Smarter Planet: Transportation
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© 2010 IBM Corporation
Let’s Build a Smarter Planet: Transportation
George Mattathil -
4/21/2011
© 2010 IBM Corporation
Let’s build a smarter planet: Transportation
Transportation: The big picture.
Passengers and freight
Local and long distance
Commercial or publicly owned
Mode of transportation
Infrastructure
Automobiles
Trucks
Buses
Railroads
Metro transit
Roads
Parking
Tolls
Rails
Terminals
Bridges
Tunnels
Signals and
communications
Airlines Passenger
terminals
Air cargo
terminals
Ships and
ferries
Ports
Cargo
terminals
Air
Land Sea
Vehicle and infrastructure manufacturers
Supporting service providers for travel and freight
© 2010 IBM Corporation
Let’s build a smarter planet: Transportation
Transportation is critically important to civilization.
Across town or across the globe…
Freight: Food, clothing, shelter, fuel, materials, manufactured products.
People: Travel to work, school, shopping, healthcare, recreation.
Economic vitality depends on the availability of transportation.
Quality of transportation improves quality of life.
Cities could not exist without transportation of goods into the city.
© 2010 IBM Corporation
Let’s build a smarter planet: Transportation
Assure safety and security.
Improve operational
efficiency while reducing
environmental impact.
Dramatically improve
the end-to-end customer
experience.
Demands on transportation providers will increase over time, driving the need for new intelligence and insight, greater connectivity and transparency, and improved customer service.
DRIVERS OF CHANGE CHALLENGES STRATEGIC IMPERATIVES
Population explosion
World population is growing and
transportation providers will need
to expand capacity to keep up.
Urbanization
As the number and size of cities
grows, pressure on transportation
systems to move people and
materials between and within
those cities grows.
Globalization
The growing interconnectedness
of the world is driving inter-city and
international growth in demand, with
an expectation of improved service.
Technology
Technology now enables the capture
and analysis of real-time information
about the status, location and
condition of everything.
Capacity and congestion
Meet the growing, changing
demand efficiently, consistently
and profitably?
Empowered customers
Deliver transportation choices
and information in the way that
end customers value.
Efficient, green operations
Reduce cost and dependency on
scarce resources while reducing
environmental impact.
Safety and security
Unobtrusively reduce exposure
to security risks and increase the
safety of operations, with less
cost and impact on customers.
Predict demand and
optimize capacity and
assets.
© 2010 IBM Corporation
Let’s build a smarter planet: Transportation
Drivers of change Exploding populations, urbanization, globalization and technology are driving change, which creates unique challenges and opportunities for transportation providers.
It took all of history for human
population to reach 2 billion, and only
one generation to more than triple to
nearly 7 billion.
International trade in manufactured
goods increased more than 100 times
(from $95 billion to $112 trillion) in the
50 years following 1955.
In 2010 there are 476 urban areas with
at least 1 million people. That’s an
increase of 573% from 1950 when there
were 83. Over half the world’s population
now lives in urban areas.
Today, there are over 4 billion mobile
phone users, and over 1 billion internet
users, growing rapidly to 2 billion.
2 billion / 7 billion
>100x growth
476 cities over 1 million
4 billion / 1 billion
© 2010 IBM Corporation
Let’s build a smarter planet: Transportation
The need for progress is clear.
Traffic congestion costs the European
Union over 1% of GDP, or over 100
billion Euros per year.
100 billion Euros
Capacity and congestion
By 2020 there may be global demand for 7
billion air passenger trips. Yet airports and
airlines will only have capacity for 6 billion.
(Organization for Economic Cooperation and Development)
7 billion / 6 billion
The world will spend about $30 trillion over
the next two decades on new roads and
similar projects according to CIBC
economist Benjamin Tal.
$30 trillion
30,000 people from 47 countries
downloaded an airline’s new smartphone
application in the first 6 days.
30,000 in 6 days
Empowered customers
87% of U.S. travelers use the Web.
87% use the Web
4.6 billion worldwide by the end of 2009.
4.6 billion cell phones
60% of consumer sentiment around the U.S.
air travel industry is negative, and there are
19% fewer brand-loyal travelers in 2008 than
in 2006—a recipe for commoditization.
60% and -19%
© 2010 IBM Corporation
Let’s build a smarter planet: Transportation
The need for progress is clear.
U.S. road traffic congestion during 2007
wasted 2.8 billion gallons of fuel and
4.2 billion hours. Total cost of wasted
fuel and time was $87.2 billion.
