Thoughts on Smart City Strategy

This is a repost of my recent advisory at Realcomm.com

There is no doubt that the way cities are being built, improved and operated is changing.

A few years ago I was leading the strategy for Nakheel to create smart cities. The business case was based on a belief that services revenue would fund the operator so that there would be no need for taxes and property values would increase dramatically due to the quality of service, efficiency of operation and lower costs. At that time, our thinking was a big bang or revolutionary approach where new cities would be built this way. Now, with the impact of the financial crisis on the property industry and a much better understanding of the impact of instrumenting cities, social networking behaviors and the evolution of the municipal supply chain we can see that the change will be more gradual and evolutionary. This has a big impact on the strategy a vendor and in fact the whole industry should take.

For me, three years ago the development of the “City-as-a-platform” was a holy grail that would reduce the cost of integrating systems, improve reliability and provide an open architecture for collaborative development of innovative solutions and services.

Now, I see that vendors of traffic light systems, street lighting and even public transport fleet management are all virtualising their control software and standardizing device protocols. This means that over time, all the individual verticals of solutions that make up a city will change. This is where the “City-as-a-Platform” solution will be come a simple evolutionary step rather than the big bang issue it is for many right now. Plus, point solutions for new areas will emerge, mainly from the Telco and location based marketing industries. I’ve thought for some time that location based services would be the real revolution – there is so much value add here that we are only just beginning to understand what can be done and the value that can be created.

To understand some of the reasons for this we need to understand the origins of some of the technology and systems thinking involved. I think that the whole convergence issue in city operations has come from four key technology areas:

• Building Automation

• Telco’s

• Real estate operations – mostly building automation but more recently enterprise system vendors

• M2M (process automation, mostly from the manufacturing sector)

My first experiences in the workplace were in the process automation space and I think this was one of the things that set up my interest in technology, that and selling one of the first IBM PC’s to arrive in Australia.

The original smart building dialogue was generated by vendors like Tridium and Panduit who saw the potential for convenience and efficiency by tweaking existing business models in building operations. This gradually extended into smart Grid and has proven to be a very viable model. But it didn’t connect with property services provision or the customer.

Most dialogue in the industry seems to have originally been generated by the Telco’s as they naturally saw city automation as a pathway to cash – more data to carry etc. Telco’s saw the smart home space as a way to get more services into their customers and build their average revenue per subscriber – thus building their corporate valuation.

The problem with the smart building and Telco models is that they never joined together – this was because the developer, the property services company and the municipality that sat in the middle were not technology aware. They had no idea that process automation and linking together enterprise processes with smart buildings using the Telco infrastructure would create any benefits. They saw it as a bunch of tech guys peddling snake oil.

 Finally, the M2M guys who have been driving automation in manufacturing gradually got interested in industries such as transport, utilities and now, devices such as traffic signals. For me this closes out the loop and means that with everyone beginning to see the same picture we are going to see an informed evolution.

Now, when a city maintenance department goes to market to upgrade their traffic controls systems they will get proposals from vendors that talk about IP enablement, virtualization and mobile access to control systems in the Cloud. If we are lucky, the enterprise vendors who provide accounting through to supply chain and business intelligence for these organisations will pick the sent of cash and drive for an integrated solution that will delivery lower costs and enable more revenue.

Its only with this type of grass routs change in the existing supply chain that purchasing decision makers will move to new models.

With all areas of the city operation gradually being IP enabled and virtualised the issue of large scale integration and an “always on” model will become more important. That is when the average purchasing will see the safe choice is to implement a “city-as-a-platform” model. That’s when you will start to see truly smart communities in our existing built environment – totally an evolutionary model that requires a grass roots approach to getting adoption. The remaining issue is that some of the largest benefits come from solutions that really only are of benefit when the platform is in place. And it will be from solutions that we probably don’t even see as yet such as instrumented sidewalks an roadways connecting to instrumented equipment and vehicles.

If you follow this thinking them all the companies interested in getting devices instrumented and systems virtualised need to focus on a large, fragmented supply chain of city systems. This implies a two pronged approach – driving awareness and demand from the purchaser side and engaging with deep expertise and holistic thinking on the supply chain side – demonstrating the value and benefits of a different approach to traditional vendors of slightly smart systems.

