucks, reducing fuel use,to support the project. congestion and emissions.1.5% per year 10% fewer breakdowns A container port in the UK reduced equipment breakdowns by 10%.50% by 2050Airline industry environmental targets: 60% fewer delayed bags1.5% average annual improvement in A European airport reduced mishandled baggagefuel efficiency from 2009 to 2020. by 60% using an innovative RFID-based solution.Cap aviation CO2 emissions from2020 onwards (carbon neutral growth).50% reduction in CO2 emitted by 2050 99.15% on timerelative to 2005. An Asian high-speed railway achieves 99.15% on-time performance. © 2010 IBM Corporation
  9. 9. Let’s build a smarter planet: TransportationThe reality of living in a globally integrated world is upon us. Frozen credit markets, limited access to capital, unpredictable funding. Economic downturn and future uncertainty of economic growth. Environmental sustainability challenges and new global regulation. Oil and fuel volatility and long-term cost escalation. Information explosion, channel proliferation and loss of market-making power. Emergence of indirect substitutes and alternatives. Changing travel demand and shifts in buying behaviors. The need to increase or decrease capacity rapidly to align with demand. New customer demands and business models.The world is connected:economically, socially and technically. © 2010 IBM Corporation
  10. 10. Let’s build a smarter planet: TransportationThis mandate for change is a mandate for smart. The infrastructures, systems and processes that underpin how business and society function are becoming digitally aware, interconnected and infused with intelligence. The new intelligence applies to how services are delivered, to the movement of people, freight, money, information, electricity and more. Each represents a chance to do something better, faster and more productively. This is a new frame of reference with enormous promise for economic growth, with opportunities to think and act in new ways. © 2010 IBM Corporation
  11. 11. Let’s build a smarter planet: TransportationSuccess will depend on deeper, more holistic and informedplanning, collaboration and execution. Transportation providers willneed to become smarter. PREDICT DEMAND AND DRAMATICALLY IMPROVE THEOPTIMIZE CAPACITY AND ASSETS END-TO-END TRAVELER OR CUSTOMER EXPERIENCE Predict demand, align transportation asset and infrastructure deployment Understand customer needs and continuously adapt operations. and provide information and services to meet those needs in the manner preferred. TRANSPORTATION PROVIDERS IMPROVE OPERATIONAL ASSURE SAFETY EFFICIENCY WHILE REDUCING AND SECURITY ENVIRONMENTAL IMPACT Leverage new sources of Continuously balance cost and information and new ways environmental impact of scarce of using that information to resource use while exploring new improve security and safety. operational alternatives. © 2010 IBM Corporation
  12. 12. Let’s build a smarter planet: Transportation The transistor was Over 4 billion mobile invented 60 years phone subscribers by ago… the end of 2009… By 2010, there will Today, there are 1 be 30 billion RFID billion transistors for tags embedded into each person on earth. our world. 1 billion people are connected to the internet… Soon growing to 2 billion people. © 2010 IBM Corporation
  13. 13. Let’s build a smarter planet: TransportationAlmost all usable information was once authored or processed bya person. That kind of information is now being overwhelmed bymachine-generated data from sensors, RFID, meters, microphones,surveillance systems, GPS systems and all types of objects. Volume of digital data The number of emails sent every day is estimated to be over 200 billion. Every day, 15 petabytes of new information is being generated. This is 8 times more than the information in all U.S. libraries. By 2010, the amount of digital information will grow to 988 exabytes (equivalent to a stack of books from the Sun to Pluto and back). © 2010 IBM Corporation
  14. 14. Let’s build a smarter planet: TransportationWith the expansion of information sources comes a large variancein the nature of the data. This creates significant challenges topromoting real-time decision making. Variety of information Today, 80% of new data growth is unstructured content, generated by emails, documents, images, and video and audio. 38% of email archiving decisions receive input from a C-level executive and 23% from legal/compliance professionals. The average car will have 100 million lines of code by 2010. The Airbus A380 contains over 1 billion lines of code. © 2010 IBM Corporation
  15. 15. Let’s build a smarter planet: TransportationDecision making velocity is about optimizing the speed of insight aswell as the confidence that decisions and actions taken will yield thebest outcomes. Velocity of decision making Every week, the average information worker spends 14.5 hours reading and answering email, 13.3 hours creating documents, 9.6 hours searching for information and 9.5 hours analyzing information. For every 1,000 knowledge workers, $5.7 million is lost annually in time wasted reformatting information between applications. Not finding the right information costs an additional $5.3 million per year. 42% of managers say they inadvertently use the wrong information at least once per week. 70% of executives believe that poor decision making has had a degrading impact on their companies’ performance. © 2010 IBM Corporation