2.8 billion gallons
4.2 billion hours
Efficient, green operations
Airlines worldwide generate 3% of all
greenhouse gas emissions. Some say
that because aircraft operate in the upper
atmosphere, the impact may be equivalent
to 13% of emissions from all sources.
3% or 13%
The U.S. Department of Transportation
reports over 41,000 road fatalities every
year from 1995 to 2007.
>41 thousand lives
Safety and security
Airlines spend $5.9 billion per year on
security (IATA). Airports spend >60% of their
operating cost on safety and security (ACI).
$5.9 billion
>60% of operating cost
© 2010 IBM Corporation
Let’s build a smarter planet: Transportation
The opportunity for progress is clear.
A European city reduced traffic by up to
18%, and increased use of public transit by
80,000 passengers per day. Citizens voted
to support the project.
18% less traffic
Airline industry environmental targets:
1.5% average annual improvement in
fuel efficiency from 2009 to 2020.
Cap aviation CO2 emissions from
2020 onwards (carbon neutral growth).
50% reduction in CO2 emitted by 2050
relative to 2005.
1.5% per year
50% by 2050
One ton of rail freight can be moved 423 miles
using one gallon of fuel, and a single freight
train can replace 280 trucks, reducing fuel use,
congestion and emissions.
423 miles using 1 gallon
A container port in the UK reduced
equipment breakdowns by 10%.
10% fewer breakdowns
A European airport reduced mishandled baggage
by 60% using an innovative RFID-based solution.
60% fewer delayed bags
An Asian high-speed railway achieves
99.15% on-time performance.
99.15% on time
© 2010 IBM Corporation
Let’s build a smarter planet: Transportation
The reality of living in a globally integrated world is upon us.
Frozen credit markets, limited access to capital, unpredictable funding.
Economic downturn and future uncertainty of economic growth.
Environmental sustainability challenges and new global regulation.
Oil and fuel volatility and long-term cost escalation.
Information explosion, channel proliferation and loss of market-making power.
Emergence of indirect substitutes and alternatives.
Changing travel demand and shifts in buying behaviors.
The need to increase or decrease capacity rapidly to align with demand.
New customer demands and business models.
The world is connected: economically, socially and technically.
© 2010 IBM Corporation
Let’s build a smarter planet: Transportation
This mandate for change is a mandate for smart.
The infrastructures, systems and processes that underpin
how business and society function are becoming
digitally aware, interconnected and infused with intelligence.
The new intelligence applies to how services are delivered, to the movement of people,
freight, money, information, electricity and more. Each represents a chance to do something
better, faster and more productively.
This is a new frame of reference with enormous promise for economic growth, with
opportunities to think and act in new ways.
© 2010 IBM Corporation
Let’s build a smarter planet: Transportation
Success will depend on deeper, more holistic and informed planning, collaboration and execution. Transportation providers will need to become smarter.
PREDICT DEMAND AND
OPTIMIZE CAPACITY AND ASSETS
Predict demand, align transportation
asset and infrastructure deployment
and continuously adapt operations.
DRAMATICALLY IMPROVE THE
END-TO-END TRAVELER OR
CUSTOMER EXPERIENCE
Understand customer needs
and provide information and
services to meet those needs
in the manner preferred. TRANSPORTATION
PROVIDERS
IMPROVE OPERATIONAL
EFFICIENCY WHILE REDUCING
ENVIRONMENTAL IMPACT
Continuously balance cost and
environmental impact of scarce
resource use while exploring new
operational alternatives.
ASSURE SAFETY
AND SECURITY
Leverage new sources of
information and new ways
of using that information to
improve security and safety.
© 2010 IBM Corporation
Let’s build a smarter planet: Transportation
The transistor was
invented 60 years
ago…
Today, there are 1
billion transistors for
each person on earth.
1 billion people
are connected to
the internet…
Soon growing to
2 billion people.
Over 4 billion mobile
phone subscribers by
the end of 2009… By 2010, there will
be 30 billion RFID
tags embedded into
our world.
© 2010 IBM Corporation
Let’s build a smarter planet: Transportation
Almost all usable information was once authored or processed by a person. That kind of information is now being overwhelmed by machine-generated data from sensors, RFID, meters, microphones, surveillance systems, GPS systems and all types of objects.
Volume of digital data
The number of emails sent every day is
estimated to be over 200 billion.
Every day, 15 petabytes of new information is
being generated. This is 8 times more than the
information in all U.S. libraries.
By 2010, the amount of digital information will
grow to 988 exabytes (equivalent to a stack of
books from the Sun to Pluto and back).
© 2010 IBM Corporation
Let’s build a smarter planet: Transportation
With the expansion of information sources comes a large variance in the nature of the data. This creates significant challenges to promoting real-time decision making.
