Business Strategy

IDC PlanScape: The Essentials of Internet of Things

Investment for Smart Cities
Ruthbea Yesner Clarke

IDC GOVERNMENT INSIGHTS OPINION

FIGURE 1
IDC PlanScape: Executive Summary of the Essential Elements for IoT Investment
for Cities and States

Source: IDC Government Insights, 2015

January 2015, IDC Government Insights #GI253551

Figure 1 shows the essential elements for cities and states to consider as they begin to research
investment into the Internet of Things (IoT). The Internet of Things is an emerging reality; U.S. cities
and states cannot avoid the ramifications of new IP-enabled and connected devices and their potential
impact on the delivery of government services and on the quality of life of citizens. IT and non-IT
government leaders must begin to educate themselves more fully on this broad ecosystem of
technologies in order to begin investment in key point solutions.

©2015 IDC Government Insights #GI253551 2

IN THIS STUDY

The Internet of Things is an important part of the development of Smart Cities. In this study, IDC
explains the role of the IoT in Smart Cities and provides a planning framework that enables state and
city organizations to prepare for, and respond to, the fast pace of technology transformation around the
3rd Platform (cloud, mobile, social networks, and big data and analytics).

This IDC PlanScape document offers practical guidance to help IT and non-IT leaders in government
justify investment in IoT solutions. This guidance includes answers to the following:

 Why is the IoT important for consideration for investment by state and city government?
 What are IoT solutions and key use cases?
 Who are the key stakeholders that should be involved in IoT initiatives? What are their roles
and responsibilities for promoting successful IoT projects?
 How can IT and non-IT leaders help accelerate investment in the IoT for their organization?

SITUATION OVERVIEW

Why Is the Internet of Things Important?

The Internet of Things is important because it provides access to new and better information in real
time. This rapid access to new and better information impacts the quality of government services,
enabling them to be provided more quickly, more efficiently, and in a more predictive and less reactive
manner. This ultimately impacts every single person — citizen, visitor, business owner — who enters
your city or state.

To be more specific, the IoT offers:

 Access to new information: Devices, whether intelligent devices with embedded analytics or
"dumb" IP-enabled devices that merely transmit information, can provide departments with
new information. Some of this information will be new by virtue of the type of device. For
example, strategically placed acoustic sensors that pick up gunshots have shown that
previous assumptions on the level of gun activity in certain neighborhoods were wrong. Police
departments (PDs) operated on the assumption that when shots were fired, 80% of the time
someone called 911. In fact, this percentage could be as low as 20% of the time, a fact that
was revealed when these sensors were able to pick up actual gunshots, providing local PDs
with new information and insight.
Some of this information may already be collected by people, but because of resource
constraints, it cannot be collected as often or as detailed as needed. For example, inspectors
collect data on the structural integrity of bridges and other infrastructure, but there are rarely
enough inspectors to regularly and thoroughly inspect all the bridges that need it. Sensors on
bridges can provide information on the structural integrity of the bridge at regular intervals,
alerting inspectors when there are potential problems that need to be addressed.

©2015 IDC Government Insights #GI253551 1

  Access to better, faster information: Access to "better" information means access to more
granular, automated information often provided in real time or near real time as opposed to
waiting for an update manually or by phone or data entry. Parking sensors, for example,
provide immediate information when a parking space is empty, instead of requiring people to
drive around to find an empty spot. Public buses can alert a transportation management center
of their location continuously, allowing managers to record their routes for improved routing
and scheduling, follow traffic patterns, and update digital signs or provide alerts via apps so
citizens waiting for the buses know when they will arrive with accuracy.
A recent survey of U.S. state and local government executives shows that access to timely,
granular, and complete data to support action and decision making is an area for
improvement. When asked, "To what extent do you agree with the following characteristics of
the data available in your organization to support decision making?" (on a scale of 1 to 5, with
1 = do not agree and 5 = completely agree), the lowest-rated characteristics were that data
was timely, complete, and granular enough to support decision making (see Figure 2).

FIGURE 2

Data Characteristics to Support Decision Making

n = 359
Base = U.S. state and local government respondents
Note: Data is rated on a scale of 1 to 5, where 1 = do not agree and 5 = completely agree.

Source: IDC's Smart City MaturityScape Benchmark Survey, 2014

The premise of IoT solutions is that they provide a significant return on investment (ROI) from this
improved access to information. There will be a financial return from efficiencies and cost savings but
also a social and environmental return by enabling departments and agencies to meet specific targets,
outcomes, and policy goals. The IoT can help state and local governments reduce traffic congestion,
respond more quickly to emergencies, reduce greenhouse gas emissions, and serve the citizen more
effectively.