I think this creates an interesting industry view – who will be the leaders and why? The major players in the enterprise strategy and technology space who have been investing heavily in the smarter communities space really should partner with M2M vendors who know how to make low cost large scale systems and may not see the value of a high margin or strategy focused partner. The competitive strategy within the industry is in danger of causing a major road block to progress unless the right path can be defined and followed.

Living PlanIT – The new EPCOT?

Living PlanIT is a lab in the development and design phase with lots of interesting ideas. The concept that how we use buildings needs to be challenged is very upside down thinking. One North in Singapore really the only other example of a living lab I have seen at scale.

The FastCompany article (http://bit.ly/bdvElg)  is a great exposition of the core issue and the technology that sits at the core of the solution. It’s interesting that PanIT have decided to publish the architecture of their solution – a lot of people would have kept this a secret. But it’s key to how the city can operate and how the model for a private sector city can be brought together at low cost and at speed.

The concept of a platform that supports a set of third party modules on top has been around for ages – I drew a similar diagram in 2007 and have since met at least ten other people with original version of the same diagram. I now also know of at least three companies who have built this platform with the applications on top – and I’m sure there are many others.

The business model is different though – we have a bunch of technology people saying they can build a better solution based on a different business model – that the business cannot articulate because its constrained by traditional thinking.

Exactly the problem I worked with at Nakheel in 2007/08. And the solution – to bring in a whole bunch of partners who can build solutions on top of the platform is the best approach in my view as no one company can do it all. I think this is where PlanIT is going but at the moment, most of the partners are firms who contribute to the construction phase – which is where the problems are right now for this project and is where a lot of the long term paradigms of a city and a building are set. I hope that the focus on construction and supply chain works but I still think it’s the end operating model you need to start with – not how to build it.

Like any good IT project – ask the end user what they want to achieve and be radically challenging in solutions that meet that need with a holistic view of the ecosystem the user fits into.

I don’t think PlanIT is proposing a huge change here across all aspects of how we live our lives – I think there a re a few fundamental changes to how many of us work that will drive a lot of the change that is needed.

Our expectations, our normal and our comfort zone are all about place and how different places support different activities – we describe places in terms of their use and function. But there is a grass roots change happening. The traditional corporate hierarchy is no longer driving much of business architecture and home is changing as technology enables social contact in a different context.

I for example have an office at home (on the edge of Dubai), an office in Abu Dhabi and an office in downtown Dubai. I work on client sites all over the Gulf region and I meet with business partners and friends in café’s around town. The team I am part of has a similar paradigm and we adopt a swarm approach to opportunities, projects and issues. I have no idea who will be in which of my offices each day until I get there so socializing and dealing with non urgent work communications happens in an unpredictable way so you can never be sure who is up to date on what. The office services a much less important function and the fabric of the city needs to support how I work, in particular how I interact with my colleagues and partners.

In a domestic environment, teenagers now not only have a phone but also have instant messaging, social media, virtual worlds and email. Twenty years ago when a teenager got home mum would be saying – you just left school, how come you jump straight on the phone and chat with your friends? Nothings changed but the size and level of immersion in that social scene has increased – and even when out and about they continue the immersion and spend less time with family. My home is also my favorite office – provided I can stay connected socially – it saves on the fuel bills and gives me less stress.

Education is changing but I don’t see the classroom disappearing any time soon. The same can be said I think for most other institutions such as hospitals and jails.

Retail has always been and will always be about place so that will evolve as cities change.

I think that the change we can make is in how commercial offices are used and how they fit into the fabric of the city. We need to challenge the way allot, but not all of us, use offices and this means how they work and are built. That’s why I’m working on a new project that I think will change how offices are viewed.

I also agree with the PlanIT team that the construction industry as a whole is so wasteful and ignorant of the impact they have on the planet. I still think that the idea behind Bangitup.com in Australia was one of the most successful game changes in the construction industry – it got to the grass roots of the trades industry and took the management function out of the contractors head and into a structured and well thought out business process engine. This ensured that only the stuff on the plan was ordered and it was delivered to site only when it was needed. It works really well in residential.

PlanIt have talked allot about different construction techniques and materials and thinking about how that affects the way buildings work – that’s all great stuff and they along with Masdar and a number of other developments with a research focus will go along way to improving how operations is considered in the design and build process. There is no doubt a need to redesign the construction process so that only what’s needed gets ordered and is delivered only when its needed. Then make sure that the waste removed from site is tracked and dealt with like all other waste should be. That’s taking the Bangitup idea for residential and making it work across the entire construction industry.

