Speaker: Samvit Kanoria, Partner, McKinsey & Company

1. Smart Cities – What’s in it for the citizen?
ARABNET-DUBAI
CONFIDENTIAL AND PROPRIETARY
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MCKINSEY GLOBAL INSTITUTE
May 1st, 2018

2. 2McKinsey & Company
The next era of smart cities will use digital technologies to improve citizen quality of life
– we defined 7 relevant outcome dimensions for smart cities
Environmental
quality
Health
Social conectedness
& participation
Safety
Time and
convenience
Citizen quality of life: Relevant outcome dimensions
Jobs
Cost of Living

3. 3McKinsey & Company
Our research looked at > 50 applications that will be relevant in the time horizon to 2025
MobilityEnergy WasteWater
Government,
Housing and
Community
Economy,
Education
HealthcareSecurity
Digital administra-
tive citizen services
Data-driven building
inspections
Digital land-use and
building permitting
Open cadastral
database
P2P accommodation
sharing
Civic engagement tools
Local connection
applications
Predictive crime
analytics
Real time crime
mapping
Gunshot detection
Smart surveillance
Emergency dispatch
optimization
Body worn cameras
Early disaster warning
Alert wearables
Home security
Telemedicine
Remote patient
monitoring and
medication adherence
Lifestyle wearables
First aid alert apps
Air quality information
Infectious disease
surveillance
Data based population
health interventions:
Maternal and child
health
Data based population
health interventions:
Sanitation and hygiene
Online care search
and scheduling
Urban patient flow
management
Digital job
requalification
Personalized school
learning
Local e-career center
Building automation
Home energy automation
Energy consumption
tracking
Smart streetlights
Dynamic electricity
pricing
Distribution automation
Consumption tracking
Leakage control
Smart irrigation
Water quality
monitoring
"Pay as you throw"
waste collection
Recycling monitoring
Waste collection
route optimization
Real-time public
transit info
Digital payment
in public transit
Predictive maintenance
of public transport
Intelligent traffic signals
Congestion pricing
Demand-based
microtransit
Smart parking
E-hailing and pooling
Car- and bike-sharing
Integrated multimodal info
Real-time road navigation
Parcel Load Pooling
Smart Parcel Locker

4. 4McKinsey & CompanySOURCE: McKinsey Global Institute
1 Includes time in spent in government processes and time spent searching for, traveling to, and waiting for healthcare services; 2 DALY = Disability adjusted life years, metric for burden of disease from mortality and morbidity
3 additional jobs per 1,000 working-age citizens. Includes direct job effect as well as approximation for indirect and induced jobs (cross-industry for mid-sized+ cities of 2.2 used)
Safety
Environmental
Quality
Health
Smart city applications can improve most dimensions of quality of life by
at least 10 - 30%, allowing cities to do more with less
Citizen-centric
outcome dimension Metrics
Time &
Convenience
Commute time saved, min/citizen/work day
DALYs2 averted, DALY(days)/capita
Water consumption reduced, L/capita/day
GHG emissions averted, kg/capita/yr
Waste reduced, kg/capita/day
Incidents prevented, #/100,000 citizen
Emergency response time reduced, min
Time saved in gov and health1, hr/citizen/yr
Jobs
Fatalities averted, #/100,000 citizen
Jobs created, #/1000 citizen3
Social
connectedness
& Participation
Connectedness to local community increased, % of citizens feeling connected
Connectedness to local government increased, % of citizens feeling connected
Range
depending on
city-specific
character-
istics
Improvement, Percent
Cost of Living Cost of Living reduced, USD/capita/yr
Total impact in most
dimensions 10 - 30%
10 21040 50300 20
RESEARCH PREVIEW

5. 5McKinsey & Company
In many domains, smart city applications are changing the nature of public infrastructure delivery and
put citizens more in the driver seat
Traditional Infrastructure Smart Infrastructure
Mobility Provider of mobility opportunities
▪ (Potentially private) on-demand provisioning of mobility in smaller,
flexible vehicles
▪ Short investment cycles
▪ Customer-demand driven
Energy Promoter of decentral supply-demand decisions
▪ Decentralized energy provisioning and supply-demand matching
▪ Incentives and regulations to promote sustainability
▪ Citizens with transparency and agency to adjust electricity demand
Healthcare Enabler of citizen health
▪ Telemedicine or Online Care Search & Scheduling gives citizens
easier access to care
▪ Active improvement of citizen health, e.g., with health wearables,
smoking cessation apps
Transport infrastructure provider
▪ Top-down investments in public transport fleets with
fixed schedules & routes
▪ Long investment cycles
▪ Citizens as "passive" consumer
Centralized energy supplier
▪ Top-down investments in centralized power plants
▪ Supply-driven electricity provisioning
▪ Citizens as "passive" consumer
Healthcare system operator
▪ Top-down investments in hospitals/ doctors with long
investment cycles
▪ Citizens as patients, healthcare system in charge of
health
SOURCE: McKinsey Global Institute
Supply-
driven
Centralized
"Passive"
citizens
Demand-
driven
Decentralized
"Active"
citizens

6. 6McKinsey & Company
~40
~10
~5
~50
No direct financial return Direct financial return
Profitable private
investments in
the city, e.g., car-
sharing
Citizen pur-
chases with
societal benefit,
e.g., lifestyle
wearables
More Private
Ownership
More Public1
Ownership
Opportunities for
public value
capture, e.g.,
smart streetlights
Public services,
e.g., Intelligent
Traffic Signals
35
~15
~75
~25
~50 ~50
Leveraging smart financing models and collaborating with the private sector
will be key for the next generation of smart cities
~25
~20
% share of total number of smart city applicationsX
X % share of initial investment costs for all smart city applications
SOURCE: McKinsey Global Institute
1 Energy, water, waste utilities, public transport operators, hospitals assumed public for this quantification – will differ around the world
Percent
RESEARCH PREVIEW

7. 7McKinsey & Company
The smart city game has only just begun – even the leading cities of our benchmarking
have significant upside potential in most dimensions
SOURCE: McKinsey Global Institute
Smart city
benchmarking
out of max points
per layer, percent
Bottom
city
Top city
Technology
base
Applications Citizen
adoption
100
30
70
40
90
80
60
50
10
0
20

8. 8McKinsey & Company
The more citizens use smart city applications, the more critical they are – close involvement of citizens
in designing a smart city required
Results from citizen adoption survey
… but satisfaction with smart city applications doesn’t
necessarily increase with increasing usership
Usage of smart city applications rises with increasing
awareness …
SOURCE: McKinsey Global Institute
654540 7060
0
10
50 55 75
5
45
15
35
40
50
30
25
20
302015 35105 250 1 20 64 5
40
20
30
50
60
80
90
70
10
10
0
3 87 9
Satisfaction score
(out of max. 10 points)
User experience crucial for adoption – requires close involvement of citizens in designing smart city applications
Usage score (out of max. 10 points)Awareness (percent of all respondents, avg. over all apps)
Usage
(percent of all respondents, avg. over all apps)

9. 9McKinsey & Company 9McKinsey & Company
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