©2015 IDC Government Insights #GI253551 2

What Is the Internet of Things?
IDC defines the Internet of Things as "a network of networks of uniquely identifiable endpoints (or
things) that communicate without human interaction (by either wired or wireless access) using IP
connectivity — whether locally or globally." The IoT makes real the concept of ubiquitous connectivity
with its innate management, monitoring, and analytics functions.

Without a doubt, all IoT solutions require intelligent systems. Devices or things in the IoT are managed
by these intelligent systems, defined as securely managed electronic systems that run a high-level
operating system (HLOS) and autonomously connect to the Internet, execute native or cloud-based
applications, and facilitate data analysis. Research indicates that traditional embedded systems are
also being enhanced to function like intelligent systems in IoT solutions in some cases. IDC's current
definition of the Internet of Things has evolved to underscore the requirement that the IoT system is
defined precisely as an intelligent system or enhanced traditional embedded system that must have IP
connectivity.

When we think of the IoT, our mind typically begins with the endpoints themselves — the vast types of
sensors, wearable devices, and surveillance cameras. However, the IoT is a solution that covers the
entire technology stack as well as the associated services to integrate, deploy, and support solutions
and the security required at every level, as shown in Figure 3.

FIGURE 3

The IoT Technology Stack

Source: IDC Government Insights, 2014

To deploy an effective IoT solution, all elements of the technology stack must be mature and in place.
Of course, there must be intelligent devices and systems capturing data; the communications network
must be in place, whether it is fiber, wireless broadband, and/or sensor networks to transmit the data;

©2015 IDC Government Insights #GI253551 3

there must be a platform in place to integrate and manage devices and data from devices; and data
must be processed and analyzed to filter out noise and execute on relevant information and so forth.
New IoT apps cover an expanded number of sources of the data (including a broad array of sensors,
machine-to-machine traffic, and wearable devices), offer more extensive analytics on a wide range of
data, and can help bring these analytic and application processing capabilities out to many of the
devices themselves. Analytics, decision-support tools (mapping, visualization, etc.), and integration of
data sets are key elements to making an IoT solution actionable — as data types and volumes are
growing exponentially, data must not only be turned into information via analysis but be integrated with
existing and legacy data sets and displayed in such a way that everyday users can respond to it.

To further understand what the IoT is, let's look at some specific use cases under way right now in the
world (see Table 1).

TABLE 1

Worldwide Regional and Local Government IoT Use Cases

Vertical Use Case Benefit Example

Transportation Tolling collection — Reduced congestion at tolls, convenient Many

transponders payments, improved compliance, less CO2
emissions

Transportation Public transportation — sensors Capture real-time traffic conditions, improved Singapore
on buses prediction of best routes and scheduling for
greater fuel efficiency, improved communication
with passengers

Transportation Smart parking — parking Navigate drivers directly to open spots for Santander, Spain
sensors greater convenience, increased turnover in
central business districts, reduced congestion
and emissions, improved fee
collection/violations tracking emissions

Public safety Acoustic sensors for gunshot Response possible for every shooting incident, Multiple U.S. cities
detection faster response times, better scheduling of (Chicago,
patrols in high-violence areas Oakland)

Public safety Situational awareness — Real-time situational awareness and recording Many
wearable cameras of actions, potential to modify officer behavior

Connected IP enabled and sensors LED Cost savings and reduced energy consumption; Copenhagen,
lighting lighting on street lamps lights dim and brighten depending on Denmark
surrounding activity; faster response times by
work crews to issues

Public works Citizens as "things" using Reduced costs to find, repair, and schedule Boston,
smartphone sensors for repairs, work crews, and work orders; engages Massachusetts
automatic pothole reporting citizens

Source: IDC Government Insights, 2014

©2015 IDC Government Insights #GI253551 4

Challenges and Risk Factors

As solutions, particularly emerging technology solutions that rely heavily on data, there are risk and
challenges to deployment. Key challenges and risk factors include:

