Governments, businesses and citizens could save over $ 5 trillion every year with help of smart city tech, claims Chordant report.
Smart city technologies could save enterprises, governments and citizens globally over US$ 5 trillion annually by 2022, according to new research published by Chordant, a newly launched business unit focusing on smart city developments and part of mobile technologies specialist Interdigital.
With higher concentrations of people and businesses located in urban areas, smart city and IoT technology will help cities get better use from existing assets, operate more efficiently and create more sustainable environments, says the report, Smart Cities and Cost Savings.
But IoT and smart technologies can only work, it warns, where a “holistic approach” is taken to collecting data from sensors, sharing it and analysing it effectively.
The report, which was conducted on Chordant/InterDigital’s behalf by market analyst firm ABI Research, goes on to consider the aggregated absolute cost-savings potential in a smart city of 10 million inhabitants over the next five years. These sums, apparently, are based on the yearly savings already achievable for 75 of the world’s cities with a total urban population of more than 5 million. The report claims that:
Governments could save as much as $ 4.95 billion annually, with street lighting and smart buildings representing two areas with the biggest potential to yield savings. Smart street lights alone might be expected to cut repair and maintenance costs by 30 percent, the report says.
Businesses operating in smart cities could save $ 14 billion in areas such as freight transportation, by using more energy-efficient transport options including drones, robots or driverless vans and trucks, and through operating smart manufacturing plants.
Citizens could achieve savings of up to $ 26.7 billion per year in areas such as utility bills, through the deployment of smart meters and microgrids, and in education with the development of a hybrid education system that mixes online learning with physical classrooms.
Internet of Business spoke to Jim Nolan, executive vice president at Chordant about the findings. The potential for cities to save money looks great, we said, but what steps should municipal authorities be taking today to be more sure of reaping those rewards by 2020?
“Key steps would include thinking through their smart city strategy before committing to proof of concept projects [PoCs] with a focus on aggregation of data,” he said. “Most cities, towns, and regions already have significant data sources that are not leveraged or are siloed. Currently, many single function PoCs, [such as] smart garbage bins, smart lighting, environmental sensors and so on, don’t create lasting value as they don’t offer a large, aggregated suite of data sets that can be used to create solutions that save capex, opex and improve the quality of life of citizens – for example, by reducing congestion or environmental impact.”
If cities create multiple, single-focus PoCs with no ability to federate data, he added, these gains will be lost. But, he added, the smart city opportunity isn’t confined to sprawling urban conurbations. Small cities, towns, even villages, he said, can benefit, too, because “the ability to leverage aggregated data doesn’t end at local regional boundaries and integration across towns to broader regional areas creates additional value.”
The international community has been trying to develop cybernorms for international behaviour for over a decade. This has been happening through UN processes, through the GCCS, through international law discourse, and other fora. And, some progress has been made. For instance, the Tallin manuals provide some insights on how international law applies to cyber war and cyber operations, while the UN GGE, among others, recognized the applicability of international law on the digital space and has provided some protection to cybersecurity incident response teams (CIRTs) and critical infrastructure.
However, these processes are slow, and certainly not without roadblocks. The 5th UN Group of Governmental Experts on Information Security (GGE), for example, failed to reach consensus on whether certain aspects of international law, in particular the right to self-defence, apply to cyberspace as well as issues related to attribution. During a panel at GCCS, five participants in the 5th UN GGE shared their perspectives. To me it was clear that all parties see that the cyber diplomatic discussions on stability need to continue, but that it is not at all clear what the modalities of such discussion will be; it is not clear if there will ever be a 6th UN GGE or an alternative UN process.
So, how do we get to norms that may impact state and non-state behavior? Norms that can be supported by a large group of stakeholders – states, private sector, and technical, academic and civil society communities alike?
Without prejudice to their rights and obligations, state and non-state actors should not conduct or knowingly allow activity that intentionally and substantially damages the general availability or integrity of the public core of the Internet, and therefore the stability of cyberspace.
This is a call that, I believe, can be prima facie respected by international law scholars, diplomats, negotiators, politicians, civil society members, and technologists alike. It recognizes a body of existing norms and agreements while it also unequivocally states: don’t mess with the public core of the Internet.
