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City as a Customer Strategy: Growth Opportunities From The Cities of Tomorrow Archana Amarnath Program Manager, Visionary Innovation Research Group Top Mega Trends Covered By The Visionary Innovation Research Division What is a Mega Trend? Mega trends are transformative, global forces that define the future world with their far reaching impact on business, societies, economies, cultures and personal lives. Urbanization – City as a Customer Bricks and Clicks Future Infrastructure Development Smart is the New Green Innovating to Zero Health, Wellness and Well Being Social Trends New Business Models: Value for Many Future of Mobility Connectivity and Convergence Beyond BRIC: The Next Game Changers 2 Agenda Introduction and Definition of City as a Customer Strategy Smart City Market - Key Smart City Segments of 2025 City Stakeholders Analysis – Key Market Participants and New Business Models Macro to Micro Opportunities 3 Mega Cities Mega Regions Mega Corridor Smart and Sustainable Cities 4 There Will be 35 Mega Cities Globally By 2025 - 77% of Mega Cities to be From Developing World Moscow Chicago New York City London Paris Madrid Los Angeles Mexico City Nanjing Harbin Shanghai Beijing Hangzhou Tianjin Seoul Tehran Tokyo ChengduWuhan Delhi Osaka-Kobe Chongqing Cairo Guangzhou Mumbai Kolkata Shenzhen Foshan Istanbul Bogotá Hong Kong Jakarta Rio de Janeiro São Paulo Buenos Aires Population in 2025 > 27 Million 18-27 Million 8-18 Million Note: Mega City is defined as a city with population of over 8 million and GDP of $250 billion or more Source: : United Nations, Department of Economic and Social Affairs, Population Division (2012). World Urbanization Prospects: The 2011 Revision , Frost & Sullivan, 2012 5 China to have 13 Mega Cities That Will Contribute $6.24 Trillion to the Total GDP in 2025 By 2025, 921 Million people (65.4% of China’s Population) will Live in Cities (equals to 2.6 times of U.S. Total Population) Mega cities in 2025 Emerging mega cities in 2025 (4-8 million population) Haerbin, 8.2 Ulumuqi Beijing, 22.6 Changchun Tianjin, 11.9 Shenyang Dalian Tiayuan Shijiazhuang Qingdao Xi’an Wuhan, 12.7 Jinan Zhengzhou Nanjing, 8.5 Chengdu, 10.0 No. of Province 3 Urbanization Rate >80% % in Country Urban Population Suzhou Wuxi Chongqing ,13.6 Changsha 6.9 % 5 70 – 79 % 28.3% 7 60 - 69% 26.4% 14 50 - 59% 36.3% 2 < 50 % 2.1% Ningbo Hangzhou, 8.5 Wenzhou Kunming Dongguan Xiamen Guangzhou ,15.5 Shantou Shenzhen,15.6 Zhongshan Foshan, 9.8 Note: Mega City is defined as a city with population of over 8 million and GDP of $250 billion or more. The figures represent population in Million Shanghai, 28.4 Hefei Hong Kong, 8.2 Source: Department of Economics and Social Affairs, United Nations; International Institute of Applied System Analysis; Frost & Sullivan 6 Case Study: Delhi-Mumbai Industrial Corridor—One of the Biggest Manmade Corridors; Completed by 2020 Dadri-Noida– Ghaziabad Investment Region, UP Manesar–Bawal Investment Region, Haryana KhushkheraBhiwadi-Neemrana Investment Region, Rajasthan Pithampur-DharMhow Investment Region, MP Gujarat-Ahmedabad Dholera Investment Region Nashik–Sinnar– Igatpuri Investment Region Maharashtra-Dighi Port Industrial Area $90 1,483 billion The estimated funding from Japanese and Indian government on a 50:50 basis 7 states to be integrated along the corridor are Delhi, Uttar Pradesh, Haryana, Madhya Pradesh, Rajasthan, Gujarat, and Maharashtra 9 Industrial zones, 7 emerging Mega Cities 3 ports, 6 airports and high speed freight lines km road length and 1,500 km of rail link of DMIC supported by financial and technical aid from Japan 3 million people to get employment opportunities with over 67 percent in the manufacturing/processing industry 6 investment regions each of 200 square km size, doubling employment and tripling exports in 5 years Source and Photo Credits: DMIC 7 Cities, and Not Countries, Will Drive Wealth Creation In the Future Cities like Seoul account for 50% of the country’s GDP; Budapest (Hungary) and Brussels (Belgium) each for roughly 45%. Cities like Milan account for 11% of the country’s GDP (~66% employment rate) . What are the Micro Implications? High Economic Power Hub and Spoke Business Model Transit oriented development New Mobility Solutions City as a Customer 8 City as a Customer –Urbanization To Create Numerous Cross-Sectoral Micro Implications and Opportunities Healthcare: M health, e-health services, Health Access for All with focus on Primary care, prevention and monitoring, Medi Cities, Hub and Spoke Hospitals Mobility: Car sharing, bike sharing, integrated door-todoor multi modal transport solutions Security: Safe Cities, sensors, Intelligent home security Environment: Water treatment systems Integrated Power Sources and Zero Waste for Industry Retail: New Retail Formats, Online retail, Virtual Stores, Retail Parks Smart Products: Smart Infrastructure Smart homes, Green buildings, Personalized energy monitoring, Energy: Pattern recognition smart meters, Home Area Networks Cleaner technologies such as CHP Introduction and Definition of Smart Cities 11 Smart Diamond that Defines a Smart City Smart Governance Smart Citizen Smart Energy Smart Healthcare Smart Building 4G Smart Technology Smart Mobility Smart Infrastructure* * Other Smart Infrastructure such as sensor networks, digital management of water utilities not included in other segments Source: Frost & Sullivan analysis. 