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Analytics Magazine

Smart cities: A world of opportunity in data

Amsterdam example: Real-time data enables efforts to reduce traffic, pollution, energy usage and crime.

Frank HarmsenBy Frank Harmsen

With its museums dedicated to master painters, canals that exude old-world charm and core city streets that date back to the 17th century, Amsterdam is a place very much in touch with its past. But the city, known for being progressive and open to new ideas, has also become a pioneer for what’s possible in our data-driven future to improve citizens’ quality of life, drive new efficiencies and increase sustainability.

Amsterdam has become a city where real-time data enables efforts to reduce traffic, pollution, energy usage and crime, thanks to the power of increasingly prevalent connected devices, the Internet of Things and analytics. In building out such capabilities, Amsterdam has placed itself at the forefront of the smart cities movement, where elected leaders, private industry, consultants and citizens come together to determine how best to capitalize on data and the insights derived from it – and thereby renew and redefine the social contract between governments and their populations.

For these efforts, the European Commission named Amsterdam as its Capital of Innovation award winner in April, an achievement in what has been an eight-year journey, with more to do. But what are the opportunities, and how does a city get that far along over a relatively short time?

In Amsterdam’s case, collaborating with industry was key. For example, the city worked with EY (Ernst & Young), which has helped Amsterdam define, shape and finance its plans as the city evolved, stressing that successful urban development requires putting citizens at the heart of all smart cities initiatives – and that the human element is just as important as the technology.

Amsterdam is already known for being the bicycle capital of the world, but it’s pushing to get more people to ride them.

Amsterdam is already known for being the bicycle capital of the world, but it’s pushing to get more people to ride them.

A World of Opportunity in Local Data

Last December, Gartner predicted that smart cities will use 1.6 billion connected devices in 2016, up 39 percent from the prior year [1]. A sizable chunk of those are used in commercial real estate – for example, sensors used to monitor and manage energy use and security – and significant growth is predicted in private residences, where smart thermostats and other devices are replacing their “dumb,” disconnected versions. Trends are accelerating in the consumer space, as more people worldwide use smartphones, enabling broader connectivity. In a report from July, Navigant Research estimated that revenue from energy, water, mobility, buildings and government components linked to smart city initiatives would jump to $88.7 billion by 2025, more than doubling 2016’s total of $36.8 billion [2].

Amsterdam has been ahead of the curve, setting up public-private partnerships with technology companies and capitalizing on the imagination of developers to build its own apps independently with available data. Amsterdam set up more than 80 pilot projects throughout the city, creating a laboratory where efforts are tested, sharpened and rolled out into a wider area if they prove to be promising. As you might expect, the teams encountered hurdles; an inventory determined that the city had 12,000 different data sets that were often not centralized and had had varying levels of accessibility. But by planning, managing expectations and carefully testing projects, Amsterdam has made progress in a whole host of innovative areas including the following:

Crime prevention and investigations. Law enforcement agencies have long been teeming with data: what crimes happen where and when, who perpetrated them or is suspected of doing so, and much more. In Amsterdam, that information is being used to identify relationships between certain characteristics of an area and to predict the number of crimes. For example, higher prevalence of secondhand cars in one spot can correlate to higher crime rates. By itself, that factor doesn’t prove cause and effect, but it’s useful nonetheless.

In addition, the city’s Top600 initiative puts algorithms to work to pinpoint the 600 residents who have the most extensive criminal records and then targets extra social services to their younger brothers and sisters to try to stop the cycle of crime.

Traffic and pollution. Amsterdam is already known for being the bicycle capital of the world, but to further reduce pollution and ease congestion on its narrow, centuries-old streets, it’s pushing to get more people to ride them. The city used data to identify some areas where people were ideally suited for pedaling instead of driving, such as their distance from the city center or the subway. The analysis also determined that immigrants were less likely to use bikes, so communication strategies were adapted accordingly.

The city has also shared its traffic data with a tech company to formulate algorithms to ease traffic, and its Rain Sense project scrutinizes rainfall patterns to help reduce the impact of flooding – always a concern in the Netherlands – on its streets.

Healthcare. Equipped with data from insurance companies and analytics, one city department got greater insight into a problem that is often invisible: depression. Some locations with higher concentrations of depressed people lagged other areas when it came to the levels of available care. The data also considered treatment costs. Even a push to improve children’s diets had a data component to gauge its effectiveness: Grocery store sales were analyzed to see whether they were selling more vegetables.

