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Smart Cities: Implications for Boards

Smart Cities: Implications for Boards

Introduction

Cities are growing exponentially. The notion of the ‘smart’, ‘wired’ and ‘connected’ city or the Internet of Everything (IoE) is attracting interest from many leaders worldwide. Technologies available today have immense power to transform cities into more responsive communities that can tangibly improve human lives. These range from city-wide public Wi-Fi systems, to data analytics and tele-rehabilitation. The potential for smart cities to improve lives is vast and exciting, but these developments are inevitably accompanied by the risk of security breaches. If an application isn’t secure, it shouldn’t be used.

Realising these opportunities and safeguarding the security of data and people will depend on the important choices leaders make now and in the near future. Although 84% of business leaders currently feel ready for IoE, only 34% of C-suite executives think their company’s senior leaders fully grasp the implications of IoE.

This paper outlines some of the major changes already being implemented, and suggests that many boards should rethink how they respond to these forces sweeping the world, in discharging their responsibilities.

Consider the following

  • 54% of the world’s population currently lives in urban areas
  • The number of urban dwellers grows by nearly 60 million every year
  • An estimated 1.8 billion of the world’s population is aged between 10 and 24; this ‘youth bulge’ is facing higher levels of unemployment
  • In the next 10 years, more than 100 cities of 1 million people will be built
  • Currently, there are around 10 to 20 billion devices connected to the Internet; compared with 500 million 10 years ago
  • By 2020, connected devices will likely increase to 40 or 50 billion
  • By 2023, there will be 30 megacities worldwide; 55% of which will be in developing countries such as India, China, Russia and various countries in Latin America
  • By 2050, more than 60% of the world’s population will be in urban areas
  • Cities are responsible for more than 70% of the world’s CO2 emissions
  • Evidently, the top 10 cities in China account for 20% of its GDP
  • More specific to Australia, 80% of our economic activity occurs in cities=
  • In NSW alone, the average income per person in Sydney has climbed to approximately $80,000 a year; this surpasses regional NSW by more than $32,000
  • Strains on traditional service delivery from growing populations pose increasing challenges to the sustainable growth of cities. Managing the aging infrastructure of utilities and dealing with the demands of healthcare, traffic and city logistics are essential capabilities required to ensure sustainable growth in the future.

Extraordinary changes have happened, are happening and will continue to happen

Cisco’s Smart+Connected Cities Program identifies four ways in which cities are transforming:

  • People
  • As the Internet transitions to IoE, people will be connected in more relevant and valuable ways; aside from their devices and social networks
  • Evidently, ‘things’ of IoE can include road, traffic, train, waterway and other structural sensors that gather and analyse data on the condition and performance of these systems
  • Things
  • This will allow for faster, smarter decisions, which will improve the way we control our environment
  • In the future, people will be able to swallow a pill that can report the health of their digestive tract over a secure
  • Sensors placed on the skin or clothing will measure and report vital signs
  • Data
  • Connected things will soon be able to send higher-level information to machines, computers and people for further evaluation
  • Sensors, consumer devices and enterprise assets that are connected to the Internet and each other will provide more information to help people and ‘things’ make more valuable decisions
  • Process
  • Given the right processes, people, data and ‘things’ will work with one another to ensure that the right information is being delivered to the right person at the right time

For example, Teena Maddox of TechRepublic identified some of the most interesting and useful products for smart cities in 2017:

  • Smart streetlights
  • Connected LED streetlights are an easy way for a city to add smart tech. Crime is reduced because the lights automatically brighten when there are multiple people in the area and dim when no one is around. LED lights save enough energy costs to pay back their capital cost in 5-7 years. The city of Los Angeles saves about $9 million annually on utility costs from the decision to spend $57 million to convert nearly 80% of its 215,000-old sodium-vapour streetlights to LED lamps
  • Parking sensors
  • Parking sensors can be accessed with a mobile App to indicate when a parking spot is available. European cities were early adopters of this technology. In Paris, the average resident spent four years of their life looking for parking spots, according to Cisco. With widespread use of parking sensors, traffic chaos in Paris has dropped dramatically. Kansas City is one of the first US cities to add parking sensors, with many other US cities testing them in small areas
  • A 2016 Cisco Systems study indicated that the application of IoE in 21 core ‘use cases’ across five areas of business, could potentially deliver $14.4 trillion of net gain for private companies between now and 2022. These business areas are:
  • Asset utilisation
  • Employee productivity
  • Supply chain and logistics
  • Customer experience
  • Innovation
  • Such ‘use cases’ include:
  • Smart grid
  • Smart buildings
  • Connected patient monitoring and healthcare
  • Smart factories
  • Connected education
  • Driverless vehicles
  • Connected marketing and advertising
  • Connected gaming and entertainment

Singapore’s Smart Nation Program is implementing these ‘use cases’ in the following areas:

  • Living
  • From April 2016, residents from approximately 3,200 households in the Yuhua estate are eligible to trial the use of smart devices in their homes
  • Several hospitals are currently trialing a tele-health rehabilitation system for patients with orthopaedic conditions
  • Health
  • These trials have generally yielded positive responses for ease of use and the non-intrusive nature of the devices.
  • Smart devices available in the trial include the Elderly Monitoring System that uses smart sensor technology to alert caregivers of any abnormalities, and the Utility Management System that helps manage household electricity and water usage
  • Data is wirelessly transmitted to therapists through wearable motion sensors attached to patients’ limbs, so that practitioners can conduct treatment sessions for patients in the comfort of their own homes.
  • Transport
  • Arrival times of buses are monitored by sensors installed in over 5,000 vehicles
  • Real-time location data of buses provides information to meet transport planning and commuters’ demands. Results have yielded a 92% reduction in overcrowded bus services despite an upward trend in daily bus commuting, and waiting times have also been shortened by 3 to 7 minutes.