I think the real challenge for Steve Lewis and the team at PlanIT is to weld all this together in a business model that will make money. In my view, the only new part is building an integrated city operations business. This will only happen if they can finish what we started at Nakheel – to redesign the city operations function into an integrated revenue generating business that delivers on a dream that I first saw articulated by Walt Disney in 1965. The city is not just a place, it’s a brand and it’s a service that makes living in the city a different experience.

Technology leading the curve – When will society catch up?

I’m a bit concerned right now – apart from the Telecom Regulatory Authority in the UAE turning off my Blackberry – about the connected world – the combination of hardware and software in the place based social networking space – is ahead of both legislation and also social norms. Not a major issue so don’t get me wrong, I’m not calling for regulation but I think that there are some areas where we are going to have problems if we’re not watching.

In the last two to three years we have had major changes in the volume of geotagged data, the level of engagement in social networking tools and the intelligence linked to in building devices. This has resulted in functionality available to every day users that has no basis for control.

Take for example that by the end of 2010 facial recognition software, with a web search function will be available on the I-phone. Anyone, anywhere can take your photo and a search engine will collate data from the web based on your face – Linkedin profiles, Facebook, your school photo, last holiday, recent speaking engagements and criminal records – everything that is not locked down will be on that persons phone in minutes. There is no legislation or generally accepted set of social behaviors as a reference point for what’s good or bad in using this, even if common sense prevails we still have a runaway train.

The ability to create geotagged data has changed dramatically. As of now, almost 20% of all apps on the Apple I store have some level of place centric functionality to them. Nike has put sensors in some shoes that allow your run to be mapped. Analysts are creating complex and soon real time heat maps based on geotagged data for things such as crime, .

We have governments adopting social networking and collaboration tools to get citizens more involved in data collection and provision. Find a pothole in the road – in some countries a few clicks and its reported, soon it will automatically dispatch an inspection crew to assess required work. Better still analytics can use multiple reports and photographs and assess the severity of each issue and prioritise responses.

I’ve started to see some early indications of augmented reality in the enterprise space – using the I-phone interface to SAP business objects library – now I can find our customers, job locations, I can also get data on our products or equipment and use my phone to update the enterprise database. Convergence of data into usable interfaces is accelerating rapidly

Data on place is changing forever – Google maps is free to use but has restrictions and Google will always own the data, the user interface and the context. Open Street Map is a wiki based map that anyone can update – and with Garmin GPS now having a “create new road” on the fly function we can all start to share free map data – that’s why Nokia have started to give away the map data for free for life, if you buy the phone.

Social behaviors – look at the issue of checking who is polluting in your neighborhood, a recent Harvard Business Review Article quoted use of Scorecard.org to identify local 20 top polluters in 15 seconds and immediate links to various tools of action. There are sites and pages that publish Facebook etiquette advice and there are generally accepted do’s and don’t on Linkedin that most folk understand.

The smart grid – what I think will soon be the largest networks of devices on the planet is growing and becoming more intelligent every day. We have companies that are making street lights into intelligent networks that can self manage consumption and switching them to LED’s so they run for 30 years, cannot be smashed by youths with stones and use next to no power.  Google and Microsoft are rushing to put devices and software in your house that will tell you stuff about your electricity consumption with a view to informing you so you can make informed decisions about power use (when I was a kid dad just went around the house and turned off all the lights at least twice a night). I’m not convinced my teenage daughters will behave any differently though. But as the smart grid stands today anyone who knows what they are doing can get a lot of information from the devices in your home – like the best time to break in!

Something is still missing and I think it will help to enforce security and privacy. What I think is needed is s simple but effective piece of security – a personal identifier that like the information connected to us is ubiquitous (ugh, overused jargon). Smart phones are almost there but not quite – I want to get rid of my car and house keys, my passwords and my ATM cards and carry a digital key for everything in my phone. It should have all the rights and obligations I need to access and activate everything – also identify me and confirm my account for billing and payment. Its just about getting the security apps on phones connected with enterprise systems and device networks so that everything can work without friction.

