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1 BEST PRACTICES RESEARCH INSERT COMPANY LOGO HERE 2013 North American SSL Certificate 2014 Global Best-in-Class Smart City Integrator Product Leadership Award Award Visionary Innovation Leadership 2014 Frost & Sullivan 1 We Accelerate Growth

2 Visionary Innovation Leadership Award Best-in-Class Smart City Integrator Global, 2014 Frost & Sullivan s Global Research Platform Frost & Sullivan is in its 50th year of business with a global research organization of 1,800 analysts and consultants who monitor more than 300 industries and 250,000 companies. The company s research philosophy originates with the CEO s 360-Degree Perspective, which serves as the foundation of its TEAM Research methodology. This unique approach enables us to determine how best-in-class companies worldwide manage growth, innovation, and leadership. Based on the findings of this Best Practices research, Frost & Sullivan is proud to present the 2014 Global Visionary Innovation Leadership Award as a Best-in-Class Smart City Integrator to IBM. Frost & Sullivan s Visionary Innovation Research Group Visionary Innovation is the ability to innovate today in the light of perceived changes and opportunities that will arise from Mega Trends in the future. It is the ability to scout and detect unmet (and as of yet, undefined) needs and proactively address them with disruptive solutions to cater to new and unique consumers, lifestyles, technologies, and markets in the future. At the heart of visionary innovation is a deep understanding of future implications and global ramifications of mega trends, in order to correctly identify and capture niche and white space market opportunities in the future. The Visionary Innovation Research group at Frost & Sullivan conducts cutting-edge visionary research by tracking the most important global Mega Trends, potential scenarios of specific trends in 2020 and beyond, and the macro to micro implications of these new Mega Trends. What makes this analysis unique, compared to other predictive programs out there, is its ability to not only identify and evaluate emerging Mega Trends, but to also help clients translate those opportunities to everyday business and personal life, using the macro to micro approach. Frost & Sullivan's Visionary Innovation Research team has conducted extensive work on Mega Trends, identifying Smart Cities as the trend that will significantly influence and compel companies to realign their strategies in response to new challenges and opportunities in the market. This Award category recognizes the best practices of companies that have pioneered innovative models to overcome the challenges created due the rapid move towards smart cities Frost & Sullivan 2 We Accelerate Growth

3 Significance of the Visionary Innovation Leadership Award Key Industry Challenges According to Frost and Sullivan, 60% of the world s population is expected to live in urban environments by It is expected that around 26 global cities and more than 90 sustainable cities will develop, with 50% of these 'smart cities' being in North America and Europe. The increased growth of smart cities will drive the need to innovate and provide solutions to foster convergence within the city. The smart city market is growing, especially with the rapid rate of urbanization taking place, with the market expected to be a $1.5 trillion by This significant growth presents certain challenges for organizations and city authorities. Rapid urbanization plays an integral role in economic and societal progress. However, it also strains a city s infrastructure. Key challenges, such as traffic congestion, energy usage, public safety, and the building of sustainable communities are top of mind. Such challenges need to be addressed through the development and implementation of intelligent solutions. Smart City solution providers face the challenge of integrating key initiatives within a city's existing framework. Smart cities are measured by the integration of their infrastructure and the intelligent ways by which they tackle challenges. A smart city puts emphasis on creating a system of networks to allow for a systematic flow of information and effective management of resources. Enabling integration and convergence with organizations and local authorities to provide solutions for the development of a smart city is crucial. Companies, which use their expertise and provide technological solutions, such as cloudbased services and big data analytics, will be able to improve their position and stay competitive in the market. Another key challenge in smart cities is the development of an implementation roadmap outlining objectives, stakeholder participation, type of public-private engagement and most importantly funding mechanisms. However, there is no one-size-fits-all approach in this fragmented market with each individual smart city project requiring a custom strategy. Therefore, companies that cover the water-front in terms of smart city sectors, products, and technologies are best equipped to offer solutions here either as a prepackaged bundled solution or a-la-carte catering to the specific needs of the city, be it smart transportation, energy or infrastructure Frost & Sullivan 3 We Accelerate Growth

