This is the second in a three part series on Smart Cities. Best to start with Part I.
Urbanization in China Sets the Stage by Defining the Need
According to the World Bank, China's urban population was 191 million in 1980. By 2007, it was 594 million, excluding migrants. About half of China's population now lives in cities, and that trend looks likely to continue particularly as the government relaxes restrictions on internal movement institutionalized in the strict hukou system of residential registration.
And, bigger cities face bigger challenges to meet the needs of their burgeoning populations:
Infrastructure and jobs. Between now and 2025, it's likely that another 200 to 250 million people will migrate to China's cities, adding to an existing mobile or migrant population of about 155 million. Providing infrastructure - housing, roads, hospitals etc. - and jobs for this anticipated inflow of people poses major challenges. With new changes to the hukou system, this migration into cities could be even greater.
Energy. Urban residents use 3.6 times as much energy as rural residents; suggesting that energy use is far from its peak. In China, energy intensity (consumption of energy per unit of GDP) is 7 times that of Japan and 3.5 times that of the United States, and over 70% of electricity use is coal-produced.
This is actually not a tale of two specific cities but of two types of cities, or “smart cities” as the new moniker goes. It will appear in three parts.
Defining Smart Cities
“Smart” has become the adjective of choice among tech vendors to describe solutions that capture, synthesize and analyze the vast amounts of data being produced by computing and networking systems. Forrester defines Smart Computing as:
a new generation of integrated hardware, software, and network technologies that provide IT systems with real-time awareness of the real world and advanced analytics to help people make more intelligent decisions about alternatives and actions that will optimize business processes and business balance sheet results.
What does that mean in layman’s terms? Every system can be smarter if it can learn from and act on the data it produces.
A city is a “system of systems” making the potential for efficiency exponential as all of its systems interact. Therefore, a smart city is:
A city that uses technology to transform its core systems – city administration, education, healthcare, transportation, public safety, real estate, utilities and business — enabling them to capture, analyze and act on the data they produce.
As a result, a smart city’s systems can optimize the use of and return from largely finite resources. It can, in other words, “do more with less.” Using resources in this smarter way also boosts innovation, a key factor underpinning competitiveness and economic growth.
We have all heard a lot about the growing segment of information workers including senior executives, managers, legal professionals, and financial service executives who use their smartphones for work. About 45% of all employees in the US are information workers, and Forrester survey results show that nearly 15% of these workers use smartphones for work. In addition, nearly 33% of information workers are issued smartphones by their company, and about 25% select and purchase a smartphone that may, or may not be supported by the company. We expect the info worker segment to grow significantly as more employees work away from their desk or telecommute.
Vendor marketing and strategy professionals across the mobile value chain must understand how information workers use smartphones and applications, so they can successfully develop products to address the needs of these workers. Information workers are going beyond plain vanilla email, calendar and PIM applications. Many are trying out instant messaging, productivity apps to access Word, Excel, and PowerPoint documents, and location-based services. To tap the fast-growing slice of information workers relying on their smartphones, business application categories must be clearly identified on mobile operator portals and mobile app store sites. Device manufacturers and mobile operators must also ensure smartphone features and functionality address both personal and professional user needs. Are there other strategies vendors are using to address the needs of the mobile information worker segment?
I recently published a sample business capability map for insurance firms as a way to illustrate many aspects about the description and use of this business architecture methodology. One of the readers of this report commented “It seems the business capability maps provide value as a complement to existing methodologies” and referenced Strategy Maps and Business Process Modeling. This made me realize that I should explain more how Forrester sees capability maps as more than a complement – and why we, along with many of our clients are so ‘jazzed up’ about this methodology.
A bit of background: Forrester views capabilities as stable elements of a business model, where the dynamics of a firm are reflected in the business goals for the capability, and the processes, functions, information and other assets which are how a capability is delivered. A capability map describes all the capabilities, and the relationships between them, which an organization needs to have as part of their business model to achieve outcomes. Think of Sales as a simple example, where there are business goals and associated metrics for Sales, and processes, functions, information and people assets necessary for this capability to be delivered. And Sales has a relationship to Fulfillment, to Customer Service and to Marketing.
NetSuite, a leading SaaS ERP/CRM provider, recently announced that it is revamping its channel partner comp model: 100% on Y1 subscription revenue, and 10% thereafter. VARs have been remiss in taking up the SaaS torch, largely because most SaaS vendors haven’t provided a financial model conducive to VARs’ cash flow requirements. Per the on-premise license model, channel partners make a big portion of their nut on initial product margin, i.e., up front. But vendor SaaS economics minimize up-front remuneration and spread revenue out over a long period of time. Though it sacrifices year-one revenue, NetSuite’s 100/10 model more closely mirrors VARs’ accounting practices.
NetSuite’s model will be the first of many SaaS channel model “experiments” that will ultimately be a shot in the arm for the SMB market in particular. Contrary to popular belief, SMBs have been slow on the uptake of SaaS (application hosting outpaces SaaS adoption by SMBs by a factor of 3-4x) ...