  16. 16. Let’s build a smarter planet: TransportationThe transformation to smart is enabling us to becomemore efficient, productive and responsive. Traditional approach Smarter approach Instinct and intuition Fact-driven Corrective Directive Years, months, weeks Hours, minutes, seconds Decision support Action support Efficient Optimized © 2010 IBM Corporation
  17. 17. Let’s build a smarter planet: Transportation + + = An opportunity to think and act in new ways. Predict demand Dramatically improve Improve operational Assure safety and optimize the end-to-end traveler efficiency while reducing and security. capacity and assets. or customer experience. environmental impact. © 2010 IBM Corporation
  18. 18. Let’s build a smarter planet: TransportationSmart transportation:Predict demand and optimize transportation capacity and assets.SMART IS SMART ISUnderstanding and modeling a holistic view Modeling scenarios and better planning routes,of demand—across the transportation network. schedules and maintenance by optimizing assets, infrastructure and capacity.SMART IS SMART ISCreating dynamic multimodal plans and Gaining deeper insights into the utilizationmodels, and executing real-time operations of transportation assets and infrastructure.based on real-time data. © 2010 IBM Corporation
  19. 19. Let’s build a smarter planet: TransportationSmart transportation:Predict demand and optimize transportation capacity and assets.Netherlands Railways uses ILOG software to weigh Stockholm—IBM solutions improved congestion and56,000 variables including passenger demand and quality of life reducing peak period traffic by 18%. Useavailable assets to assemble and schedule over 5,000 of public transit increased by 80,000 passengers pertrains per day, realizing a 6% savings in operating day. CO2 emissions from vehicles were reducedefficiency and saving $28.5M per year. Also improved by 14%. Increased revenue is channeled back intoon-time performance by 2%, helping capture an improving public transportation.additional $57M in fares.Queensland Motorways reduced road congestion A large railway in Asia uses an automated crewduring peak hours, improved Brisbane commuter scheduling system that evaluates the skills and locationexperience and supports local economic prosperity of available employees in real time to assign staff toby avoiding traffic snarls in commercial areas. scheduled trains. Employees receive their assignments via cell phone text messages, and log in to work using biometric scanners, ensuring positive identification and access control. The system provides management with real time information about available staff and forward- looking intelligence to optimize resource allocation, reducing staff shortages and overtime expense. © 2010 IBM Corporation
  20. 20. Let’s build a smarter planet: TransportationSmart transportation:Dramatically improve the end-to-end traveler or customer experience.SMART IS SMART ISIncreasing revenue and share by developing Reducing cost and differentiating customer service.more loyal customers who become advocates.SMART IS SMART ISOptimizing capacity to meet demand and Better serving customers by anticipatingreduce delays. and catering to their needs throughout the journey and by collaborating with adjacent service providers. © 2010 IBM Corporation
  21. 21. Let’s build a smarter planet: TransportationSmart transportation:Dramatically improve the end-to-end traveler or customer experience.A European airport, in partnership with an international A leading global logistics firm uses ILOG Optimizationairline, reduced mishandled baggage by 60% with an software to route and consolidate shipments for theirRFID-based baggage handling system. Reduced customers, lowering supply chain transportation coststransfer time by 22% and operational cost by 40%. by up to 25%.Singapore Land Transport Authority provides a unified IBM developed an application for Air Canada using the Applepayment system using smart cards for public transit, iPhone, iPod Touch, and Blackberry allowing passengers totolls and parking, improving the commuter experience. book flights, download electronic boarding passes, check-in,Planners use data from the system to develop optimal get flight status and book rental cars and other services.routes and schedules, reducing congestion and There were over 30k downloads of the app from 47 countriesincreasing the appeal of public transit. Reduced fare in the first 6 days and a 13.5% increase in mobile check-ins.leakage by 80% and cost of fare processing by 2%. 93% of Air Canada passengers say multichannel self service has improved their travel experience. Canadian New Media Award for Best Mobile App of 2009. © 2010 IBM Corporation
