Martin Fleming, Vice President, Corporate Strategy
April 26, 2010
Get Smarter for a New Economy:
Smarter Transportation for Smarter Cities
© IBM Corporation 2010
IBM Corporate Strategy
Get Smarter for a New Economy:
 In the years ahead, economic growth will increasingly rely
on the merger of creativity, technology and innovation.
 Addressing this challenge will require cities to provide
services that meet the needs and expectations of the
highly skilled and diverse population.
 Making a city’s transportation system smarter is one of
the most important steps a city can take to significantly
improve the quality of life of its residents and the
productivity of its work force.
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© IBM Corporation 2010
IBM Corporate Strategy
Human capital is important worldwide with notable
differences between regions
Links between human capital and income,
emerging and advanced economies, 2005
 Higher education
enrolment has a strong
positive impact on per
capita income in
advanced economies
Advanced Economies
40,000
Income, GDP per capita, PPP
 Positive impact of
human capital on
income per capita is
present, but weaker
amongst the emerging
economies
50,000
30,000
20,000
10,000
Emerging Economies
0
0
20
40
60
80
100
Human Capital (% enrolment in tertiary education)
Data Source: UNESCO and Analysis: IBM’s Institute for Business Value
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© IBM Corporation 2010
IBM Corporate Strategy
In the future economic growth will arise from the
creative power of a diversified urban workforce
Determinants of Income per Capita
50 top cities, US 2007
 Future economic growth will
arise from the creative power of
the new urban workforce.
31,000
29,000
27,000
 Skills specialization, with the
need for greater investment and
diversification of the human
capital, is critical for success.
 As reflected in diversification
scores, there is a strong positive
correlation with city’s income per
capita.
y = 238.73x + 13428
25,000
23,000
21,000
19,000
17,000
Diversification Score
15,000
0
10
20
30
40
50
60
70
Data Source: UNESCO and Analysis: IBM’s Institute for Business Value
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© IBM Corporation 2010
IBM Corporate Strategy
By end of 2008, half the global population lived in
cities and by 2050 70% will live in cities
 Currently there are 1.6B people living in Asia’s urban areas,
increasing to 3.4B by 2050, where the growth will be highly
concentrated.
Urban Population Forecast
 China, now 40%
urban, will
become 70%
urban by 2050.
 In Africa, the
urban population
will triple over 40
years, from 340M
to 900M.
5
80
60
40
20
0
1950
1960
1970
1980
1990
2000
2010
2020
2030
2040
2050
Source: Population Division of the Department of Economic and Social Affairs of the
United Nations Secretariat, World Population Prospects: The 2006 Revision and World
Urbanization Prospects: The 2007 Revision, http://esa.un.org/unup
© IBM Corporation 2010
IBM Corporate Strategy
A growing body of research indicates a positive
relationship between broadband expansion and
economic growth
Economic Outcome
Relationship with Broadband
Employment
Positive and Large
Working Age Population
Positive
Employment Rate (Employed residents/working
age population
None
Average Pay per Employee
None
Median Household Income
Negative
Telecommuting
None
Bringing Work Home
None
Having Home-based Business
None
Note: Employment data are from NETS; population, employed residents, employment rate, average pay and median household income data are from
Census/BLS; telecommuting, bringing work home and having home-based business data are from Forrester
Source: Jed Kolko, Does Broadband Boost Local Economic Development?, January 2010, Public Policy Institute of California.
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© IBM Corporation 2010
IBM Corporate Strategy
A Smarter Planet: The Next Leadership Agenda
Prime areas to consider for improvement
How much energy we waste: 6%
to 10% lost because grids are
not smart
How gridlocked transportation in cities
is: $78B annual loss in U.S. in wasted
gas and time
How antiquated our healthcare is: no
linkage from diagnosis to providers to
insurers to employers
How our water supply is drying up: 6 fold
increase at twice rate of population
growth
Inefficiency of our supply chains: $40B
annual loss in CPG & Retail industries,
3.5% of sales
Crisis in financial markets: inability to
track risk has undermined confidence
“The digital and
physical
infrastructures of the
world are converging.
We must make the
mundane processes
of business,
government and life
sustainable.”
