Report & Analysis

Smart Cities and the Role of Defense

A smart city should first and foremost be a human centric city – whilst technology is integrated to push the quality of resource optimization and management and service provision to the limit possible with the help of superior communication

Date: Issue 71 - November 2016

A smart city should first and foremost be a human centric city – whilst technology is integrated to push the quality of resource optimization and management and service provision to the limit possible with the help of superior communication and Information Technology (IT), the primary objective should always be improving the lives of its citizens. Smart city projects are part of a general concept of city modernization; one could consider them a natural evolution in the same way as cities evolved to integrate multiple lane roads, electricity grids and other major events over the last thousands of years. While the potential contribution and benefits of Information and Communication Technologies (ICT) to modernization can be considerable, smart city projects should never be seen in isolation, or as one element in a city’s (or a region’s) evolution. At the same time, interpreting smart city projects as technology projects alone would be a mistake. Given the continued urbanization process and in consequence the increased population density and resource consumption of cities around the world, the start of any city modernization process needs to be rooted in the question of what kind of place does a city want to become: How should the various targets such as “quality of life” be defined, the realization of which can then be supported by technology solutions.

In the past decade, the notion of the “smart city” has been gaining attention around the world. Also called the “wired”, “networked” or “ubiquitous” city, the “smart city” is the latest in a long line of popular terms, referring to the development of technology-based urban systems for driving efficient city management and economic growth. One can clearly see in the last few years the bifurcation of approaches to imagining a smart city. On the one hand you have cities that opt for a project driven strategy whereby the mass aggregation of projects such as lighting, parking and public wifi create a swarm of technology enveloping a city. On the other hand you have cities that are thinking on a more platform basis, using an approach of the city acting as a single entity upon which different applications are “plugged” into. 

My team has spent a considerable amount of time working with cities and solution providers around the world to help bring clarity to this space. In doing so our team identifies a smart city as one that fulfills at least 5 of 8 parameters. These eight parameters include: smart buildings, smart energy, smart mobility, smart health care, smart infrastructure, smart technology, smart governance and smart education, and smart citizens as depicted by Figure 1.

In assessing the various approaches it has become clear to our team that leading cities are those that are able to create a clearly identifiable plan in each of these sectors, and that each sector is integrated into each other using an interconnected software platform. 

Your Imperative to Act

By 2030, five billion people will surge into cities. As more cities become smart-- either built from scratch, like Songdo in South Korea, or existing ones upgraded with intelligent infrastructure, such as in Barcelona or Singapore, – we find cities becoming more responsive to the needs of the citizens that reside within them. Cities in this respect have little choice, this is a new era of city transformation that holds digitization as the gold standard. For a city to ignore this transformation will almost certainly result in a deep weakening of its competitive positioning and thus its ability to maintain businesses and attract a diverse population. Over time one can imagine the devastating affect this would have on the cities that do not immediately begin work to digitally modernize. 

The initial characterization of a smart city often seemed to point to what I would refer to as “Smart projects” whereby small iterative technological enhancements were made to a city (think Parking and EV stations). This invited a slew of players into the space that have become known as Integrators, companies that bring together many projects into a more cohesive platform. This next decade will see an accelerated growth in revitalizing the essential infrastructure of cities that enable true return on investment (ROI). As budgets become tighter in both municipalities as well as solution providers that have been heavily investing in cities, projects with high ROI will be sought after. With this several areas spring to prominence as opportunities:

Smart Grids and Energy Efficiency

It is estimated that cities are responsible for between 60% and 80% of the world’s energy use. Optimizing delivery and consumption is vital. Smart grid technology aims to tailor the generation and supply of energy to user consumption, thus increasing efficiency, reducing costs and environmental impact. In particular, consumer ‘smart meters’ and sensors, equipped with IP addresses, can communicate information about energy utilization patterns to the supplier, as well as allowing end-user control. This can help manage real-time demand, and even provide advice to consumers about usage habits. Buildings, both residential and commercial, provide an important opportunity to optimize energy consumption and enhance the wellbeing of residents and workers. The disruptive nature of the “smartification” of energy brings opportunities to move in the smart meter space from traditional meters that have become digitized, to the entire notion of connected living whereby the user is connected throughout the day’s activities. Being able to monitor and manage the personal user’s energy patterns as they move around the city allows a city to adjust resources through an integrated Smart grid. 