4 Key Benchmarking Criteria for the Visionary Innovation Leadership Award For the Visionary Innovation Leadership Award, the following criteria were used to benchmark IBM s performance against key competitors: Understanding and Leverage of Mega Trends Vision Integration Into Strategy Excellence Efficacy of Innovation Process Degree of Impact on Business and Society Criterion 1: Understanding and Leverage of Mega Trends From the inception of its Smarter Cities program in 2009, IBM has led the way in establishing itself as a leading provider of smart city solutions, entering into key collaborations with local authorities. IBM has successfully made use of the impact of urbanization on cities by introducing offerings, such as Intelligent Operations Center in 2011, energy optimization tools, and predictive analytics for effective transportation management for various smart cities across the world. Using disparate, but existing data (or even publicly available data), IBM focuses on collecting data and leveraging its own technologies, such as cloud services, Big Data analytics, mobile and social and its Intelligent Operations Center to integrate city systems and allow for the efficient management of city resources. Such systems respond to the demands of new applications and accelerate their deployment, along with simplifying the management of the Cloud and Business solutions, using IBM capabilities and industry partners. IBM recognizes that smart cities are a phenomenon, which will drive growth, and it has accordingly designed its strategy to focus on the local authorities within cities as the avenues through which the market will grow. IBM recognizes vital challenges that cities face, such as traffic congestion, energy usage, and the efficient management of city resources to cater to ever-growing population demands. Via its Smarter Cities Challenge, IBM has provided its talent and resources to over one hundred city authorities around the world, equipping them with the knowledge and the assessment ability required to make informed decisions in the most efficient way to manage city resources. In April 2013, IBM sent a team of experts to Gran Valparaiso, Chile, where, along with the growing population, the challenge of better connecting communities through an effective transportation system arose. IBM worked together with the government to come up with a better solution to manage the transport infrastructure with continuous data collection. The IBM Smarter Challenge teams work efficiently and effectively with local authorities in cities to come up with solutions to the key challenges that they face Frost & Sullivan 4 We Accelerate Growth

5 Criterion 2: Vision Integration into Strategy Excellence IBM s vision of a Smarter Planet is driven by the 3 I s Instrumentation Interconnectedness Intelligence By pursuing each of these, IBM has successfully provided solutions that make cities more productive. With thousands of successful engagements and many industry collaborations, Smarter Cities has become a key part of IBM s growth strategy. Smarter Cities has evolved into a multi-strategy platform, involving the promotion of IBM technologies, such as predictive analytics and Cloud-based services, as well as know-how, through which governments, industry, education, and other businesses can become smarter and contribute in building a Smarter Planet. IBM s expected revenue growth for 2015 is $20 billion, with the Smarter Planet initiative expected to contribute $7 billion in revenues, an increase from $3 billion in revenues in IBM reported a growth of 20% in Smarter Planet for Q3 of This continued increase in revenues through Smarter Planet distinctly reflects the immense impact that the initiative has had on cities as well as on IBM s growth as a company. IBM s Smarter Cities Challenge initiatives has garnered considerable interest from governments and organizations alike, having partnered with over one hundred cities across the globe since its inception in 2010, with contributions valued at $50 million. Local governments are struggling with the increased demand for basic services and need to meet this demand with limited resources. In this scenario, the Smarter Cities team at IBM delivers recommendations to these communities on strategic investments that can be made in order to better utilize the limited resources that the local government has. IBM s advantage as a smart city integrator lies in the development of methodologies, which help assess cities performance against indicators and identify the challenges as well as opportunities for improvement. IBM provides business insights and research, along with the tools and technologies required for the implementation of smart city solutions to city authorities. In Ho Chi Minh City, IBM partnered with city representatives and outlined a plan for the city to improve its major underlying systems. IBM s vision for the city involved building a comprehensive, IT-based urban management system, such as using data analytics, which would allow the city to become smarter. IBM recognized that in order to help cities tackle challenges, such as traffic congestions and energy usage, it was essential to develop a new set of skills. Hence, through collaborations with universities, IBM has given students access to technologies and training to develop new skills necessary to help cities become smarter. In 2013, IBM announced collaborations with 9 universities in Europe, Asia, 2014 Frost & Sullivan 5 We Accelerate Growth