12 Key Parameters That Will Define a Smart City in 2020 Smart Energy: Digital Management of Energy • Smart Grids • Smart Meters • Intelligent Energy Storage Smart Technology: Seamless Connectivity • Broadband penetration rate of over 80% • Location Based Services, Augmented Reality, GPS enabled devices/ phones Smart Buildings: Automated Intelligent Buildings • Building Automation • Intelligent Buildings: Advance d HVAC, Lighting Equipment Smart Infrastructure: Digital Management of Infrastructure* • Sensor Networks • Digital Water and Waste Management Smart Governance: Government-onthe-Go • e-Government • e-Education • Disaster Management Solutions Note: *Infrastructure not included in other segments Smart Mobility: Intelligent Mobility • Low-emission Mobility • Integrated Mobility Solutions • Multimodal Transport Smart Healthcare: Intelligent Healthcare Technology • Use of ehealth and mhealth systems • Intelligent and connected medical devices Smart Citizen: Civic Digital Natives • Use of Green Mobility Options • Smart Lifestyle Choices • Energy conscious Source: Frost & Sullivan analysis. Global Smart Cities Over 26 Global Cities to be SMART Cities in 2025 - More than 50% of Smart cities of 2025 will be from Europe and North America Calgary Vancouver Amsterdam Copenhagen Beijing Tokyo Stockholm Oslo Helsinki Seattle San Francisco Los Angeles London Paris Toronto Chicago New York Barcelona Santander (upcoming) Berlin Vienna Tianjin Seoul Wuhan Shenzhen Singapore Sydney Selected Smart Cities in 2025 Source: Forbes Smart City List, Innovation City Index, Specific Smart Project Websites for Each City, Frost & Sullivan 14 Smart cities To Create Huge Business Opportunities With A Market Value Of $3.3 Trillion By 2025 Smart City Market by Segments, Global, 2025 Smart Building 6 1 CAGR: 4.1% (2012-2025) 7.4% Smart Healthcare 5 Smart Governance and Smart Security 10.4% CAGR: 11.6% (2012-2025) CAGR: 8.8% (2012-2025) 36.8% 10.5% Smart Transportation Smart City Market 2 4 CAGR: 19.6% (2012-2025) Smart Energy 11.4% CAGR: 28.7% (2012-2025) 23.4% Smart Infrastructure* 3 CAGR: 12.0% (2012-2025) Note: The graph represent the market share of each segment in the smart city market. For more information on smart city market sectors please refer to appendix *Other Smart Infrastructure such as sensor networks, digital management of water utilities not included in other segments Source: Frost & Sullivan analysis. Case Study of SMART City Plan: In Santander, Spain 10,000 sensors feed BIG DATA into Data Servers that Integrates Various Infrastructure 16 Difference Between Smart and Sustainable City Smart City Smart cities are cities built on “Smart” and “Intelligent” solutions and technology that will lead to adoption of at least 5 out of the 8 smart parameters. Sustainable City Sustainable cities are cities that are built on ecofriendly basis. These may not necessarily include “intelligent” systems but are built more on an energy-efficient or environment-friendly objective. 17 Global Snapshot of Sustainable/ Eco Cities in 2025 Europe Cardiff Brussels Zurich Lyon Frankfurt Milan Rome Cambridge shire Marseille Tampere North America Portland Sacramento Oakland San Diego Dallas Houston Orlando Austin Minneapolis San Jose Denver Boston Ottawa Montreal Philadelphia Washington DC Columbus Edmonton Sustainable / eco-city in 2025 Sustainable / eco-city built from scratch Latin America Brasília Belo Horizonte São Paulo Rio de Janeiro Curitiba Bogotá Mexico City Geneva Graz Riga Vilnius Metz Tubingen Montpellier Bordeaux Casablanca Norwich Hamburg Middle East & Africa Accra Johannesburg Cape Town Durban Tunis Masdar City Doha Note: Eco Cities are cities built on a green initiative, from buildings to transport, governance, city planning, energy, and technology. These cities are either upgraded or built from scratch Moreland Manchester Gothenburg Isle of Wight Glasgow Liverpool Dublin Marseille Bergen Edinburgh Nantes Gyor Istanbul Bursa Ankara Eskisehir Izmir Denizli Antalya Adana Edinburgh Asia-Pacific & Australia GIFT Sino-Singapore Tianjin Eco-city, Tianjin Nanjing Hong Kong Foshan Guangzhou Wuxi Osaka Yokohama Wanzhuang Eco-city, Hebei Medan Palembang Jakarta Surabaya Denpasar Makasar Balikpapan Adelaide Moreland Source: Siemens Green Index, Frost & Sullivan, 2012 18 City Stakeholders Analysis , Business Models City Stakeholders Analysis- Relationship Between Stakeholders are Integral to a City Project Direct Stakeholders