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A vision of
smarter cities
How cities can lead the
way into a prosperous
and sustainable future
IBM Institute for Business Value
IBM Global Business Services, through the IBM Institute for Business Value,
develops fact-based strategic insights for senior business executives around critical
industry-specific and cross-industry issues. This executive brief is based on an
in-depth study by the Institutes research team. It is part of an ongoing commitment
by IBM Global Business Services to provide analysis and viewpoints that help
companies realize business value. You may contact the authors or send an e-mail to
iibv@us.ibm.com for more information.
A vision of smarter cities
How cities can lead the way into a prosperous and sustainable future
By Susanne Dirks and Mary Keeling
A century ago, fewer than 20 cities around the Politically, they are in the midst of a realign-
world had populations in excess of 1 million ment of power with greater influence, but
1
people. Today, that number has swelled to also greater responsibility. From a technology
450 and will continue to grow for the foresee- standpoint, advances are underway that can
2
able future. provide them with better understanding and
control of their operations and development.
As cities grow in both numbers and popula-
tion, they are taking their place on the worlds Operationally, cities are based on six core
center stage, with more economic, political systems composed of different networks, infra-
and technological power than ever before. structures and environments related to their
Economically, they are becoming the hubs of key functions: people, business, transport,
a globally integrated, services-based society. communication, water and energy. A citys
22 IBM
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A vision of smarter cities
How cities can lead the way into a prosperous and sustainable future
Energy: A citys energy system, as essential Business: Cities must balance complex
as its water resources, includes its power regulatory requirements with the need
generation and transmission infrastructure, to minimize unnecessary administrative
burdens
as well as its waste disposal.
Cities depend on their business systems for
These core systems are interconnected and their prosperity. Less efficient administrative
must be treated as such. Understanding one systems can cost as much as 6.8 percent
of GDP in some economies. A 25-percent
12
system and making it work better means that
cities must comprehend the bigger picture reduction in administrative costs e.g., time
and how the various systems connect. spent filling out forms could yield savings
of up to 1.5 percent of GDP, or some 150
Cities are being empowered at a time when 13
billion (approximately US$209 billion). As
they face significant challenges and threats Figure 3 shows, the number of days it takes
to sustainability in each of the six interrelated to undertake the same process starting a
systems and must act now to secure future business in different cities varies dramati-
prosperity. cally, even within the same country. With cities
becoming more important actors politically
People: From demographic changes to
health, cities face major challenges and and economically, solving the dichotomy
threats to their sustainability between where laws are made and imple-
While on average urban populations are mented will be central to the efficiency and
growing, cities in developed countries often effectiveness of cities business systems.
face shrinking populations in the last 30
years, more cities in the developed world
shrank than grew.9 These cities will require new
ways to stay globally competitive and attrac-
FIGURE 5.
Usage of global water supplies and estimated Energy: Cities are realizing current energy
costs. systems are insecure, inefficient and
unsustainable
35%
47% Leakage
Global emissions of CO2, the principal green-
Water used ($9.3bn) house gas, are expected to have increased
by more than 45 percent between 1990 and
2010, driven largely by the growth of cities
(see Figure 7). Cities generate the vast bulk
of CO2 emissions; therefore reducing their
18%
Theft/Poor metering CO2 emissions is necessary for a healthier
Source: World Bank, 2006. ($4.7bn) planet. As a result, city policymakers are under
growing pressure from citizens and from
investors to incorporate into their policy-
Currently, 2.8 billion people, or 44 percent of
making environmental sustainability in general
the worlds population, live in areas of high
22 and greenhouse gas emissions in particular.
water stress. Present trends suggest that this
Cities are starting to rise to this threat to their
will rise to almost 4 billion by 2030 (see Figure
23 sustainability, with the mayors of 400 European
6). Globally, water shortages are estimated to
cities, for example, pledging in February 2009
cause an annual loss to economic growth of
24 to make drastic cuts in CO2 emissions by
about 3.6 per cent. In California, the cost of 26
2020.
water issues is already 2 percent of the state
25
budget. Providing secure and sustainable energy
for their citizens is a key challenge for cities
over the coming generation. Globally, almost
one in three people lack access to electricity.
FIGURE 8.
Sample of interrelationships between core city systems.
People
Cities have difficulty using Reduce crime and react faster to Putting in place a new public safety system in
all the information at their public safety threats, by analyzing Chicago, allowing realtime video surveillance and
disposal information in realtime? faster more effective response to emergencies
Citizens face limited access Use better connections and Giving doctors in Copenhagen instant access to
to information about their advanced analytics to interpret patients health records, achieving the highest
healthcare, education and vast amounts of data collected to satisfaction and lowest error rates in the world.34
housing needs. improve health outcomes?
Transport
Transporting people and goods Eliminate congestion and generate Bringing in a dynamically priced congestion
is dogged by congestion, sustainable new revenues, while charge for cars to enter Stockholm, reducing
wasted hours and wasted fuel. integrating all transport modes inner-city traffic by 25 percent and emissions by
with each other and the wider 14 percent, while boosting inner-city retail by 6
economy? percent and generating new revenue streams.35
Communication
Many cities have yet to provide Connect up all businesses, Merging medical, business, residential and
connectivity for citizens citizens and systems with government data systems into a so-called
Going online typically means universal affordable high-speed ubiquitous city in Songdo, Korea, giving citizens
at slow speeds and at a fixed connectivity? and business a range of new services, from
location. automated recycling to universal smartcards for
paying bills and accessing medical records.
Water
Half of all water generated is Analyze entire water ecosystems, Monitoring, managing and forecasting water-
wasted, while water quality is from rivers and reservoirs to the based challenges, in Galway, Ireland, through
uncertain. pumps and pipes in our homes? an advanced sensor network and realtime data
Give individuals and businesses analysis, giving all stakeholders from scientists
timely insight into their own water to commercial fishing up-to-date information.
use, raising awareness, locating
inefficiencies and decreasing
unnecessary demand?
Business
Businesses must deal with Impose the highest standards Boosting public sector productivity, while
unnecessary administrative on business activities, while simplifying processes for business in Dubai
burdens in some areas, while improving business efficiency? through a Single Window System that simplifies
regulation lags behind in and integrates delivery and procedures across a
others. range of almost 100 public services.36
Energy
Insecure and unsustainable Allow consumers to send price Giving households access to live energy prices
energy sources. signals and energy back to the and adjust their use accordingly, as in a Seattle-
market, smoothing consumption based trial, reducing stress on the grid by up
and lowering usage? to 15 percent and energy bills by 10 percent on
average.37
FIGURE 9.
A framework for strategic planning.
What activities do cities currently do What are a citys core activities that
that they should shed? should be retained?
Currently have
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