  22. 22. Let’s build a smarter planet: TransportationSmart transportation:Improve operational efficiency while reducing environmental impact.SMART IS SMART ISIncreasing the extended transportation Increasing the ability to deal with irregularnetwork capacity using current infrastructure operations across the transportation networkand assets without increasing spend, including and modes.collaborating with adjacent service andinfrastructure providers.SMART IS SMART ISSaving money and time by knowing the Modeling the financial impact of businesslocation, status and availability of your decisions, streamlining planning, andassets—reducing total resource use and monitoring performance to maximizecarbon footprint enterprise-wide. revenue, margins and cash flow. © 2010 IBM Corporation
  23. 23. Let’s build a smarter planet: TransportationSmart transportation:Improve operational efficiency while reducing environmental impact.A U.S. state department of transportation used Cognos Taiwan High Speed Rail Corporation uses IBM Maximoto improve their operational reporting and financial for their advanced maintenance management solutionmanagement, which had a direct positive effect on which used condition-based monitoring to predict andtheir bond rating and interest rates available to them. act on maintenance requirements and manage over 320k asset elements. They have improved asset life and availability with 99.15% on-time train performance.A major European railroad reduces maintenance cost COSCO, a global shipping firm, engaged IBM to helpby 30% by moving from curative and preventative optimize their supply chain using the Supply Chainmaintenance to predictive maintenance using Maximo. Network Optimization Workbench (SNOW). As a result of the engagement, COSCO consolidated from 100 to 40 distribution centers, lowered logistics cost by 23% and reduced CO2 emissions by 15%. © 2010 IBM Corporation
  24. 24. Let’s build a smarter planet: TransportationSmart transportation:Assure safety and security.SMART IS SMART ISPredicting and avoiding vehicle failure. Reducing congestion and accidents by balancing traffic across routes or modes.SMART IS SMART ISBetter managing security uniformly across Improving reliability and uptime by optimizingthe transportation network with reduced cost, the supply chain and MRO processes.while protecting the privacy of individuals. © 2010 IBM Corporation
  25. 25. Let’s build a smarter planet: TransportationSmart transportation:Assure safety and security.A U.S. hub airport implemented a digital video A national rail system in Europe monitors its railsurveillance solution and a security command and infrastructure in real time and resolves more thancontrol center. The system also uses information from 50% of issues before they affect train operationbiometric handprints and badge readers. The system using a service management solution built withis more effective at recognizing risks and alerting the IBM Tivoli software.command center. The effective labor cost savings isUS $2.2m per year.Using RFID tags on parts and containers, IBM has An Italian parcel delivery service reduced theirhelped a major aircraft manufacturer track aircraft security staff and increased the level of securityparts through the entire life cycle including all for their 10 hub facilities using an IBM solutionmaintenance and the plane in which it is used. The that centrally monitors intrusion, access controlsolution has allowed them to be more responsive to readers, digital video and smoke detection.customers, and reduced fleet down-time withoutcompromising safety. © 2010 IBM Corporation
  26. 26. Let’s build a smarter planet: TransportationThe smarter transportation system is an interdependent ecosystem—integrated around standard information, processes and technology. Transportation Governments providers Participants aggregate, analyze and act upon data to: Terminal Regulators operators  Predict demand and Information optimize transportation assets and infrastructure. Processes Freight and Travel  Dramatically improve the logistics Technology service providers service end-to-end traveler or providers customer experience. Passenger and  Improve operational journey information Passengers Freight efficiency while reducing Freight shipment and drivers customers environmental impact. information Location, status and Vehicle and Influencers:  Assure safety and security. condition of assets and infrastructure Associations infrastructure manufacturers and universities Usage patterns across all modes of transportation © 2010 IBM Corporation