Cisco Systems has its sights on transforming 100 Indian metropolises into smart cities using connected technology; by far the biggest smart cities project worldwide.

In November 2016, New York City was awarded “Best Smart City 2016” at the Smart City World Congress in Barcelona. Over the course of last year, New York City has pushed several smart city initiatives, including public Wi-Fi service, a platform for companies to showcase products to the city, a fund for innovators and entrepreneurs, a program to trial smart tech, and guidelines for the development of smart city applications.

LinkNYC is the highest profile tech project in New York City at the moment. Up to 10,000 structures are being erected in place of old payphones; 500 are currently in place. These will provide gigabit internet to residents and super-fast Wi-Fi to commuters and tourists near the structures.

Last year, New York City invested an additional $3 million in sensors that will enhance public safety and received $20 million in grant funding for a connected car pilot program.

Garbage removal in many cities has been transformed using the smart waste and recycling system, ‘Bigbelly’. The system has been deployed in cities such as Philadelphia, San Diego, Los Angeles, New York, and Chicago, in all 50 US states and in 50 other countries. It comprises a solar-powered compacting waste bin that handles up to five times more waste than a traditional bin and then alerts the appropriate city department when it should be emptied, according to Leila Dillon, vice president of marketing for Bigbelly.

The number of trash stations in a city can then be reduced by 70-80%, which makes the streets more aesthetically appealing, and reduces the rodent population and the cost of rubbish disposal.

Informed observers comment on the transformational impact on specific sectors

Data considerations are essential in establishing sound decision-making frameworks for smart city environments. The British Standards Institution worked with 30 international cities in 2015 to produce a report which identifies the following 14 dataset categories required to support city projects:

  • Social/Community (18%)
  • Infrastructure (13%)
  • Technology (13%)
  • Transport and Mobility (12%)
  • Economics (9%)
  • Communications (8%)
  • Energy (6%)
  • Built Environment (5%)
  • Geospatial (5%)
  • Innovation (3%)
  • Health (2%)
  • Logistics (2%)
  • Natural Environment (2%)
  • Water (2%)

A 2016 report from the National League of Cities (NLC), based on case studies of Chicago, Philadelphia, San Francisco, Charlotte, North Carolina and New Delhi, offers three recommendations for municipalities that aim to become smart cities:

  • Cities should start with the outcomes they want to achieve
  • Simply collecting data isn't enough. Information must be relevant and the resulting analysis should lead to applications to alleviate public problems derived from existing city vision and plans.
  • Cities should partner with universities, not-for-profits and the private sector

The benefits of partnerships include opening cities to funding and expertise that they might not otherwise access. Many public problems are complex and too diverse for any single entity to tackle. Some cities are already partnering with other cities. By collaborating, they are often able to do more with partners than they could do alone.

  • Cities should look for best frameworks and practices
  • The vast array of technologies being deployed and their relative newness means that not much has been codified, according to the report. Cities interested in becoming smart should continue to look for best frameworks and practices for this type of development.

We need much better information about what is happening within all the different datasets, or ecosystems, and understand how they interact. Currently, there is no cooperation or coordination between these ecosystems. Within individual enterprises, there is reluctance to expose data in some instances because of the perceived risks of disclosing company and personal information which may breach confidentiality.

The development of smart cities is driven by three things

  • The inexorable growth of the number of cities and the size of the populations that live in them
  • The scale and complexity of city living. Many of the social, economic and sustainability problems can be solved only with the adoption of smart technologies. This particularly applies to the utilisation of key infrastructure such as broadband, energy, water, and transport
  • The need to form partnerships with research centres, such as universities, private sector companies and other cities to tackle huge challenges and acquire access to technologies and experience of their application.

In these fast-growing parts of our world, change is happening faster than ever before. Therefore, the world is far more unpredictable—making the jobs of boards and management much more difficult than in the past.

Most chairs and directors I speak to across most of Australia’s key sectors believe that every business needs to embrace these fundamental forces sweeping across their markets, to ensure the long-term survival of the businesses under their stewardship.

Summary

  • In my opinion, boards have two key responsibilities among the large number of requirements mandated by various regulators:
  • Safeguard the long-term survival, value and strength of the business, by ensuring that the company complies with its legal obligation and therefore sustains its right to operate, and protects its assets through appropriate risk management
  • Ensure that expected performance is delivered to key stakeholders continuously.
  • Boards discharge these key responsibilities by focusing on the following:
  • Spending more time on strategy and the impacts of digital transformation on their businesses
  • Securing continuous access to advice on technology developments, new applications and the possible opportunities and threats to the business
  • Developing a board-wide mindset that embraces the challenges and opportunities of digital disruption
  • Using technology to disrupt board processes and work.

Author(s)

Sasha Jurac
Sasha Jurac
John Colvin, Sasha Jurac

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