... due to the fact that VARs, in ownership of the customer trust asset, haven’t been pushing SaaS. But the financial barriers to channel partners’ SaaS advocacy are being broken down.
Now that the path for VARs to play in the cloud is being forged, and their play along with software vendors, aggregators, and ISPs being validated, distributors and DMRs, long wedded to on-premise license models, are going to have to figure out their place in the new cloud channel order.
What do you think? Is this one of many experiments? What is the role for distributors and DMRs in cloud computing?
Ever since I first started working with online social communities I've been thinking about just what it is that makes some communities successful while others fizzle and die. In particular I'm curious why collaboration communities seem to be so hard to make work.
While doing recent research on social computing initiatives I got to thinking on this problem again. Recently I made the connection to Abraham Maslow's work on the hierarchy of needs:
Maslow suggested all people are motivated by a desire to fulfill basic human needs in an ascending hierarchy. He also suggested that unless the lower-order needs are fulfilled, the higher-order needs are not motivators of behavior.
The primary needs Maslow identified fall into five groups:
Almost four years ago, I began a new journey at Forrester Research when I agreed to take on the B2B marketing research coverage and practice. The first significant research that I conducted and wrote, “B2B Marketing Needs A Makeover – Now,” looked at the challenges B2B marketers face and how they address these issues through marketing programs and technology investment. Little did I know that “Makeover” would become the seminal piece of research in a series that extends across those four years and culminates in an upcoming report next week.
Today, it is with a mix of pride, nostalgia, excitement, and deep appreciation that I announce the next step in that B2B marketing journey, which started in 2006 here at Forrester, but extends back more than a decade earlier through various high-technology marketing positions I held prior to becoming an analyst.
At the end of March, I will leave Forrester to become the Vice President of Industry Marketing for Xerox Global Services, North America.
Very simply, I have been helping many clients face down their marketing challenges, adopt new approaches, and improve the reputation and standing of marketing at their firms for some time. While personally rewarding in so many ways, I longed to return to my roots where I could do more practicing and less preaching. Xerox offers me this opportunity.
A lot of emerging companies think they've "arrived" when they've launched their first analyst briefing "tour." Oftentimes, these start-ups have very small to no marketing function internally, instead turning to outside agencies for public relations, marketing communications, and of course, the debut to the analyst influencers. These small firms feel confident that once they've placed themselves in the hands of the seemingly capable agencies, they'll get all the ink and influence needed to execute the hockey-stick growth curve they've presented to their board and investors. The agency then scurries off, schedules a bunch of analyst briefings, and gives themselves a big pat on the back: mission accomplished! The appointed briefing time comes, the firm's show dog delivers the pitch, and then. . . the promise of a successful briefing fizzles.
Earlier this week, I had a briefing with just such a start-up. The agency dutifully sent me the slides in advance and, as analysts are inclined to do, I took a look. . . and was left wondering just what value this agency was providing to this client. Why? The slide deck, while short, did nothing to sell this company to me, the analyst. Here's the start-up's value proposition:
To this end, Company X seeks to design a system leveraging the latest technologies and utilizing a common processing engine and user interface to provide an integrated, easy-to-use, cost effective solution for financial institution.
Deloitte recently made two acquisitions that may not make front-page headlines, but for sourcing professionals, they are noteworthy. In February/March Deloitte announced the acquisition of 1) dcarbon8, a carbon and sustainability consulting company that specializes in supply-chain management and carbon benchmarking and 2) Simulstrat, a company that pioneers “wargaming” and a spinoff from the department of war studies at King’s College in London. The acquisitions are small, but they highlight some interesting trends in the technology marketplace:
Before the recession of 2008, high oil prices pushed interest in “going green” to a peak, but the economic recession cooled some of the green fever -- and many “clean tech” companies we track started repositioning themselves more as enablers of cost savings and efficiency. The acquisition of a sustainability consultancy like dcarbon8 highlights the fact that the interest in green continues – and companies like Deloitte view the green focus as more than a passing fad.
Simulstrat offers sophisticated risk mitigation consulting to companies – all posited at a simulation or “game-like” setting. In this case, Deloitte looked to the capabilities of an academic institution to bring an innovative risk services offering with its private sector clients. While simulations have traditionally been applied in government settings (e.g., war games) the potential for businesses (who are increasingly interested in risk mediation strategies to deal with macro-economic shifts) is strong.
BPM has always provided fertile ground for new ideas but often results in confusing business process and application professionals. Recently Dynamic Case Management and Social BPM are being spoken of as important directions for BPM. But how do they relate to one another? And since social media is an important part of both, what value does social really add to process improvement and Line of Business professionals if any? No doubt social improves collaboration in process design, and more important is the ability -with analytics to add a new form of input to process improvement -input that may go directly to the CEO. This is part of the BPM advantage but the area of Case Management may have more dramatic value as you collaborate during a critical incident like an adverse drug reaction, or create a stronger community to deliver a more personalized service event -or to gather "voice of the customer" data to improve case handling. But in both BPM and Case -social is an enabler and takes a seat along side important advancements such as analytics, convergence of BPM and ECM, and a stronger domain focus.