Tourism: Imagine all the posts on Twitter and Flickr from a tourist hotspot like Amsterdam. That’s a lot of free information out there, and through the Beautiful Noise initiative, they’re mined for information to identify patterns in wait times and mass-transit delays. Crowd control is essential for large events such as the SAIL Amsterdam festival, which drew more than a million people to the city in 2015, so cameras, social media posts, Wi-Fi hotspots and even GPS tracking were used to study how crowds move and how to use those insights to unclog high-traffic points in a way that respected people’s privacy.

A tourist hotspot, Amsterdam uses cameras, social media posts, Wi-Fi hotspots and GPS tracking to study how crowds move in order to reduce congestion.

A tourist hotspot, Amsterdam uses cameras, social media posts, Wi-Fi hotspots and GPS tracking to study how crowds move in order to reduce congestion.

Becoming a Smart City in a Smart Way

These were all ambitious plans, but how did they take shape and become successful? With public money involved, Amsterdam, like any other city with ambitions to be “smart,” had to be sure it was acting in its citizens’ interests and not wasting time building a technocrat’s dream. The city did much of this on its own and received some assistance from EY to achieve the following:

Define the vision. It’s good to conduct experiments, but with more than 80 such pilot projects, some weren’t going anywhere and didn’t really fit within what the city wanted to accomplish. A smart city is nice, but without an overall and well-defined vision, citizens may fail to see the value behind the gadgetry. It’s very important that the general public understand what a smart city is good for and to realize it’s designed with them in mind.

EY helped leaders develop that vision, asking questions such as: What is your purpose, and what do you want to be famous for? Is it to be a tourist destination, a sustainability leader or something else? What are your priorities? Do you want to have a smart city to help fight crime, improve healthcare or modernize infrastructure? What cultural elements are unique to your city that should be built upon? How do you position yourself in relationship to other cities? And what role should each group play in making that plan a reality? In Amsterdam’s case, its goal was to build on their progressive tradition and unique port location, to lessen the strain on its historic infrastructure and the overall environment, and to further accentuate the attractions that draw people there to live and visit.

Act as a “sparring partner.” Sometimes the solution doesn’t involve a lot of data, or maybe the right problem isn’t even being addressed. We encouraged the city leaders to consider a different approach, with an eye toward what citizens and other stakeholders need.

Behavioral change is as important or even more important than the programs you develop, the algorithms you create and the technology you buy. The best components can get you only so far. Analytics practitioners in every industry, particularly those with stakeholders in the public sector, must never lose sight of the end user, in this case the taxpayers, who can jettison all these grand designs by electing new leaders who appear to have a firmer grasp on voter priorities.

Get the financing right. Sharing data, within the bounds of privacy rules, can prove attractive to companies, and foundations can also help pay for programs through grants. It’s different for each city, but opportunities exist beyond tapping public budgets. We helped Amsterdam’s leaders find private financing and establish relationships with banks and technology companies in an innovative way, within the bounds of strict procurement rules.

Final thoughts: Never Lose Sight of the Citizen

Amsterdam has momentum on its side to continue challenging the norms of what data can do, what governments can accomplish with it and how citizens can benefit. Just a decade ago, such possibilities were unthinkable. Who knows where the next decade will take those willing to begin the journey, with a common vision that’s clearly communicated alongside a strong push for citizen engagement.

Smart cities run on data, but putting the citizens at the heart of your plans is essential to successful urban development. In this new world full of new potential, technology is merely the infrastructure. It holds value only when it’s connected to people – the real lifeblood of our communities.


Frank Harmsen is a partner with Ernst & Young Accountants LLP in the Netherlands and the firm’s market segment leader for the Government & Public Sector, Advisory Services. The views expressed in this article do not necessarily reflect those of the global EY organization or any of its member firms.

REFERENCES
1.     “Gartner Says Smart Cities Will Use 1.6 Billion Connected Things in 2016,” Gartner, gartner.com/newsroom/id/3175418, Dec. 7, 2015.
2.     “Annual Global Smart City Revenue is Expected to Reach $88.7 Billion by 2025,” Navigant Research, navigantresearch.com/newsroom/annual-global-smart-city-revenue-is-expected-to-reach-88-7-billion-by-2025, July 19, 2016.

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