City as a Customer Role in smart city City Authorities Stakeholder Types Government Management Service Delivery Infrastructure and Services Local Enterprises Citizens • Plan and execute governance system, government services and fundamental services • Provide access to employment, healthcare, education, and recreation. • Located in the city to promote industrial growth and enable market growth. • Use of intelligence and insight to create plans, system strategies, and support decisions • Supports effective and efficient infrastructure. • Create digital platform for data processing and analysing • Create digital infrastructure . • Plays the role of interface and operator • Enables the generation of intelligence • Provide intelligent, logical and information framework • Creates and delivers advanced services Indirect Stakeholders Enabling City as a Customer Technology and Application Providers Systems Integrators Infrastructure Services Providers and Operators 20 Smart Cities Business Models Majority of smart city projects are developed under Business Operate Managed (BOM) business model 2 1 The smart city planner independently builds the city infrastructure and delivers smart city services. The operation and maintenance of the services is fully under the planner’s control. Eg. Jubail 4 The smart city planner appoints a trusted partner to develop the city infrastructure and services. The partner operates and manages the smart city services. The city planner has no role further. Most of the publicprivate partnerships are build on this model. Eg. Rio Build Business Own Own Operate Operate (BOO) (BOO) Build Operate Transfer (BOT) Build Business Operate Operate Managed Manage (BOM) (BOM) Open Business Model (OBM) The smart city planner appoints a trusted partner to build the city infrastructure and provide smart city services for a particular area within a time period. After completion the operation is handover to the smart city planner. Eg. Norcross 3 The city planner allows any qualified company or business organisation to build city infrastructure and provide city services. The city planner however will impose some regulatory obligations. Eg. Amsterdam Note: City Planner: Governing authorities involved with urban planning/land use planning that design plans for the development and management of urban and suburban areas based on land use compatibility, economic trends, environmental implications and social needs. Partner: Private / public stakeholders collaborating with city authorities over urban planning and smart city initiatives Source: Frost & Sullivan analysis. 21 Convergence of Competition Convergence of Technology Will Lead to Convergence of Competition IT Players SAP HP Point of Convergence ST Electronics Oracle Microsoft Google Cisco Verizon Telecom Players IBM AlcatelLucent Senergy O2 Deutsche Telekom Siemens General Electric ABB Emerson Schneider Electric Honeywell Energy/Infrastructure Players Eaton Johnson Controls Rockwell Automation Automation/Building Control Players Note: This is an illustration and does not show all market players Selective Wish List of Products/Services Portfolio That Can be Offered by Smart City Integrators Products / Services SECTORS Mobility Energy IT and Telecom Security Healthcare Traffic management Smart grids; energy management City Cloud Computing Identity Management Integrated health record system Electric vehicle charging infrastructure Smart meters Data-centric Consulting Services Cyber Security E-health Tolling and congestion charging Smart home appliances Information Management Services Intelligent, real time security management M-health Integrated mobility management Flow and regenerative technologies IT Advisory Services Sensor actuator solutions Tele-consultation facility Geo Fencing & Asset Tracking Renewable integration Managed Security Services Logistics / Mobility security management Home health Parking Management and Payment Solutions Sensors and Smart Material Building security Data and Business Analytics for Healthcare Authentication and Monitoring (Sensors, Video Surveillance) Governance e-Services Transactions and Payments eCommunication Notifications and alert service e-Administration Tools for public administration e-Security Law enforcement and emergency management e-Businesses Registration Services Patent Renewals M-Governance SMS Tax Returns SMS Utility Bills Source: Frost & Sullivan Analysis 24 There Are Four Different Roles Smart Cities Players Can Take 1 Integrators 2 Network Service Providers 3 Pure-Play Product Vendors 4 Managed Service Providers Smart city integrators are project integrators that bring together various sectors of the smart city through pre-packaged platforms thereby providing a unified , holistic and end-to-end integration of multiple sectors Example: IBM, Oracle, Accenture, Smart city network providers offer collaborative networks, data analytics and enterprise working solutions that connect people, assets, systems