 Security: Besides public safety, much of the data being sent across networks for IoT use
cases will not be heavily sensitive, but that does not mean that it wouldn't cause significant
disruption if the systems were hacked. For public safety, the fact the much of the information
that may relate directly to a police officer is geolocation-specific could present a threat to the
safety of officers in the field. Real-time transmission of this data and its security is a serious
consideration. In other cases, endpoint devices as data collectors, in some cases conducting
some data analysis at the edge, and providing information that is geolocation specific, may not
be the security issue — the data may already be open and accessible to the public as part of
Open Data initiatives. But the systems themselves (i.e., a connected lighting system), if
disrupted, could provide significant hazards to citizens.
 Privacy: Much of the talk about the IoT is its Big Brother aspect. While citizens may want the
convenience of a multispot parking system that relies on a license plate reader to track their
location, this is certainly giving up some privacy, which could have ramifications later on. At
times, this can be addressed by having opt-in services so that those concerned about privacy
can choose not to access services. But not all services can be opt-out. In the case of
Harrisburg, Pennsylvania, that offers a parking system based on license plate numbers, there
may not be options for parking without giving up this information. The will, over time and with
the increase of IoT solutions, be an increasing tension between convenience and privacy and
accessing government services and privacy. Privacy could be retained by disassociating data
from its owner — that is, the license plate is used for parking payments but not linked to other
systems related to the citizen; however, this reduces the value of the data for state and local
governments that are seeking to get a more cross-departmental, cross-services, holistic view
of citizens.
 Required changes in work processes or standard operating procedures: New information,
coming in real time, is going to change the way workers need to work. This requires changes
in operating procedures and work processes. These changes may need to be documented
and approved if there are changes in policies (and could involve unions in some cases) and
require training and change management strategies for dealing with resistance to change from
workers. For example, acoustic sensors that detect gunshots have provided real-time access
to this information but no other details that might be collected from a 911 call, such as the
number of people in the area. A responding officer may actually have little information about
the scene unless there is also a corresponding video information or a 911 call. This means
that officers do not know what standard operating procedures to follow.
 Lack of standards and integration: The value of IoT data increases exponentially when it is
integrated with other data sets and into existing operation center systems (the previously
mentioned example with acoustic sensors is a great example of this — video, 911, and acoustic
data should all be integrated into the dispatch systems). This presents a challenge in that
there is little standardization of chips and devices for device enablement solutions offerings.
While standards are emerging, there are complications by multiple standards bodies
determining multiple standards. Part of this is the immaturity of solutions from vendors; many
are working to be able to integrate with other systems and work within a partnership

©2015 IDC Government Insights #GI253551 5

 ecosystem. There will be a challenge to determine the best private partners for pilot IoT
solutions.

THE APPROACH

Who Are the Key Stakeholders?

Even at the early stage of researching IoT solutions, or designing a pilot solution, the active
participation of top management from the IT department as well as functional department is required.
The CIO and someone on her/his staff must be visibly targeted with the strategic objective of
supporting the functional department, with an eye toward future cross-departmental deployments (see
Table 2). For example, IP-enabled cameras at traffic lights might be a first step, but eventually data
from the cameras should be shared with the police department or others. A level of architectural
strategy should be in place and will likely include IT operations, data analysts, and Open Data
initiatives, as well as the department director plus assigned staff. Equally imperative is to ensure all
stakeholders and beneficiaries of the solution are involved at an early stage — such as local business
and community groups. There have already been examples of implementations of smart parking
meters or other citizen-facing systems that have been met with considerable resistance and even
project failure in which systems needed to be rippled out and replaced.

TABLE 2

Key Stakeholders in IoT Solution Design

Title Role Action Required

CIO Leader Innovator and change agent, set strategic direction, align and motivate
people

Department head Leader Find budget, align internal department resources, motivate people
(i.e., chief of police)

Functional IT director Manager Project management and execution, responsible for accountability,
(i.e., patrol unit/traffic designing and meeting KPIs and metrics
investigations)

Functional IT support staff Support Execute on project tasks

IT department Open Stakeholder Identify issues, moderate project impact, ensure timely feedback
Data lead

Citizen/business/ Beneficiary Provide feedback and input on usability of systems and areas of concern
community groups around privacy or other issues, determine measurements of success

Source: IDC Government Insights, 2014

©2015 IDC Government Insights #GI253551 6

FUTURE OUTLOOK

The Internet of Things will grow in importance and influence, especially in urban environments, in the
next two to three years. The IoT will become an essential component to deliver on key policies like
CO2 emissions and climate preparedness as well on quality-of-life issues like traffic congestion and
public safety. Several predications from IDC FutureScape: Worldwide Smart Cities 2015 Predictions
(IDC #253164, December 2014) highlight the direction of the future IoT:

 Citizens will be connected "things." One of IDC's IoT decision imperatives for 2015 is that
within the next five years, 40% of wearables will have evolved into a viable consumer mass-
market alternatives to smartphones. While initially citizens will use both smartphones and
wearable computing devices, eventually wearable devices will mature into full-fledged
standalone devices with a broad range of functions and associated applications. These
devices will create data and connect with apps and systems autonomously, and just as with
mobile apps on smartphones, citizens will expect to access government services via these
devices as well as be part of the IoT ecosystem that provides information to government.
 Investment will grow relatively rapidly. IDC predicts that by 2018, competing to build innovative
and sustainable Smart Cities, cities and metropolitan areas will represent at least 25% of
government spending on deploying, managing, and realizing the business value of the Internet
of Things. At this point, mostly large cities are deploying point IoT solutions, but this will
change as midsize cities realize benefits.
 Climate change will be a driver. By 2018, concerns about severe weather and changes in sea
and water levels will drive collaboration between public safety, emergency response, and
sustainability programs for climate preparedness and a 30% increase in investment in
predictive IT solutions using the IoT, big data, and social networks to mitigate damage to
property and people.
 There is risk in doing nothing and risk in moving ahead without proper strategic planning. In
2015, 70% of local government CIOs will lack an appropriate information architecture strategy
to cope with the increasing use of cloud, data analytics, and connected devices, leaving many
states/provinces and cities open to security risks as well as limited in the ability to manage,
validate, and use data assets.