Variety of information
Today, 80% of new data growth is
unstructured content, generated by emails,
documents, images, and video and audio.
38% of email archiving decisions receive
input from a C-level executive and 23% from
legal/compliance professionals.
The average car will have 100 million lines of
code by 2010.
The Airbus A380 contains over 1 billion lines
of code.
© 2010 IBM Corporation
Let’s build a smarter planet: Transportation
Decision making velocity is about optimizing the speed of insight as well as the confidence that decisions and actions taken will yield the best outcomes.
Velocity of decision making
Every week, the average information worker spends
14.5 hours reading and answering email, 13.3 hours
creating documents, 9.6 hours searching for
information and 9.5 hours analyzing information.
For every 1,000 knowledge workers, $5.7 million is
lost annually in time wasted reformatting information
between applications.
Not finding the right information costs an additional
$5.3 million per year.
42% of managers say they inadvertently use the
wrong information at least once per week.
70% of executives believe that poor decision making
has had a degrading impact on their companies’
performance.
© 2010 IBM Corporation
Let’s build a smarter planet: Transportation
The transformation to smart is enabling us to become more efficient, productive and responsive.
Traditional approach Smarter approach
Instinct and intuition
Corrective
Years, months, weeks
Decision support
Efficient
Fact-driven
Directive
Hours, minutes, seconds
Action support
Optimized
© 2010 IBM Corporation
Let’s build a smarter planet: Transportation
An opportunity to think and act in new ways.
Improve operational
efficiency while reducing
environmental impact.
Dramatically improve
the end-to-end traveler
or customer experience.
Predict demand
and optimize
capacity and assets.
+ + =
Assure safety
and security.
© 2010 IBM Corporation
Let’s build a smarter planet: Transportation
Smart transportation: Predict demand and optimize transportation capacity and assets.
SMART IS
Understanding and modeling a holistic view
of demand—across the transportation network.
SMART IS
Creating dynamic multimodal plans and
models, and executing real-time operations
based on real-time data.
SMART IS
Modeling scenarios and better planning routes,
schedules and maintenance by optimizing
assets, infrastructure and capacity.
SMART IS
Gaining deeper insights into the utilization
of transportation assets and infrastructure.
© 2010 IBM Corporation
Let’s build a smarter planet: Transportation
Smart transportation: Predict demand and optimize transportation capacity and assets.
Stockholm—IBM solutions improved congestion and
quality of life reducing peak period traffic by 18%. Use
of public transit increased by 80,000 passengers per
day. CO2 emissions from vehicles were reduced
by 14%. Increased revenue is channeled back into
improving public transportation.
Queensland Motorways reduced road congestion
during peak hours, improved Brisbane commuter
experience and supports local economic prosperity
by avoiding traffic snarls in commercial areas.
A large railway in Asia uses an automated crew
scheduling system that evaluates the skills and location
of available employees in real time to assign staff to
scheduled trains. Employees receive their assignments
via cell phone text messages, and log in to work using
biometric scanners, ensuring positive identification and
access control. The system provides management with
real time information about available staff and forward-
looking intelligence to optimize resource allocation,
reducing staff shortages and overtime expense.
Netherlands Railways uses ILOG software to weigh
56,000 variables including passenger demand and
available assets to assemble and schedule over 5,000
trains per day, realizing a 6% savings in operating
efficiency and saving $28.5M per year. Also improved
on-time performance by 2%, helping capture an
additional $57M in fares.
© 2010 IBM Corporation
Let’s build a smarter planet: Transportation
Smart transportation: Dramatically improve the end-to-end traveler or customer experience.
SMART IS
Increasing revenue and share by developing
more loyal customers who become advocates.
SMART IS
Optimizing capacity to meet demand and
reduce delays.
SMART IS
Reducing cost and differentiating customer service.
SMART IS
Better serving customers by anticipating
and catering to their needs throughout the
journey and by collaborating with adjacent
service providers.
© 2010 IBM Corporation
Let’s build a smarter planet: Transportation
Smart transportation: Dramatically improve the end-to-end traveler or customer experience.
A European airport, in partnership with an international
airline, reduced mishandled baggage by 60% with an
RFID-based baggage handling system. Reduced
transfer time by 22% and operational cost by 40%.
A leading global logistics firm uses ILOG Optimization
software to route and consolidate shipments for their
customers, lowering supply chain transportation costs
by up to 25%.
Singapore Land Transport Authority provides a unified
payment system using smart cards for public transit,
tolls and parking, improving the commuter experience.