Many readers will rebut that this is a clear call, as the concept of public core of the Internet is not clearly defined. They have a point, but among the commissioners, it is well understood that the public core is a broad term that includes elements like Internet routing, the domain name system (DNS), certificates and trust, and communications cables. The associated protocol soup contains terms like BGP, DNS, PKI, and TLS. It is also well understood that we are not only talking about physical resources, like the routers themselves, but also about intangible aspects such as the state of the global routing table. More work will be done to refine and define the Public Core concept.
Creating a common understanding of global normative behaviour is a long and slow process where certain actors can become norm entrepreneurs. Not without pride, I believe that the GCSC, with the call for protection of the public core, is demonstrating norm entrepreneurship. Or, as EFF’s Jeremy Malcolm observes in in his blog on Delhi’s cyber events: “The Call to Protect the Public Core of the Internet is not intended to be legally binding, but like Internet standards, it is hoped that it will acquire influence because the process by which it was developed was relatively thoughtful, inclusive, and balanced”, closing his blog with: “It doesn’t surprise us that a diverse, multi-stakeholder group of experts can actually produce more useful outcomes than a group of governments alone, and this could be taken as a lesson by the host of the next GCCS.”
This year may go down as the last year that companies tossed connected devices out into the market without a plan for the long-term business model required to support it. Or at least I hope it is. This was a focus of a conversation I held last week in San Francisco at the Target Open House with the makers of several consumer connected devices.
Roy Vella, who is in charge of building the U.S. market for Hive, brought up the idea that when thinking about a business model or even lifecycle for a connected device a company should start with time. As in, how long would the business support the device? Hive sells a series of smart home devices for a monthly service charge.
Vella said the planned life of a product is an essential element in figuring out how much it will cost to support it. More than that, it also gives the manufacturer a clear sense of its responsibilities while providing consumers a clear sense of what they should expect.
I’ve talked about giving connected products an expiration date before, but I hadn’t really thought much about the power that comes with setting a time limit on a connected product. It makes the product look more like a service, and it also sets expectations throughout the supply chain.
The supply chain needs these expectations. I had a conversation ahead of the event with a chip company executive who was bemoaning the fact that one of his clients wanted a security update for a six-year-old connected product. But, as a consumer, my six-year-old connected light switches better get security upgrades, because they are now installed inside the wall.
Which brings us back to the cost of supporting connected devices. The concept is that instead of a piece of hardware, people are now buying a service. If you are in the enterprise or industrial world and reading this, you’re likely nodding along and wondering why it took so long for the consumer device makers to wake up to this.
For example, it’s common to negotiate support for that massive MRI machine software so the vendor services it and supports the software for a set amount of time. In some cases, the supply chain isn’t totally on board as witnessed by medical equipment vendors who are not updating bugs in their older gear, but the idea has been there for decades.
This is controversial in the consumer world because most companies don’t sell their devices as services, a point that June CEO Matt Van Horn was quick to point out. When people buy the June oven, they are buying an oven, not the service of being able to heat food perfectly.
But you can’t have connectivity without costs. Van Horn’s solution is to sell recipes as a service and to sell additional gear for the June oven. This could work. As a June oven owner, I asked Van Horn if I would be profitable as customer even if I never subscribed to the recipe service or bought any more gear.
He told me that cloud costs generally decline over time, which isn’t a real answer. I think we need to get to the point where the maker of a connected device can deliver that real answer. And as consumers, we need to rethink what we’re buying when we buy a connected device. Does that mean I need to pay an annual fee for “access” to my oven? Probably not, but it does mean a manufacturer has to have a real plan when I ask, how long will this last?
How is technology transforming the practice of management? As everyone knows, technological innovation enables changes in how we work, for example, helping people collaborate, access information more quickly, and make smarter decisions. Less obvious, but no less important, is the observation that technological innovation inspires new approaches to management. For example, the shift from mainframe computers to personal computers gave impetus to the empowerment trend of the 1980s, and the emergence of collaborative software tools shaped the knowledge management movement in the 1990s. In such cases, new technologies expand our capabilities and broaden our horizons, and it is this combination that enables management to evolve.