6 and the U.S. to train students in 'Big Data' and 'Analytics'. IBM's smart city strategy focuses on a wide range of industries such as transportation, emergency management, water, healthcare, education, infrastructure, and computing, thereby offering a wider coverage in cities to ensure a more efficient management of local resources. Criterion 3: Efficacy of Innovation Process IBM has developed a range of solutions under its Smarter Planet initiative to cater to the growing needs of cities. The IBM Intelligent Operations Center (IOC) helps governments in managing municipal services while concomitantly providing a better level of service to the people. Using the IOC technology, organizations can increase the efficiency levels of their staff by giving a unified view of the organizational goals across all departments in the city, resulting in the incurrence of lower costs through streamlined management processes. IOC also enables authorities to reduce any unplanned service disruptions by effectively managing the infrastructure in the cities. For example, while the Chinese city of Zhenjiang is using the IOC technology to manage its public transportation system. The IOC acts as the backbone for Rio de Janeiro, supporting its transport, public safety, and major events such as the 2016 Summer Olympics. Along with the IOC, IBM s Crime Management Center solution was developed to provide information management to equip authorities with the ability to aggregate data from various sources using the knowledge capture feature. It also allows for tactical lead generation, which provides real-time access to data and search capabilities, thereby leading to more efficient procedures in law enforcement. IBM announced, in October 2013, its collaboration with the city of Fort Lauderdale that uses data analytics and Big Data, to assist the city in optimizing law enforcement resources. The solution will allow for effective patrol planning and identifying key crime factors to ensure the safety of the residents within the city. IBM also provides solutions for efficient building planning and management. IBM TRIRIGA Energy Optimization, launched in 2011, allows for efficient energy usage to reduce costs. The software combines real-time systems monitoring with facilities in buildings to analyse and optimize operations, to reduce energy expense. It increases the management capabilities and productivity of the building, while increasing energy efficiency. IBM, in 2013, used this state-of-the art technology to reduce the operating costs of its building in Germany by more than 35%. In order to effectively manage transportation systems within a city, IBM s intelligent transportation solutions provide real-time traffic updates and analysis with prediction capabilities, thereby allowing for more efficient traffic management systems. The IBM Transportation Management Center predicts traffic flow utilizing intelligent video analytics and real-time traffic input. In this way, it facilitates truly effective solutions, considerably enhancing value to cities struggling with traffic congestion. Criterion 4: Degree of Impact on Business and Society IBM s Smarter Cities initiative has been instrumental in interconnecting cities with intelligent solutions to tackle the growing challenges from rapid urbanization. Cities that adopted IBM s 2014 Frost & Sullivan 6 We Accelerate Growth

7 smarter transportation solutions reduced travel delays by more than 700,000 hours daily. Although IBM s Smarter Cities initiative is still relatively new, results can be seen in cities, which have implemented IBM s initiatives. San Francisco s use of IBM s preventive intelligence systems, in 2009, has since reduced repair costs in the city by 11%. Along with the use of IBM data and sensors, pollution levels in the city have declined considerably. IBM leads the way with its integrated solutions by combining state-of-the-art software, hardware, and services. The company s proven excellence in helping cities adopt Cloudbased and industry-proven solutions to tackle the challenges of public safety, emergency management, transportation, water, energy consumption, education and healthcare is helping cities reinvent themselves and become more dynamic in the process. Conclusion Frost & Sullivan's independent analysis confirms that IBM is the leading Smart City integrator. The company has launched several key initiatives working together with city authorities in the effective implementation of Smart City solutions in order to better manage city resources. Providing innovative technologies to track traffic congestion, conserve energy in buildings, use in-house expert knowledge to provide recommendations to governments and organizations on smart cities, and providing key business insights and research to assess the impact of smart cities, are some of the key best practices that has significantly strengthened IBM s position in the Smart City market. For its visionary excellence in rightly identifying an inherent opportunity in the Smart Cities Mega Trend while concomitantly creating effective solutions to address the key challenges, IBM is recognized with Frost & Sullivan's the 2014 Visionary Innovation Leadership Award as the Global Best-in-Class Smart City Integrator Frost & Sullivan 7 We Accelerate Growth

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