  27. 27. Let’s build a smarter planet: TransportationIBM’s solution strategy is aligned with the needs oftransportation providers. STRATEGIC IMPERATIVES HOW IBM HELPS MEET THE NEED Predict demand and optimize  Demand and revenue management  Road user charging transportation assets and  Enterprise asset management and MRO  Fleet optimization infrastructure.  Route and schedule optimization  Integrated fare  Traffic modeling and prediction management  Irregular operations management Dramatically improve the end-to-  Reservation system modernization  Loyalty management end traveler/customer experience.  Multichannel self-service  Cargo management  Ticketing and payment systems  Risk management  One view of the customer  CRM  Customer analytics Improve operational efficiency while  Enterprise asset management  Resource optimization reducing environmental impact.  Enterprise infrastructure management  Carbon management  Enterprise application systems  Condition monitoring  Green supply chain optimization  Systems virtualization Assure safety and security.  Identity and access management  Biometric identification  Condition based monitoring  Risk analytics using wireless sensors  Digital video  Data and application security surveillance  Server and endpoint security  Network security © 2010 IBM Corporation
  28. 28. Let’s build a smarter planet: TransportationWhat makes IBM different? IBM’s breadth of experience working with transportation providers worldwide across all modes of transportation is unparalleled. IBM has strong analytical tools to aggregate, analyze and act upon data gathered from disparate sources—providing solutions for planning, scheduling, routing, CRM, pricing, revenue management, intelligent traffic and infrastructure management. IBM has practical experience implementing innovative solutions to help clients become smarter—more instrumented, interconnected and intelligent. IBM is the market leader in collaborating with transportation clients to deliver: the fastest time to value with minimum risk through innovative solutions; the most comprehensive portfolio of hardware, software and services; and deep domain experience and expertise. IBM Centers of Excellence, IBM research, proofs of concept and first-of-a-kind projects demonstrate innovation and competence in solution implementation. © 2010 IBM Corporation
  29. 29. Let’s build a smarter planet: TransportationWe’ve only just begun to uncover what is possible on asmarter planet. The infrastructures, systems and processes that underpin how business and society function are becoming digitally aware, interconnected and infused with intelligence. The new intelligence applies to how services are delivered; to the movement of people, freight, money, information and electricity; and to how billions of people live and work. Each represents a chance to do something better, faster and more productively. This is a new frame of reference with enormous promise for economic growth, with opportunities to think and act in new ways. Let’s work together to drive real progress. © 2010 IBM Corporation
  30. 30. Let’s build a smarter planet: TransportationTrademarks and notes IBM Corporation 2011  IBM, the IBM logo and are registered trademarks, and other company, product or service names may be trademarks or service marks of International Business Machines Corporation in the United States, other countries, or both. A current list of IBM trademarks is available on the Web at “Copyright and trademark information” at  Adobe, the Adobe logo, PostScript, the PostScript logo, Cell Broadband Engine, Intel, the Intel logo, Intel Inside, the Intel Inside logo, Intel Centrino, the Intel Centrino logo, Celeron, Intel Xeon, Intel SpeedStep, Itanium, IT Infrastructure Library, ITIL, Java and all Java-based trademarks, Linux, Microsoft, Windows, Windows NT, the Windows logo, and UNIX are trademarks or service marks of others as described under “Special attributions” at:  Other company, product and service names may be trademarks or service marks of others.  References in this publication to IBM products or services do not imply that IBM intends to make them available in all countries in which IBM operates. © 2010 IBM Corporation
  31. 31. Let’s build a smarter planet: TransportationIBM Global Financing versus financing providers IBM Global Financing Other IT companies More than 30 years of experience as an asset-  Generally can’t match the depth and breadth of based lender IBM’s IT portfolio and IBM Global Financing’s scope, experience and expertise Optimal understanding of IT across businesses of all sizes and virtually all industries  Often must use third-party finance providers Global client financing and asset recovery reach Comprehensive financing portfolio to address Traditional banks needs across the IT life cycle  Generally lack expertise in technology financing Competitive rates, terms and conditions  Tend to be limited to the acquisition phase of IT life designed to be easy to understand, and flexible cycle end-of-lease options  Often have limited scope to exploit residual value of Based on our expertise and market knowledge, financed equipment we are able to take strong residual value positions with respect to hardware, resulting in  Rarely serve the full needs of IT life cycle very competitive rates for our FMV lease  By and large require restrictive loan covenants and offerings end-of-lease options Integration of financing into IBM’s solutions  Offer no equipment recycling or disposal31 © 2010 IBM Corporation