Planners use data from the system to develop optimal
routes and schedules, reducing congestion and
increasing the appeal of public transit. Reduced fare
leakage by 80% and cost of fare processing by 2%.
IBM developed an application for Air Canada using the Apple
iPhone, iPod Touch, and Blackberry allowing passengers to
book flights, download electronic boarding passes, check-in,
get flight status and book rental cars and other services.
There were over 30k downloads of the app from 47 countries
in the first 6 days and a 13.5% increase in mobile check-ins.
93% of Air Canada passengers say multichannel self service
has improved their travel experience. Canadian New Media
Award for Best Mobile App of 2009.
© 2010 IBM Corporation
Let’s build a smarter planet: Transportation
Smart transportation: Improve operational efficiency while reducing environmental impact.
SMART IS
Increasing the extended transportation
network capacity using current infrastructure
and assets without increasing spend, including
collaborating with adjacent service and
infrastructure providers.
SMART IS
Saving money and time by knowing the
location, status and availability of your
assets—reducing total resource use and
carbon footprint enterprise-wide.
SMART IS
Increasing the ability to deal with irregular
operations across the transportation network
and modes.
SMART IS
Modeling the financial impact of business
decisions, streamlining planning, and
monitoring performance to maximize
revenue, margins and cash flow.
© 2010 IBM Corporation
Let’s build a smarter planet: Transportation
Smart transportation: Improve operational efficiency while reducing environmental impact.
A U.S. state department of transportation used Cognos
to improve their operational reporting and financial
management, which had a direct positive effect on
their bond rating and interest rates available to them.
Taiwan High Speed Rail Corporation uses IBM Maximo
for their advanced maintenance management solution
which used condition-based monitoring to predict and
act on maintenance requirements and manage over
320k asset elements. They have improved asset life
and availability with 99.15% on-time train performance.
A major European railroad reduces maintenance cost
by 30% by moving from curative and preventative
maintenance to predictive maintenance using Maximo.
COSCO, a global shipping firm, engaged IBM to help
optimize their supply chain using the Supply Chain
Network Optimization Workbench (SNOW). As a result
of the engagement, COSCO consolidated from 100 to
40 distribution centers, lowered logistics cost by 23%
and reduced CO2 emissions by 15%.
© 2010 IBM Corporation
Let’s build a smarter planet: Transportation
Smart transportation: Assure safety and security.
SMART IS
Predicting and avoiding vehicle failure.
SMART IS
Better managing security uniformly across
the transportation network with reduced cost,
while protecting the privacy of individuals.
SMART IS
Reducing congestion and accidents by
balancing traffic across routes or modes.
SMART IS
Improving reliability and uptime by optimizing
the supply chain and MRO processes.
© 2010 IBM Corporation
Let’s build a smarter planet: Transportation
Smart transportation: Assure safety and security.
A U.S. hub airport implemented a digital video
surveillance solution and a security command and
control center. The system also uses information from
biometric handprints and badge readers. The system
is more effective at recognizing risks and alerting the
command center. The effective labor cost savings is
US $2.2m per year.
A national rail system in Europe monitors its rail
infrastructure in real time and resolves more than
50% of issues before they affect train operation
using a service management solution built with
IBM Tivoli software.
Using RFID tags on parts and containers, IBM has
helped a major aircraft manufacturer track aircraft
parts through the entire life cycle including all
maintenance and the plane in which it is used. The
solution has allowed them to be more responsive to
customers, and reduced fleet down-time without
compromising safety.
An Italian parcel delivery service reduced their
security staff and increased the level of security
for their 10 hub facilities using an IBM solution
that centrally monitors intrusion, access control
readers, digital video and smoke detection.
© 2010 IBM Corporation
Let’s build a smarter planet: Transportation
The smarter transportation system is an interdependent ecosystem— integrated around standard information, processes and technology.
Participants aggregate, analyze
and act upon data to:
Predict demand and
optimize transportation
assets and infrastructure.
Dramatically improve the
end-to-end traveler or
customer experience.
Improve operational
efficiency while reducing
environmental impact.
Assure safety and security.
Information
Processes
Technology
Passenger and
journey information
Freight shipment
information
Location, status and
condition of assets and
infrastructure
Usage patterns across
all modes of transportation
Governments Transportation
providers
Terminal
operators
Freight and
logistics
service
providers
Freight
customers
Influencers:
Associations
and universities
Vehicle and
infrastructure
manufacturers
Passengers
and drivers
Travel
service
providers
Regulators
© 2010 IBM Corporation
Let’s build a smarter planet: Transportation
IBM’s solution strategy is aligned with the needs of transportation providers.
Predict demand and optimize
transportation assets and
infrastructure.