A case in point is agile. This emerged during the 1990s as a software methodology, made possible by new programming languages that made it much easier for developers to build prototypes and gain rapid user feedback. The concept of agile software development was formally defined in 2001,1 and over the next decade it gathered momentum as a more responsive and collaborative approach to software development than the traditional “waterfall” methodology.2 In recent years, agile has started to move into mainstream management thinking, with some observers proclaiming it the next big thing. Forbes.com contributor Steve Denning calls it a “vast global movement that is transforming the world of work.” In a 2016 Harvard Business Review article, Darrell Rigby, Jeff Sutherland, and Hirotaka Takeuchi wrote that “agile innovation has revolutionized the software industry. … Now it is poised to transform nearly every other function in every industry.”3
The purpose of this article is to shed light on agile as a management practice. To do this, I report on a detailed case study of the operations of ING bank in the Netherlands, which has adopted agile across its headquarters in Amsterdam. Though ING’s Dutch operations are less than three years into the process — and it’s therefore premature to declare the initiative a success — taking a deep dive into the organization’s early experience with adopting agile is nonetheless instructive.
Most IT departments in large companies today are adopting agile techniques to some extent, although with varying degrees of success.4 And many fast-growing technology companies, such as London-based Spotify Ltd. and Los Angeles-based Riot Games Inc., have embraced agile not just as an IT methodology but as a way of working.5 By contrast, ING is a bank whose roots go back more than a century. It is the first case I know of in which an established company in a traditional industry is reinventing its management model throughout its operations in a particular country — not just its IT or software development management model — using agile principles. By studying the experience of ING’s operation in the Netherlands, leaders at other established companies should be able to make more informed decisions about whether pursuing agile is right for them.
In this article, I highlight key learnings at ING in the Netherlands, largely from the point of view of the senior executives of the bank during this transition period, and I reflect on some of the broader implications. I don’t spend much time on the internal workings of the agile teams, or squads as they are known within ING, because others have written extensively on those.6 Instead, my focus is on implementing agile on an organization-wide basis. This is where the ING experience is unique — and hopefully most useful to other established companies that are seeking to embrace agile working.
My research is based on in-depth interviews with 15 ING executives and many front-line employees. (See “About the Research.”) In addition, I spoke to leaders tackling similar issues about new ways of working at other large companies, including Barclays, Roche, Bayer, Unilever, and BMW. Tellingly, one of the ING leaders I interviewed, Bart Schlatmann, left ING early in 2017 when another large global bank recruited him to help them implement agile methods. (He had spent 22 years with ING, the last 10 as COO of ING Netherlands.)
Why ING Adopted Agile
ING has always been open to new ways of working. It was an early mover in internet banking, creating ING Direct in the late 1990s as a nonbranch offering. In 2007, ING merged its two Netherlands-based business, Postbank (a savings-only bank with no branches) and ING (a traditional retail bank). The transformation process was called TANGO (together achieving new growth opportunities), and it achieved annual savings of 280 million euros (roughly $ 330 million at today’s exchange rates). In 2014, with the emergence of mobile banking, ING began rethinking its entire model through a process called RIO (redesign into omnichannel). ING quickly realized that it needed to look beyond the banking industry for guidance. Specifically, ING found inspiration from Amazon, Spotify, and Zappos, where agile methods had demonstrably improved customer orientation and employee engagement.
ING also conducted an internal study, which highlighted how bureaucracy, silos, and risk aversion were cultural problems. Based on this analysis, ING decided on a top-to-bottom restructuring of its operations in the Netherlands, based mostly on Spotify’s model but also on practices from Google, Netflix, and Zappos. The plan was to organize the 3,500 employees in Amsterdam into squads: teams of up to nine people with end-to-end responsibility for a specific customer-related activity. The squads would then work according to agile principles: a series of short “sprints” with frequent user feedback and daily progress updates.
ING went live with the new structure for its Netherlands operations on June 15, 2015. Eighteen months later, employee engagement was up (according to an internal survey to which I had access). In addition, ING’s Net Promoter Score for its business in the Netherlands rose from –21% in 2015 to –7% in 2017, and its cost-to-income ratio in that business dropped over the same period from 65% to 51%. While the transformation is not finished, it is still fruitful to reflect on what ING has learned so far. I’ve grouped ING’s lessons into five points.
1. Decide how much power you are willing to give up. In December 2014, ING executives flew to meet executives at Spotify. At that meeting, a Spotify executive said: “I can see you are fascinated by our way of working, but it’s not that easy. You need to ask yourself honestly, how much are you willing to give up?” His point was that agile shifts power away from those at the top and puts ownership in the hands of those closest to the action. That is a difficult shift for executives at established companies.
