Smarter Planet: Transportation

George Mattathil -
4/21/2011

Let’s Build a Smarter Planet:
Transportation

© 2010 IBM Corporation

Let’s build a smarter planet: Transportation

Transportation: 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



Transportation 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.



Demands on transportation providers will increase over time, driving
the need for new intelligence and insight, greater connectivity and
transparency, 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.



Drivers of change
Exploding populations, urbanization, globalization and technology
are driving change, which creates unique challenges and
opportunities for transportation providers.

2 billion / 7 billion 476 cities over 1 million
It took all of history for human In 2010 there are 476 urban areas with
population to reach 2 billion, and only at least 1 million people. That’s an
one generation to more than triple to increase of 573% from 1950 when there
nearly 7 billion. were 83. Over half the world’s population
now lives in urban areas.

>100x growth 4 billion / 1 billion
International trade in manufactured Today, there are over 4 billion mobile
goods 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.



The need for progress is clear.

Capacity and congestion Empowered customers

100 billion Euros 30,000 in 6 days
Traffic congestion costs the European 30,000 people from 47 countries
Union over 1% of GDP, or over 100 downloaded an airline’s new smartphone
billion Euros per year. application in the first 6 days.

7 billion / 6 billion 87% use the Web
By 2020 there may be global demand for 7 87% of U.S. travelers use the Web.
billion air passenger trips. Yet airports and
airlines 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 over
the 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 are
economist Benjamin Tal. 19% fewer brand-loyal travelers in 2008 than
in 2006—a recipe for commoditization.



The need for progress is clear.

Efficient, green operations Safety and security

2.8 billion gallons >41 thousand lives
The U.S. Department of Transportation
reports over 41,000 road fatalities every
4.2 billion hours year from 1995 to 2007.
U.S. road traffic congestion during 2007
wasted 2.8 billion gallons of fuel and
4.2 billion hours. Total cost of wasted $5.9 billion
fuel and time was $87.2 billion.

3% or 13% >60% of operating cost
Airlines worldwide generate 3% of all Airlines spend $5.9 billion per year on
greenhouse gas emissions. Some say security (IATA). Airports spend >60% of their
that because aircraft operate in the upper operating cost on safety and security (ACI).
atmosphere, the impact may be equivalent
to 13% of emissions from all sources.



The opportunity for progress is clear.

18% less traffic 423 miles using 1 gallon
A European city reduced traffic by up to One ton of rail freight can be moved 423 miles
18%, and increased use of public transit by using one gallon of fuel, and a single freight
80,000 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 2050
Airline industry environmental targets: 60% fewer delayed bags
1.5% average annual improvement in A European airport reduced mishandled baggage
fuel efficiency from 2009 to 2020. by 60% using an innovative RFID-based solution.
Cap aviation CO2 emissions from
2020 onwards (carbon neutral growth).
50% reduction in CO2 emitted by 2050
99.15% on time
relative to 2005. An Asian high-speed railway achieves
99.15% on-time performance.



The 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.



This 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.



Success will depend on deeper, more holistic and informed
planning, collaboration and execution. Transportation providers will
need to become smarter.

PREDICT DEMAND AND DRAMATICALLY IMPROVE THE
OPTIMIZE 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.



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.



Almost all usable information was once authored or processed by
a person. That kind of information is now being overwhelmed by
machine-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).



With the expansion of information sources comes a large variance
in the nature of the data. This creates significant challenges to
promoting 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.



Decision making velocity is about optimizing the speed of insight as
well as the confidence that decisions and actions taken will yield the
best 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.



The transformation to smart is enabling us to become
more 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



+ + =
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.



Smart transportation:
Predict demand and optimize transportation capacity and assets.

SMART IS SMART IS
Understanding 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 IS
Creating dynamic multimodal plans and Gaining deeper insights into the utilization
models, and executing real-time operations of transportation assets and infrastructure.
based on real-time data.



Predict demand and optimize transportation capacity and assets.