Source: Sam Palmisano remarks to the Council on Foreign Relations, New York City, November 6, 2008
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© IBM Corporation 2010
IBM Corporate Strategy
Something more profound is now happening with
the infusion of intelligence into the way cities work
Sensing
 Data collection
Metering
Real Time
Data Integration
Real Time
+ Historical Data
Data Modeling
+ Analytics
Feedback to user and data source;
Incentives and actions to change behavior
Feedback to user and data source;
Incentives and actions to change behavior
Measuring, Monitoring,
Modeling and Managing
 Data Integration
 Comparison of historical
data, with newly collected
data
 Data modeling and analytics
to create insights from data
to feed decision support and
actions
Visualization
+ Decisions
Source: IBM Corporate Strategy
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© IBM Corporation 2010
IBM Corporate Strategy
Road User Charging Solutions
 Additional capacity by using pricing to manage
demand for the road network
 Reduce accidents and congestion by balancing
traffic across routes or modes
 Raise funds for other transport programs that
serve your customers
Business challenge:
Despite a progressive public transport network
serving 70% of commuters in this Scandinavian
city, the roads in the central business district
handled 450,000 vehicles per day, making major
traffic congestion a fact of life.
Benefits:
 25% reduction in traffic volume
 15% reduction in CO2 emissions
 Significant reduction in economic costs
associated with traffic congestion
 Generation of €50M per year,
channeled into reducing congestion
Solution:
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IBM engaged to design, build and operate a
automated road use charging with automatic
license plate recognition and radio frequency
identification technologies.
© IBM Corporation 2010
IBM Corporate Strategy
Integrated Fare Management Solutions
 Create a single payment structure for
multiple modes of transport
 End-to-end journey pricing – seamless
mobility within a city
Business challenge:
A European city wanted to create a seamless
mobility experience to travelers using all modes
of transportation. This required integrating
buses, metro and associate parking facilities
using a single payment mechanism.
Solution:
Benefits:
 Single view of the transportation end-user
across multiple transportation modes
 Cost reductions with revenue management
across public transportation modes
 Higher customer satisfaction among users
of the transportation network
IBM engaged to design, and build a smart-card
integrated fare management system that used a
back office and settlement engine to process
and settle multi-modal fares.
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© IBM Corporation 2010
IBM Corporate Strategy
Transport Information Management
Solutions
 Better align demand and supply within the
transport network
 Manage traffic using predictive analytics to
ascertain scenarios and potential mitigation
 Use powerful analytics to gain deeper insights
into the use of assets and infrastructure
Business challenge:
Real time is often too late in an Asian city that
thrives on movement of people and goods
across its boundaries. Traffic planners wanted to
be able to maintain free flow of cars on its roads
and reduce congestion.
Solution:
IBM built a Traffic Prediction Tool that accurately
predicted traffic scenarios on main roads in 15,
30, 45 and 60 minutes intervals.
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Benefits:
 Maintain free flow by using predictive
insights to manage signal timing and ramp
metering
 Increase accuracy of public transit arrivals
using predictive insight to inform travelers
of wait times
 Use the predictive insight to dynamically
change road pricing to proactively manage
congestion on key roadways.
© IBM Corporation 2010
IBM Corporate Strategy
The rail industry is struggling to meet the increasing
demand for freight and passenger transportation
 Railroads need to
become even more
instrumented.
– Monitor acoustic
signatures, heat and
wheel impact.
– Passengers and
maintenance can be
charged based on use.
 Rail networks - examples of an interconnected system
with vast opportunities exist for improvement.
– Block train scheduling can create greater utilization of assets
and capacity for both passengers and freight.
 Putting data to work requires more intelligence.
– Mobile condition-based monitoring systems provides realtime data capture and analysis -- health of rolling stock,
operational data, manifest verifications, freight condition,
intrusion detection.
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© IBM Corporation 2010
IBM Corporate Strategy
Smarter Cities Roadmap
1. Develop
your city’s long-term
strategy
5. Discover
new opportunities for growth
and optimization
2. Prioritize
a few high-value projects
4. Optimize
your services and operations
3. Integrate
across your systems
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© IBM Corporation 2010
IBM Corporate Strategy
The new leadership requirements:
Collaboration
Standards
Openness and Innovation
These three elements are key to your city’s long-term
strategy and road-map to success.
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© IBM Corporation 2010
IBM Corporate Strategy
A Smarter Planet
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© IBM Corporation 2010