Dramatically improve the end-to-
end traveler/customer experience.
Improve operational efficiency while
reducing environmental impact.
Assure safety and security.
Demand and revenue management
Enterprise asset management and MRO
Route and schedule optimization
Traffic modeling and prediction
Irregular operations management
Road user charging
Fleet optimization
Integrated fare
management
Reservation system modernization
Multichannel self-service
Ticketing and payment systems
One view of the customer
Customer analytics
Loyalty management
Cargo management
Risk management
CRM
Enterprise asset management
Enterprise infrastructure management
Enterprise application systems
Green supply chain optimization
Resource optimization
Carbon management
Condition monitoring
Systems virtualization
Identity and access management
Condition based monitoring
using wireless sensors
Data and application security
Server and endpoint security
Biometric identification
Risk analytics
Digital video
surveillance
Network security
STRATEGIC IMPERATIVES HOW IBM HELPS MEET THE NEED
© 2010 IBM Corporation
Let’s build a smarter planet: Transportation
What makes IBM different?
IBM’s breadth of experience working with transportation providers worldwide across all
modes of transportation is unparalleled.
IBM has strong analytical tools to aggregate, analyze and act upon data gathered from
disparate sources—providing solutions for planning, scheduling, routing, CRM, pricing,
revenue management, intelligent traffic and infrastructure management.
IBM has practical experience implementing innovative solutions to help clients become
smarter—more instrumented, interconnected and intelligent.
IBM is the market leader in collaborating with transportation clients to deliver: the fastest
time to value with minimum risk through innovative solutions; the most comprehensive
portfolio of hardware, software and services; and deep domain experience and expertise.
IBM Centers of Excellence, IBM research, proofs of concept and first-of-a-kind projects
demonstrate innovation and competence in solution implementation.
© 2010 IBM Corporation
Let’s build a smarter planet: Transportation
Let’s work together to drive
real progress.
We’ve only just begun to uncover what is possible on a smarter planet.
The infrastructures, systems and processes that
underpin how business and society function are
becoming digitally aware, interconnected and
infused with intelligence.
The new intelligence applies to how services are
delivered; to the movement of people, freight, money,
information and electricity; and to how billions of
people live and work. Each represents a chance to
do something better, faster and more productively.
This is a new frame of reference with enormous
promise for economic growth, with opportunities
to think and act in new ways.
© 2010 IBM Corporation
Let’s build a smarter planet: Transportation
Trademarks and notes
IBM Corporation 2011
IBM, the IBM logo and ibm.com are registered trademarks, and other company, product
or service names may be trademarks or service marks of International Business
Machines Corporation in the United States, other countries, or both. A current list of IBM
trademarks is available on the Web at “Copyright and trademark information” at
www.ibm.com/legal/copytrade.shtml
Adobe, the Adobe logo, PostScript, the PostScript logo, Cell Broadband Engine, Intel,
the Intel logo, Intel Inside, the Intel Inside logo, Intel Centrino, the Intel Centrino logo,
Celeron, Intel Xeon, Intel SpeedStep, Itanium, IT Infrastructure Library, ITIL, Java and
all Java-based trademarks, Linux, Microsoft, Windows, Windows NT, the Windows logo,
and UNIX are trademarks or service marks of others as described under “Special
attributions” at: http://www.ibm.com/legal/copytrade.shtml#section-special
Other company, product and service names may be trademarks or service marks of
others.
References in this publication to IBM products or services do not imply that IBM intends
to make them available in all countries in which IBM operates.
© 2010 IBM Corporation
Let’s build a smarter planet: Transportation
31
IBM Global Financing versus financing providers
Other IT companies
Generally can’t match the depth and breadth of
IBM’s IT portfolio and IBM Global Financing’s scope,
experience and expertise
Often must use third-party finance providers
Traditional banks
Generally lack expertise in technology financing
Tend to be limited to the acquisition phase of IT life
cycle
Often have limited scope to exploit residual value of
financed equipment
Rarely serve the full needs of IT life cycle
By and large require restrictive loan covenants and
end-of-lease options
Offer no equipment recycling or disposal
IBM Global Financing
More than 30 years of experience as an asset-
based lender
Optimal understanding of IT across businesses
of all sizes and virtually all industries
Global client financing and asset recovery reach
Comprehensive financing portfolio to address
needs across the IT life cycle
Competitive rates, terms and conditions
designed to be easy to understand, and flexible
end-of-lease options
Based on our expertise and market knowledge,
we are able to take strong residual value
positions with respect to hardware, resulting in
very competitive rates for our FMV lease
offerings
Integration of financing into IBM’s solutions
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