To learn more about these future predictions, refer to IDC FutureScape: Worldwide Smart Cities 2015
Predictions (IDC #253164, December 2014).

ESSENTIAL GUIDANCE

Actions to Consider
How Can My Organization Take Advantage of the IoT?

There are a few main issues facing state and local government today around IoT initiatives, and they
are not solely related to budget limitations for these projects. The main challenge is around education
and awareness. Many department leaders may have specific problems they would like to solve that
would be a great fit for an IoT solution, but they are not clear on what the term IoT means, what are

©2015 IDC Government Insights #GI253551 7

specific use cases, and what other cities have already tested and tried. Of course, the end goal is to
find the resources — both monetary and otherwise — to investment in a pilot project. To this end,
government leaders should:

 Educate key decision makers and build support.

 Use success stories from other cities and vendor ROI and other performance metrics to make
the business case.
 Aim for investment in small point solution as pilot.
 Find key private sector and university partners.

Figure 4 provides more detail around how to garner support for additional research and investment in
the IoT.

FIGURE 4

Steps to IoT Investment

Source: IDC Government Insights, 2014

The Important Role of Cloud

One very important area that must be considered to accelerate IoT investment is cloud services.
Cloud-based IoT solutions solve many of the challenges of IoT deployment. For example, many cities
and states do not have the expertise or resources to manage additional sensors or sensor networks;
cloud vendors, many emerging in the communications space, can take that role as can specialized IoT
vendors. These vendors will install, maintain, and support their sensors as well as provide analytics as
a service, serving up event notifications only as required to operations centers.

©2015 IDC Government Insights #GI253551 8

The acoustic sensors mentioned previously can be provided in such a manner. ShotSpotter offers a
subscription-based service that provides real-time notification of gunshot crimes in progress to
dispatch centers and patrol cars. Related information can include the number of shots fired, the
number of shooters, and the precise location of the crime as well as a database of maintained
incidents for further analysis to help with community policing resources. This type of service
outsources the device installation, maintenance, and analytics to the vendors and offers usage-based
pricing. While this is only one example of a cloud-based IoT solution, there are many others across
many different use cases. Cloud deployment should be a key area of research as government leaders
look to determine budget required and build the business case for investment.

LEARN MORE

Related Research
 IDC MaturityScape Benchmark: Smart Cities — An Assessment of U.S. Cities and States (IDC
Government Insights #GI253314, forthcoming)
 IDC FutureScape: Worldwide Smart Cities 2015 Predictions (IDC #253164, December 2014)
 IDC FutureScape: Worldwide Government 2015 Predictions (IDC #252588, December 2014)
 IDC FutureScape: Worldwide Internet of Things 2015 Predictions (IDC #252872, December
2014)
 IDC's Use Case Taxonomy, 2014: Making the Case (IDC #252064, October 2014)

Synopsis
This IDC PlanScape study offers practical guidance to help IT and non-IT leaders in government to
justify consideration for investment in IoT solutions. This guidance includes answers to the following:

 Why is the IoT important for consideration for investment by state and city government?
 What are IoT solutions and key use cases?
 Who are the key stakeholders that should be involved in IoT initiatives? What are their roles
and responsibilities for promoting successful IoT projects?
 How can IT and non-IT leaders help accelerate investment in the IoT for their organization?

"The Internet of Things is an emerging reality, and U.S. cities and states cannot avoid the ramifications
of new IP-enabled and connected devices and their potential impact on the delivery of government
services and on the quality of life of citizens," states Ruthbea Yesner Clarke, director, Smart Cities
Strategies program. "This document will help government decision makers understand the benefits of
IoT use cases and help justify further research into investment."

©2015 IDC Government Insights #GI253551 9

About IDC
International Data Corporation (IDC) is the premier global provider of market intelligence, advisory
services, and events for the information technology, telecommunications and consumer technology
markets. IDC helps IT professionals, business executives, and the investment community make fact-
based decisions on technology purchases and business strategy. More than 1,100 IDC analysts
provide global, regional, and local expertise on technology and industry opportunities and trends in
over 110 countries worldwide. For 50 years, IDC has provided strategic insights to help our clients
achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology
media, research, and events company.

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