smarter planet: transportation

© 2010 IBM Corporation

Let’s Build a Smarter Planet: Transportation

George Mattathil -

4/21/2011


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



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.



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


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.



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




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)


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%



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



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



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.



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.



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.



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.



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).



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.



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.



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



An opportunity to think and act in new ways.

Improve operational



Dramatically improve

the end-to-end traveler

or customer experience.

Predict demand

and optimize

capacity and assets.

+ + =

Assure safety

and security.



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.



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.



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.



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.



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.



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%.



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.



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.



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




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



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.


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



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.



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.



Trademarks and notes

IBM Corporation 2011

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or service names may be trademarks or service marks of International Business

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all Java-based trademarks, Linux, Microsoft, Windows, Windows NT, the Windows logo,

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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.

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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