Netherlands Railways uses ILOG software to weigh Stockholm—IBM solutions improved congestion and
56,000 variables including passenger demand and quality of life reducing peak period traffic by 18%. Use
available assets to assemble and schedule over 5,000 of public transit increased by 80,000 passengers per
trains per day, realizing a 6% savings in operating day. CO2 emissions from vehicles were reduced
efficiency and saving $28.5M per year. Also improved by 14%. Increased revenue is channeled back into
on-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 crew
during peak hours, improved Brisbane commuter scheduling system that evaluates the skills and location
experience and supports local economic prosperity of available employees in real time to assign staff to
by 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.


Dramatically improve the end-to-end traveler or customer experience.

SMART IS SMART IS
Increasing revenue and share by developing Reducing cost and differentiating customer service.
more loyal customers who become advocates.

SMART IS SMART IS
Optimizing capacity to meet demand and Better serving customers by anticipating
reduce delays. and catering to their needs throughout the
journey and by collaborating with adjacent
service providers.



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 Optimization
airline, reduced mishandled baggage by 60% with an software to route and consolidate shipments for their
RFID-based baggage handling system. Reduced customers, lowering supply chain transportation costs
transfer 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 Apple
payment system using smart cards for public transit, iPhone, iPod Touch, and Blackberry allowing passengers to
tolls 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 countries
increasing 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.



Improve operational efficiency while reducing environmental impact.

SMART IS SMART IS
Increasing the extended transportation Increasing the ability to deal with irregular
network capacity using current infrastructure operations across the transportation network
and assets without increasing spend, including and modes.
collaborating with adjacent service and
infrastructure providers.

SMART IS SMART IS
Saving money and time by knowing the Modeling the financial impact of business
location, status and availability of your decisions, streamlining planning, and
assets—reducing total resource use and monitoring performance to maximize
carbon footprint enterprise-wide. revenue, margins and cash flow.



Improve operational efficiency while reducing environmental impact.

A U.S. state department of transportation used Cognos Taiwan High Speed Rail Corporation uses IBM Maximo
to improve their operational reporting and financial for their advanced maintenance management solution
management, which had a direct positive effect on which used condition-based monitoring to predict and
their 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 help
by 30% by moving from curative and preventative optimize their supply chain using the Supply Chain
maintenance 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%.



Assure safety and security.

SMART IS SMART IS
Predicting and avoiding vehicle failure. Reducing congestion and accidents by
balancing traffic across routes or modes.

SMART IS SMART IS
Better managing security uniformly across Improving reliability and uptime by optimizing
the transportation network with reduced cost, the supply chain and MRO processes.
while protecting the privacy of individuals.



Assure safety and security.

A U.S. hub airport implemented a digital video A national rail system in Europe monitors its rail
surveillance solution and a security command and infrastructure in real time and resolves more than
control center. The system also uses information from 50% of issues before they affect train operation
biometric handprints and badge readers. The system using a service management solution built with
is more effective at recognizing risks and alerting the IBM Tivoli software.
command center. The effective labor cost savings is
US $2.2m per year.

Using RFID tags on parts and containers, IBM has An Italian parcel delivery service reduced their
helped a major aircraft manufacturer track aircraft security staff and increased the level of security
parts through the entire life cycle including all for their 10 hub facilities using an IBM solution
maintenance and the plane in which it is used. The that centrally monitors intrusion, access control
solution has allowed them to be more responsive to readers, digital video and smoke detection.
customers, and reduced fleet down-time without
compromising safety.



The 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



IBM’s solution strategy is aligned with the needs of
transportation 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



What 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.



We’ve only just begun to uncover what is possible on a
smarter 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.



Trademarks and notes

IBM Corporation 2011

 IBM, the IBM logo and ibm.com 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
www.ibm.com/legal/copytrade.shtml
 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: http://www.ibm.com/legal/copytrade.shtml#section-special
 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.



IBM 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 disposal

31 © 2010 IBM Corporation

Smarter Planet: Transportation

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