The macro trend that is staring at us is the mammoth $ 4.6 trillion urban services market. Three trends will drive the globe – one is the social demographics – India is becoming a younger country, 64% of Indians under the age of 27; Turkey, Brazil, Indonesia too share the same story. One part of the world is getting younger and larger and then you have places like Japan that has 20% shrinkage and that means in 2020, 40% will be over the age of 65. Germany is 36% over the age of 65 and 13% smaller in population size.
So the dynamics are shifting and most important part is that dynamic is people are moving from rural areas and coming to urban areas and creating a lot of challenges of urbanization. Take that as one of the biggest market trends in the world. And up to now cities were ignored by politicians globally. Politicians have an unhealthy fixation with rural areas and farming to the detriment of cities and ignore cities where 60% of the GDP is produced. That is also changing worldwide.
The second trend is about the economic drivers. This year, with all the devaluation, more than 50% of the world’s GDP is generated in the emerging markets. In 1820, India and China were top two economies. By 2009 India was not in the top 10, China was only about 1.2%. By 2020 India would still not be on the list, but by 2050 India, US and China will be the top three – China being the largest followed by US and then India.
Look at the top 10, only UK and Germany will be in the top 10. Brazil, Russia and China and Mexico will be in top ten. Indonesia is going to be larger than Japan. If you look at the numbers and you are going where the money is, you better understand emerging markets.
So you take all you need to create products that are cloud based and affordable. I want to talk about this new thing that is emerging that I call Urban Services Industry.
In 1998, Paul Krugman wrote that here is no such thing as a global service industry, only manufacturing is a global industry but services have to be localized. We know that’s not true in information technology, the ICT industry became a global industry that somebody could not have conceived back in the early 80s. After that the engineering services industry became a global industry with lot more engineering services, operations being run out of India and other places.
However, there is a new industry that is emerging that is going to be about worldwide management of cities because cities historically have focused on their political boundaries , geographical boundaries and locational boundaries, so police, water, security, traffic, education all come within city.
Local Companies Managing Global Cities
Already you see TaKaDu, an Israeli start-up manages water network of Singapore, Egypt and Australia using cloud technology. So from a knowledge management point of view if you have unlimited computing at a reasonable price, if you have unlimited storage at a reasonable price, unlimited bandwidth at a reasonable price, and everything was connected to everything else, would you run education, healthcare or a city the same way as we do today? If you look at 1992 to 2010 one meth of computing has come down from 269 dollars to 13 cents, if you look at storage one gigabyte has come down from 556 dollars to down to 6 cents, bandwidth has come down from 1100 dollars to less than 100 dollars. In 2020, 50 billion things will be connected to smart objects.
The point is, we already have affordable infrastructure, now the question that we have to ask is – what we can do in Indian cities. Can we create capabilities in traffic management or in water management or security management or in medical practice that can be delivered globally in a different model? This is a 4.6 trillion dollar market, video surveillance is a 62 billion dollar, water management is 10 billion dollar market, and parking is a 62 billion dollar market worldwide.
So, in knowledge management, the answer is not as interesting as the question. What we have to do using technology is we reframe the question.
Today, doctors sitting in Miami can do surgeries anywhere in the world. Traffic and parking can be managed from anywhere. Data from digital censors in a certain area can be used by several agencies. This can lower costs significantly and provides several revenue options. So the next big business is in urban services. So how are we going to get there?
• Visionary leadership: can we redesign, rethink what this is going to be?
• Adopt global standards – we have to think globally
• Smart regulation
• Public private partnerships
We need to work for a new knowledge management system on regulations, global standards then these internet technologies will become global and transformable.
Edited excerpts of Anil Menon’s talk at the CII – Knowledge Management Summit Bangalore recently.