How did ING handle this shift? The “big bang” approach meant that senior managers in the Netherlands had to embrace the new way or leave the company. Those who stayed had to reapply for the newly categorized jobs. This led to major personnel changes and a significant downsizing in the organization (a net reduction of about 1,500 employees in the Netherlands from 2014 to 2016). All told, about one-third of the senior managers left.
The overarching lesson is that you cannot implement agile unless top executives accept that they are surrendering some status and power. “It requires sacrifices and a willingness to give up fundamental parts of your current way of working,” said Schlatmann.
2. Prepare stakeholders for the leap. Some ING stakeholders were “completely freaked out by our proposals — they thought it would be complete chaos,” recalled Schlatmann. It was one thing for Spotify and Netflix to adopt agile; it was quite another for a large bank to do so in the post-financial-crisis era.
How did ING’s executives sell agile to nervous stakeholders? To the board, the executive team cited its track record with TANGO and RIO. They also argued that ING needed a new way of working to stay competitive in the lightning-fast digital marketplace. In addition, ING executives sought early buy-in from the works council representing employees, explaining how agile would engage and empower rank-and-file employees. “They accepted the notion that this was a one-time chance to really change the organization, and they ended up supporting us in a very positive way,” said Schlatmann.
Meanwhile, bank regulators were concerned: They had never seen this structure in the industry. So ING’s executives invited regulators to headquarters, where they could observe how agile brought to operations a habit of daily communication about progress and customer solutions. Most important, ING’s executives assured regulators that finance, compliance, and legal functions would continue to be managed in their traditional way.
The lesson here is to assess — as early as you can — how stakeholders will react to a major change. Then find the right arguments to allay their concerns.
3. Build the structure around customers — and keep it fluid. The notion that work should be focused on customers is as old as the hills. Management thinkers such as Peter Drucker, W. Edwards Deming, Philip Kotler, and Theodore Levitt have all espoused their own variants of customer orientation. But agile goes a step further, forging a structure around customer needs. The basic building block for ING was a self-managed team, or squad, of up to nine people focused on a particular customer group. These squads were then clustered into larger tribes working on related activities. ING distinguished between experience tribes that attract new customers and service tribes that take care of existing customers. ING also defined two enabling tribes to serve these two customer-facing tribes. For example, one of the enabling tribes built black-box technical solutions for customer identification.
ING also seeks to keep its structure fluid so that it can evolve to do what’s best for customers. For example, the experience tribe in charge of daily banking was, for a time, handling some customer communications duties. But eventually they shifted these duties to the tribe that specialized in communications. Likewise, ING has created the concept of “pop-up squads” to manage one-off, short-term projects.
The lesson here — regardless of any decision you make about agile — is to revisit your organizational structure to make sure it maps to the real needs of customers.
4. Give employees the right balance of oversight and autonomy. How do you ensure that squads prioritize important work? ING in the Netherlands moved to a quarterly business review (QBR) process adapted from Google LLC and Netflix Inc. Four times a year, each tribe lead writes a maximum six-page summary of what the tribe achieved, what they did not achieve (and why not), what they are going to achieve next quarter, and any dependencies outside the tribe’s control.
These summaries are then discussed in a big meeting (the QBR Market) attended by tribe leads and other relevant leaders — about 20 people overall. They challenge one another’s achievements and plans, and in doing so often resolve tensions or overlaps. Each tribe lead emerges with a set of objectives and key results (OKRs) for the following quarter. The OKRs then get translated into tasks for the individual squads within the tribe.
All of that has been a learning process for ING employees accustomed to a traditional goal-setting process. At first, tribe leads defined quarterly goals that were comfortably achievable. ING’s executives had to urge them toward more ambitious targets — since the whole point was setting stretch goals, not erring on the safe side.
ING’s experience is a reminder that you still need top-level oversight in an agile organization — to continually tweak the framework for goals and reporting, and to keep the level of ambition high.
5. Provide employees with development and growth opportunities. Squad-based structures can be scary for employees used to having their personal development and career progression mapped out by HR departments or the mainstream career trajectories of a given industry. Indeed, one risk of agile is that employees become too task-focused and results-oriented. They burn out and neglect to think about their careers over the long term. Having discovered this risk in its advance research, ING has taken steps to attend to employee development.
