McKinsey global report shows social gains through smart city technology

09 July 2018

In a comprehensive global study of smart city applications by McKinsey, the strategy firm has concluded a significant range of social and environmental benefits for cities which adopt digital technologies.

According to the McKinsey Global Institute, cities are currently home to more than half the world’s population, and are expected to play host to an additional 2.5 billion residents in just three decades from now – with the increased infrastructural and environment strain threatening a reduction in quality of life. As such, the McKinsey think-tank undertook an in-depth analysis on the application of smart city technology as a means to address the upcoming challenge.

It all starts with data, the firm says in its concluding Smart Cities report: “Cities, in all their complexity and scope, generate oceans of it.” Harnessing that trove of data, smart cities add digital applications to urban design, increasing efficiency and reducing waste in a cost-effective manner across a wide range of community services such as transport, health, policing and utilities.

Cities, naturally, compete. A recent report from Oxford Economics projected cities in Asia to account for nearly half of all global economic activity in under twenty years. Livable cities attract multinational enterprise and human capital, and, as noted in the McKinsey report, the ideal of a smart city as such is to improve the lives of its citizens: “Becoming a smart city is not a goal but a means to an end. The entire point is to respond more effectively and dynamically to the needs and desires of residents. Technology is simply a tool to optimise the infrastructure, resources, and spaces they share.”The impact of smart city technologies on key social indicatorsWith that perspective in mind, the study authors focused in on the achievable impacts by 2025 of existing smart city technologies on a range of quality of life indicators, finding an improvement in some key dimensions by up to 30 percent or more – including as to a reduction in fatalities and crime, shorter commuting times, a lowered health burden, and a better environmental footprint with less wastage and emissions.

Assuming an aspirational but realistic adoption level by cities and citizens, with a focus on the areas where the authors felt smart technologies could have a clear, attributable impact, the study assessed over 60 different current applications across the domains of healthcare, security, mobility, economic development, housing, community engagement, and energy, water and waste – measured in turn against a range of corresponding social metrics, with many tools impacting in multiple areas.

As a basic breakdown, with the distinct characteristics of individual cities affecting the performance of certain technologies and overall outcomes, the study concluded a 10-30 percent improvement on baseline measures from the time of smart technology introduction in most of the key quality of life indicators, with the reduction in crime pushing out to a potential 40 percent. In other categories, commute times can drop by up to 20 percent, greenhouse emissions by 15 percent, and water consumption by 20 percent, while the disease burden and accidental fatalities can be reduced by a respective 15 and 10 percent.The reduction in commute times through smart city technologyZooming in on just one aspect of the findings, urban mobility and commute times – a particularly challenging issue for many Asian cities – the McKinsey report concluded that cities which deploy the full suite of currently available intelligent mobility applications in areas such as traffic management and public transit could potentially cut average commute times by 15–20 percent – which, for the average commuter, would save 15 to 30 minutes every day.

This is significant, on a personal level, adding up to four full days per year for individuals, as well as in an economic productivity respect – with estimates of up to 2 to 5 percent of national GDP lost in some parts of Asia due to heavy traffic congestion, and Bangkok, Jakarta and Manila ranking among the top-most gridlocked cities anywhere in the world. Smart applications which can have the greatest impact on commute times include real-time public transit information and predictive network maintenance, as well as intelligent traffic signals and dynamic parking systems – in turn, helping to reduce personal expenses and decrease greenhouse emissions.

Beijing and Tokyo emerge as serious tech hub rivals to Silicon Valley

12 April 2019

As Silicon Valley struggles with a number of institutional issues, the location of the world’s top tech-hub may ultimately change – with Beijing and Tokyo emerging as serious contenders according to a survey conducted by KPMG.

Now into its seventh edition, KPMG’s Technology Industry Innovation Survey quizzed over 700 global tech executives on their thoughts on the future industry landscape – revealing that for the first time more than half of the respondents (58 percent) believe Silicon Valley will no longer be the technology innovation center of the world in just four years from now, with Beijing and Tokyo seen as two possible usurpers.

“Many factors affect a city’s perception as an innovation hub, including favorable government policies and incentives, accelerators, tech parks, corporate investment, state-of-the-art infrastructure and, in all cases, at least a few highly successful and wildly popular success stories,” said Peter Laco, an Executive Director at KPMG in Slovakia, of the previous survey.Top contenders for the next world-leading technology innovation hubWhile New York remains the most touted hot-spot among respondents, Beijing and Tokyo landed in the second and third spots as likely contenders for the global tech-hub crown, with seven Asian cities featuring among the top dozen; Shanghai (in equal 5th, but overtaken by Beijing), Taipei (in joint-5th as a notable riser), Singapore and Seoul (at 7th and 8th) and Hong Kong, which rounded out the top dozen. Shenzhen, meanwhile, has dropped outside the top 20.

With access to talent and quality infrastructure remaining key attributes for a successful hub, the report states that, despite all the positive business factors present in Silicon Valley, “an escalating cost of living, questions about diversity and corporate cultures, high business taxes, an overmatched infrastructure, and even increasing scrutiny into data privacy and other business practices are contributing to the perception that Silicon Valley may not continue to dominate.”

Still, the US (which also featured seven cities among the top 20) as a whole is still considered the country expected to produce the most disruptive technologies in the coming years, maintaining its top spot ahead of China despite a narrowing of the gap by two percentage points on last year (to 23 percent against 17 percent). The UK meanwhile has gained some separation on Japan in fourth, while Singapore, South Korea and India appear among the top ten.Countries that show the most promise for disruptive technologyTo gain further insight into the likelihood of a burgeoning tech-hub reaching the peak of the global pecking order, KPMG analysed the results of the survey against a range of other city indices, including A.T. Kearney’s 2018 Global Cities report and Mercer’s Quality of Living rankings – identifying Singapore as the most consistent Asia Pacific performer across the board, with Tokyo, Seoul, and Hong Kong lagging in a variety of areas.

“The belief that Silicon Valley will be displaced as the leading hub underscores the continuing decentralisation of technology innovation, spurred by investment in other cities and regions globally, as well as contributing factors in Silicon Valley,” says Tim Zanni, KPMG’s global technology sector leader. “Even when faced with pressing issues that call for funding, cities and countries are carving out significant investment to become a technology innovation hub due to an expected broad economic impact.”