Public Safety and Security 

Above all, cities need to be safe. Public safety and security has become paramount for city administrations, whether protecting against crime, natural disasters, accidents or terrorism. From conventional street violence to complex financial offences, identity thefts or data breaches, a dynamic crime horizon can only be tackled by increasingly sophisticated technologies and processes. Tele-surveillance systems are becoming increasingly pervasive in urban settings and, coupled with real-time communication capabilities, can help emergency services intervene promptly in incidents. In the immediate aftermath of a serious accident or catastrophic event, the ability to share information between agencies, to operate sophisticated tele-surveillance systems, to guarantee connectivity to incident response teams and first responders, to gather and analyze heterogeneous intelligence and data about incidents in real time, all in a reliable and secure way, allows municipalities and their emergency services to increase safety for citizens, businesses, assets and infrastructure. An emerging space is the utilization of crowdsourced inputs to accompany traditional methods. This has been particularly effective in cities such as Seoul Korea where through it’s U-City efforts the city has connected with citizens through an online application to provide real time feedback.  

The Security Management Emergency Command Centre (ECC) by Huawei is an example of Smart security solution. This system has been developed to address emergency service problems such as teams responding slowly to emergency events, failing to optimize resources, and lacking collaborative efforts among police forces. After its implementation in Shanghai, the ECC system reaped great benefits. Case reports have increased up to 70K per day, and both centralized instruction to the emergency joint action services and centralized reception of emergency event information have improved.

An increasingly critical area of development in the last decade has been the role of Cybersecurity and privacy in Smart Cities. This clearly makes sense as we continue to see ever more technology solutions deployed, it leaves cities in a vulnerable states so managing these concerns as part of a robust “Smart Governance” strategy is key. I see this as an area of critical value that defense companies can operate in, however those companies need to trade off the challenge of how you deploy effective solutions whilst at the same time providing enough functionality so as to not render the solution of no value. Further if government departments do not work together to create platform based security solutions then you potentially expose the risk of interoperability. This creates further vulnerability points across increasingly sophisticated network architectures. As can be seen from Figure 2 the e-services being deployed by cities are extensive and thus require a platform based model. 

These complex set of challenges make for a perfect fit for defense companies in need of diversifying their portfolio to spaces where unique value can be provided.  We have already seen test cases of success by looking to India. As part of Prime Minister Narendra Modi’s Smart City initiatives he played particular attention to the imbalance between imported defense spending and that performed or sourced locally. Eliminating 15 to 20% of imported defense spending could dramatically increase job creation in India. Smart cities have been a core initiative for Indian companies looking to bring solutions to cities. Private companies such as Tata Group and Reliance are bringing new approaches to defense, even looking at building “defense cities”. This leaves public sector companies who do not evolve in peril of becoming obsolete. 

Of course this is not without challenges and is “easier said than done” as the saying goes. The embedded bureaucracy of many government entities can lead to such a long drawn out growth opportunity that defense companies may lose patience with diversification. Similarly, the space is significantly more competitive to traditional defense contracts with dozens and dozens of players who could potentially be awarded a contract. It is therefore a space where one should be highly selective which elements should be addressed. One key word to pay attention to in this area is collaboration. It is our belief that smart city offerings have become increasingly too complicated and cities are tiring of the minimal difference between solutions and the varying business development approaches. This is an area where the disciplined structure and processes of a defense company can offer unique value, both in terms of how a company works with a city, but also the all-important area of how the projects are managed to stay on target and budget.  

There are several realities at play here which makes this such a compelling place for defense companies to work in, allow me to summarize them briefly. Defense companies are in need of diversification into adjacent market spaces where they can provide unique value. The size and scale of smart city projects can be extremely broad and thus require a highly disciplined partner who understands complex technology environments. The complexities of working with governments can render even the most patient of person, exhausted. Defense is highly acclimated to this and can navigate the tricky waters of government spending. All in all this promises to be an exciting area for a company that is willing to place assets into the smart city pool and help us prepare for the next generation of cities.