and products by leveraging on their networking and M2M capabilities. Example: Cisco, Verizon, Ericsson, AT&T Smart city product vendors provide “hard assets” like smart meters and distribution devices (e.g., automated switches, controllers for capacitor banks and voltage regulators) that operate as the main nodes of connectivity. Example: Eaton, Honeywell, ABB, Schneider Electric, Siemens Smart city managed service providers offer round-the-clock monitoring, complete management, compliance monitoring, and on-site consulting. These services are provided either in-house, co-managed, or are completely outsourced (third party providers) Example: IBM, Serco, SAIC, Infosys 25 Smart City Players and Typical Suite of Solutions (Examples)* • • • • • Integrators Network Service Providers Pure-Play Product Vendors Managed Service Providers Software Focused Communication Focused Infrastructure Focused Operations Focused Enterprise resource planning for municipalities and governments Central Operations Centers Smart City Consulting – Reference Architecture and Framework Planning Big Data Smart City Analytics Cloud-based smart city services • • • • • • Networking equipment such as routers, switches, SIM chips Geographical information systems Remote access and monitoring. Wireless Area Network M2M Big Data Analytics and Consulting Unified Communication • • • • • • • • Smart devices and control systems Sensors Smart Meters Power and automation technologies Turnkey substations Utility hardware and software Smart Parking Infrastructure Mobility Integration & parking infrastructure • • • • • Monitoring and management of smart city related IT infrastructure Prevention, detection, and reporting of security threats Feature solutions for premises, cloud, and hybrid environments Support in-house, co-managed, and outsourced options Manage risk and compliance *The list is not exhaustive. 26 Key Take Aways and Recommendations Recommendations to Cities Creates Special Smart City Consortium Encourage Open Collaboration Explore Financial Instruments Based Funding Create a specific decision making entity comprising of government bureaucrats, transport and utility providers, key decision makers, and thought-leaders Make information from public systems openly available and accessible to citizens and entrepreneurial businesses to foster innovation in new services Make alternatives to “non-grants” based funding to projects such as equity, loans or risk-sharing programmes through special structural funds. Recommendations to the Private Sector Catalyse Smart City Consortiums Shared Services and Big Data Analytics Become a strategic partner and Choose Your Role Public-private consortiums to offer integrated smart city services Cloud-based services on smart city management and analytics-based services which local authorities and other public sector agencies can access on a shared basis Explore new business models where firms could participate in the governance of cities, (like managed services) and become a supplementary part to the government 27 Case Study : How Siemens Aligns Itself to Mega Trends It is important for companies to have a “City as a Customer” Strategy Source : Siemens AG. All rights reserved 28 From Macro to Micro: Taking Mega Trends from Information to Strategy Implementation Macro To Micro Mega Trend Analysis of Opportunities and Unmet Needs Selected trends that impact your business and markets Sub Trend Impact on Future Product/ Technology A sub-layer of trends that has a wide ranging impact Impact to Your Industry Visualising the roadmap of these critical forces through scenariobuilding and macro economic forecasts 29 Visionary Innovation Research No Research Topics No 1 Urbanisation and Mega Cities and Impact on Industries and Business 14 2 Global Mega Trends and its Implications to Urban Logistics to 2020 Connected Living: Macro to Micro Implications of Robotics and Artificial Intelligence on Consumer Applications 15 Mega Trends in UK Worlds Top Mega Trends to 2020 and Impact on Society, Cultures, Business, and Personal Lives – 2012 Update 16 New Business Models Bricks and Clicks: Impact of Connectivity on Future of Retailing 17 Industries of the Future 18 Big Data and its Implications on Industries 19 3D printing and its Macro to Micro Impact on Manufacturing and Supply Chain Management 20 Augmented Reality and its Applications 21 Future of Telecom 22 Mega Trends in Europe 23 Mega Trends in North America 24 Mega Trends in Middle East 3 4 6 7 Research Topics Smart Cities and Impact on Convergence of Competition Mega Trends for Africa 8 Mega Trends for India 9 Mega Trends for LATAM 10 Mega Trends for Turkey 11 Mega Trends in China 12 E Retailing in the Automotive Industry 13 Future of Mobility—New Business Models, Opportunities, and Market Entrants in Mobility Integration 30 Contact Information Archana Amarnath Program Manager, Visionary Innovation Research Group (+44) 2079157893 [email protected] 31