This is my real point. We are in a converging world. With enterprise vendors setting up VR tools on mobiles then there is no question social networking tools will transition into business networking tools and support remote social interaction amongst team members – enabling a virtual coffee machine culture – we can work anywhere and still be part of the team.

With location we have the ability to manager proximity – so the things your near can be set to behave in response to your profile. With a connection to the enterprise I can now manage what my employees experience no matter where they work. The Sci-Fi of five years ago is now becoming reality.

Jim Young – Realcomm – a great Advisory on the converged enterprise http://bit.ly/bUEFJQ. This has been my message for almost ten years now.

Jim Young leads Realcomm, a team I’ve been involved with for a number of years now. He authored a recent advisory on the opportunity in build an integrated business platform.  I started off yesterday when Jim asked me what I thought of the column and I started a reply, then thought I really should tell everyone. So here’s the note I was going to send to Jim:

I think you have described the issue of where we are now very well. I have always talked about the BMS guy and the FM guy and the PM guy getting together and using the same customer and asset data. The value gained and the losses avoided by doing this are, in my opinion, worth more than gold.

The issue really is that you and I paint a picture that says the grass is greener on the other side. Some people get it and some people don’t. For anyone to change we need three things – (1) knowledge of a better alternative, (2) understanding that the cost of change is less than the cost of the current solution and (3) actionable first steps to go get it done.

For those that get it and agree it’s greener on the other side there is still two other issues to resolve – what will it cost to change – no one can give you a simple answer to this; And the other issue is what should I do first?  Again, when plugging just two systems together is not the answer and could make things worse not better the actionable first steps issue is a big one.

The pain of change to get to the greener grass does have its issues but is achievable. One of the main barriers to change has been traditional integration models. Point to Point integration of major systems using traditional messaging tools is brittle, carries huge error handling overhead and costly to maintain. The only companies that typically have a large number of integrations between systems are banks and telco’s. This is where the big consulting houses and big software vendors have always made there money. Implementing an OSS and a BSS with integration to accounting and a myriad of other systems for a telco is usually a 50-100 million dollar program. There is no property company on earth that can afford that type of IT spend. At Nakheel with only seven systems to knit together we were looking at USD20m. Additionally, this type of solution is brittle, and by that I mean it all breaks when part of it fails or part of it needs to be upgraded. A dynamic solution is more resilient and easier to manage.

With the advent of Service Oriented Architecture and virtualization (the Cloud) it’s possible to devise an integration strategy and solution that minimizes cost, complexity and is more resilient. There are several vendors with solutions in this space that can be applied as the middleware you need. The key is to have a domain data map that shows what data is where and which copy is the single source of truth that all other copies of the data replicate from. To design this requires deep domain expertise as well as strong application architecture skills.

The other pain of change is not a technology issue but a business issue. Many managers in a non integrated business will lose their power base and possibly their jobs if an integrated business model is adopted.

Actionable first steps is the other key to change. What should I do first? Unfortunately, I don’t think there is a universal answer to this. Every business is unique and has its own first steps but I think there are some guiding principles to what to do – (1) look for a quick win that is not complicated; (2) What is the burning platform now? Is it s new lease system, new building being commissioned, change of service contract? Any and all of these types of changes can be the catalyst to start a new way of doing things. Ideally, a company should find a trusted advisor who can help you define a roadmap to success. (3) find a champion and get a leader to support you.

Finally, there is never a good time or a bad time to do this – just get on and do it. Don’t let detractors and risk analysts tell you to wait. That just costs money.

Unless there is someone inside a property business who is prepared to lead and champion change this won’t happen. Ultimately some companies will gain competitive advantage by having an integrated business and their lower cost base will drive their competitors to imitate their success.

 Eventually, customers will ask why they haven’t done it.

IBM and Johnson Controls show some leadership…

Very interesting news this week with IBM and Johnson Controls announcing an enhancement to their existing relationship to provide an integrated, enterprise wide solution for smarter buildings.  In summary they are providing a platform for integration of building systems, business systems and devices.

Importantly, they are including not just the platform to do it with but also the applications to derive value. So now Maximo will integrate with Gridlogix will talk to each other, IBM’s space management tools will be linked building devices to track occupancy and an integrated energy management solution using Metasys and Business Intelligence tools to create new solutions around waste and energy management including automating bill payment from the meter and creating opportunities for true demand and supply management.