For example, ING in the Netherlands instituted weekly POCLAC meetings for each squad, where the activities of the squad and the development needs of individuals are discussed in tandem. POCLAC stands for product owner, chapter lead, agile coach — the three people responsible for empowering a squad. Though these meetings are undoubtedly a sound idea, they remain a work in progress. In fact, one area in which ING in the Netherlands has struggled in its agile transition is that the POCLAC meetings do not always happen on a weekly basis. Perhaps this isn’t surprising: In most organizations, long-term individual goals easily get subsumed by and subordinated to short-term urgencies. What’s more, in ING’s old way of working, a manager was responsible for everything: the product, the process, and the people. With agile, each element is the responsibility of a different person. It’s been an adjustment for chapter leads, product owners, and agile coaches to grow comfortable with all of their new responsibilities, let alone nonurgent matters like career development.
The lesson? Finding proper coaching and support for agile — and the new, long-term responsibilities employees must embrace — is one of the hardest parts of the transformation.
Lessons From ING
ING’s experiences are a reminder that implementing new practices is much more difficult than suggesting them. The key challenges — shifting power from the top, getting buy-in from stakeholders, and changing employees’ views about professional development — are operational concerns, rather than big-picture ones. No wonder new management practices often work better at young companies than they do at old ones, where the employees have entrenched expectations and habits.
But agile does have one advantage for established companies: It is now a bona fide way of working, with its own set of principles and a track record of success in certain sectors (mostly tech) and functions (mostly IT). In discussions with stakeholders, leaders can say that they are exploring a tested management model, rather than reinventing the wheel. Moreover, agile is starting to migrate into mainstream business — and ING in the Netherlands is at the forefront of this movement. By discussing the details of its experiences, I hope others can be encouraged toward comparable experiments and explorations.
Mobile operators have a significant opportunity to offer LPWA solutions, but competition will be intense. The leaders have decided which technology to support – for example, AT&T has opted for LTE-M, Orange uses LoRa and LTE-M and Vodafone has gone for NB-IoT.Many other operators, especially smaller ones, have yet to make a firm commitment, but some challenger operators are planning to deploy different technologies to the market leaders. This article, based on our detailed report on approaches to LPWA, examines the options they face and the factors that will affect their decisions.
For the traditional mass-market smartphone opportunity, the technology upgrade path, through flavours of 2G, 3G and 4G, was clear. IoT is a new market and the old rules do not always apply. There are clear benefits for operators willing to take a risk on an alternative strategy from the leaders. This article examines the options they face and the factors that will affect their decisions, says Michele Mackenzie, principal analyst and Tom Rebbeck, research director, Enterprise & IoT at Analysys Mason.
Operators have three main approaches to LPWA technology choice
Mobile operators have three main options to consider when choosing an LPWA technology. They are as follows.
Follow the leader: The challenger operator chooses the same technology as the market leader. For example, if the leading operator is launching LTE-M then the challenger would do the same. Choose an alternative to the leader: The challenger operator chooses a different technology to that of the market leader. For example, if the leader chooses LTE-M then the challenger will deploy NB-IoT. Wait and see: The challenger operator waits for a winning technology to emerge before committing.
With LPWA, challenger operators have an opportunity to differentiate. Figure 1 illustrates some of the technology choices that leading and challenger operators have made. There is currently no clear trend on the approach that challenger operators are taking; some follow the leader, others do not.
Some of the advantages for challenger operators to deploy a different LPWA technology are as follows.
The alternative technology will be better suited to particular use cases. It is uncertain how large the differences between NB-IoT and LTE-M will be in terms of price and performance, but if NB-IoT does have clear price advantages or longer battery life than LTE-M, it will be more attractive for some applications such as metering. This could benefit T-Mobile USA. Moreover, challenger operators could benefit enormously if their chosen technology is used for a mass-market proposition. For example, if LTE-M is used by a future Apple Watch, KPN would be in a strong position in the Dutch market compared with its competitors, T-Mobile and Vodafone, which are focused on NB-IoT. An alternative technology could open up the enterprise market. Most challenger operators have a limited presence in the enterprise market. An alternative technology with clearly differentiated performance could help open new enterprise opportunities. It should reduce competition based purely on price. If all three/four operators offer the same network technology and coverage, strong price competition will be inevitable. Different technology […]