This is a long overdue innovation that will drive their competitors to change and catch up. Tridium and Honeywell will need to find an enterprise partner who can boost them into this space. If they want to get into fortune 500 CRE space they will need someone like Oracle. The alternative is a property industry player like Qube or MRI.

What this also means is that Cisco, with their Richard Zeta box now need to get beyond their promised Service Delivery Platform and get the applications that deliver value connected. Ed Richards showed some great application of the RZ box at last years Realcomm using Google but this was challenging the status quo for most CIO’s and will take some time to get acceptance

The opportunity to provide intelligent, value creating remote monitoring and energy management is not far away now….

http://www.businessweek.com/news/2010-02-22/ibm-pushes-building-technology-to-curb-carbon-waste-correct-.html

http://www.earthtimes.org/articles/show/ibm-and-johnson-controls-join-forces-to-make-buildings-smarter,1174197.shtml

Will Cloud Fly for the Property Industry?

Will corporate/commercial real estate business applications provided from the cloud be accepted in the real estate market today?

Historically, the property industry has been slow to adopt technology. I still know lots of developers and investors who run their projects and their portfolios in a spreadsheet. In fact, some of the most useful software in the industry is basically a spreadsheet.

Since the mid nineties we have seen a number of vendors provide property management and facilities management software on an ASP basis. This has had some reasonable success, particularly in the SME space. A number of vendors have had this delivery model as their only option. Some larger vendors have provided both full installation as well as ASP.

And now we have cloud. What’s the difference you ask – lots of people can tell you that but the basics are as follows:

• ASP is a single copy of your software and your data in one place. Your software is backed up and managed by a service provider and you just use it. If your demand to much processing time or have more users than your hosting company planned on or if anyone else on the same server, or in the same data centre even, has a demand spike then the performance of your software will most likely suffer.

• Cloud means that there may be multiple copies of your software and your data in multiple places and you could be using different parts from different places at the same time. You should never notice performance problems due to internet traffic unless its very unusual

Users should not notice the difference between ASP and The Cloud. The benefit above should be obvious, there are lots of other issues but they are technical and don’t bear on my point.

The ASP proposition has always had some resistance due to the fact that the client was not in control of their software, their data was somewhere else and if the internet was down they were without software. The reason why some people liked it was because it was relatively cheap. You either paid a full license but saved on the hardware (a “we host your software” model) or cheaper, the software vendor rented you a license on a monthly basis. With The Cloud you can pay for only and exactly what you use, if your vendor can handle that.

The issue with Cloud is that it’s difficult to say exactly what is where when. If a management contract says you must have your clients data for them all in one specific place at one time then you’re stuck. Moreover, for those clients who were worried about where there data was and who had access to it under ASP the risks of these issues when you’re in The cloud are perceived as much greater and more difficult to grasp.

What do you think?

What devices would you connect to?

In a digital city where all devices are connected to the network and where business process can be applied to those devices you have the possibility for many, many services. To access those services a consumer needs to expose their presence and their identity on the network.

Let’s assume everyone carries a device that has their digital identity – it might just be a mobile phone with their number as an ID or it could be a smart device with all their contact details, digital wallet, personal preferences and health history -  a topic for another day.

To access services in an automated city you need to grant permission for certain devices to have access to certain levels of information. Based on current “permission” models it would seem to me that the logical way to provide access would be through a layered model with a series of groups such as the following:

• Your Personal Area Network (PAN), this is the group of devices you choose to trust. These devices are typically going to be in your home, your car and your office.  You might let a few other devices in at your coffee stop, a friend’s house etc but it’s a very close group of devices (there might be hundreds of them though!)
• Then you need to define a set of device types (such as parking meters)  or devices controlled by certain vendor types (such as restaurants) within a geography that are devices you are prepared to connect with under certain conditions – your near them, what you want to do requires their involvement.
• There would be groups of devices you would only receive from or only send to, again depending on conditions you define
• There would be devices you would bar
• The information exposed may be limited to your digital identity device being present through to contact details and all the way to personal preferences and historical information
• The Operator may make certain devices or device types and information mandatory

Some people – like those who expose to much of their personal life on Facebook won’t think twice about this. Others will be running to whatever privacy watchdog they can to complain about the city even tracking their phone – even though the telco already does this and even when the solution is to turn your phone off.

Welcome

Welcome to my Blog on connected real estate. This is publish or perish with no promises and no applogies