Decoding the new economy

A geek’s tour of Barcelona

How Barcelona is using smart devices to make their city better.

Spain and Barcelona have faced challenges in recent years as the economy was hit hard by the 2008 crisis. Now the city is looking to the internet for the next wave of prosperity.

This quest for reinvention isn’t new for the city, “Barcelona used to be an industrial city, that was badly hit by the economic crisis of the seventies,” said Deputy Mayor Antoni Vives. “There were some guys in the city at the time that decided that we had to keep on being an important city.”

“There’s a new generation of politicians, civil servants, of thinkers and people committed to the city that ten years ago started to work on a new phase of what the city was to become.”

Antoni Vives - Deputy Mayor of Barcelona — Antoni Vives – Deputy Mayor of Barcelona

“We decided that Barcelona had to become the edgiest city in the world related to the new revolution and the new revolution was this one — the technology related to mobility, devices and mainly the internet.”

That vision resulted in Barcelona starting to rewire the city which was one of the reasons for Cisco choosing the city as the venue for its inaugural Internet of Things World Forum.

As part of the event, the City took delegates on tours of some of the connected infrastructure the city has installed. Here’s what we learned on the press tour.

The digital bus stop

The digital bus stop is one of the prides of Barcelona, not only does it display digital advertising and real time bus schedules it also offers tourist information, USB charging sockets and acts as a free WiFi base station.

One of the barriers Barcelona has encountered has been the Spanish telecoms regulators objection to the city providing municipal WiFi so services are restricted to the city’s property, which happens to include bus stops.

The bus stops themselves are connected to the city’s fibre network that runs most of the backhaul and connects many of the fixed devices.

Smart parking spots

Connected to the city’s WiFi network are these smart parking spaces that detect the presence of cars through a combination of light and metal detectors.

The city’s plan is that payment and monitoring of the smart parking spots will happen online and with smartphone apps.

Powering the dot, which is a fairly dumb device, is a battery with an expected five to seven year lifespan. Interestingly, the dots don’t work with motorcycles.

One of the reporters on the tour questioned the durability of these devices given Barcelona doesn’t get extreme temperatures, the response from the Cisco and city staff indicates that ice or hot weather may shorten the lifespan of these devices.

Smart lighting and monitoring

In the square outside the Born Cultural Centre, the city has installed a row of streetlights with multiple features including CCTV, air monitoring and Wifi. All of these lights are connected to the city’s 500Km long undeground fibre network.

The fibre network itself is being installed progressively as the city carries out routine maintenance to roads and other underground services. By co-ordinating the work with other trades it reduces the installation cost dramatically.

Smart rubbish bins

The connected garbage bins are one of the showpieces of the city’s services. By monitoring trash levels, the council’s sanitation team can plot the optimal routes for collection services.

Again the sensors on the bins are fairly dumb devices that connect wirelessly to a base station, shown on the pole above the bins in the earlier photo, these track rubbish levels and later versions are expected to detect the presence of obnoxious or hazardous materials that might be dumped in the bin.

Single person operation of the connected garbage truck

Operators of the garbage trucks get real time updates to their routes which optimises their productivity. It’s cost savings in the city’s operations which is one of the key drivers for the city’s investment in these technologies.

Power savings

One of the major cost savings identified by the Barcelona Council is in energy costs. Along with the expense of running garbage trucks unnecessarily are power bills.

Part of the smart lighting system is that it will dim when there’s no motion detected in the streets and lighten when pedestrians are around. This is intended to save money and help the city meet it’s zero carbon emission targets.

Barcelona and the future

Every single one of the technologies being shown today in Barcelona will be commonplace in most developed cities in the near future.

The problem for adopting these systems is going to be connectivity, in places where there aren’t the fibre optic services or easily deployed WiFi it will be difficult to install smart devices and monitor them.

Every major city is going to be facing the question of how they deploy these devices over the next decade as their residents expect better and more efficient service. Barcelona has taken the first steps that most others will follow.

Facebook and the Fax Machine

What manufacturing was to the Chinese economy of the 1980s, information is today. How will the country’s leadership handle this?

The South China Morning Post reports the Chinese government is allowing access to otherwise restricted sites like Facebook to those in the Shanghai free trade zone.

In many ways this parallels the original Special Economic Zones set up by the People’s Republic of China at the beginning of the 1980s – these areas’ separate legal, immigration and economic status attracted foreign investment and trigged the economic boom that’s seen China become one of the world’s biggest economic powers.

Just as manufactured goods were the key to the nation’s development 30 years ago, today it’s information as the PRC leadership works on moving China up the global value chain.

For a nation of knowledge workers to succeed, the workers have to have access to knowledge.

It’s claimed the humble fax machine was responsible for the fall of the Soviet Union, how true that is open to debate but an open flow of information is never good for those who rule without the support of their citizens.

With the explosion of Chinese social networking sites, it’s become harder for the government to control the flow of information between citizens and the opening of the internet in parts of Shanghai is another small change.

How the Chinese Communist Party manages to keep the support of its increasingly affluent and better informed citizens will define the course of 21st Century history.

As China shifts from being a low cost manufactured goods supplier to a more sophisticated, diverse and expensive economy the government has no choice to face these challenges.

Beijing’s cadres would be hoping our children aren’t talking about Facebook in 2012 Shanghai in the same way that we talk of fax machines in 1982 Leningrad.

Image of a fax machine courtesy of Kix through sxc.hu

Beautiful software and changing the world

Xero founder and CEO Rod Drury has big plans for both his company and cloud computing.

Can cloud computing change the business world? Xero’s founder and CEO Rod Drury believes so and he has a grand vision for the future of business.

Interviewing Xero CEO Rod Drury at the company’s Australian roadshow in Sydney last week, it’s hard not to be impressed by his pride in the company he founded and the vision for how cloud computing will change business.

“It was only about three or four years ago we started thinking we’d have a trade show with multiple tracks and great guest speakers.” Drury said.

Xero was celebrating its 200,000 customer at the conference and Drury sees the business growing further, “we want to get to a million customers as soon as we can.”

“We’ve been doubling every year and we think that’s going to keep going. Looking at the numbers, we’re only at four percent market share.”

Markets for Xero

In Australia, that market is the 1.2 million small business the company believes needs accounting software. But it’s not just down under that Drury is looking at for growth.

“We’re operating in four main markets at the moment. We have 90 staff in Australia and that’s our main market.” Drury says, “the UK is doing really well at the moment and we’ve had a team for the last twelve months in the US.”

New Zealand Startup community

Xero is probably the brightest star in New Zealand’s startup community which, while small, is punching well above its weight internationally, Drury has some views on why such a small business community is doing so well.

“What’s cool about New Zealand is that it’s nice and small and everyone knows everybody so once a company gets to scale so there’s a nice, healthy ecosystem that lifts everybody up.”

“The small companies building apps alongside Xero don’t have to build a marketing team or sales team. If they are clever and partner with us they can access our 200,000 customers and 6,000 accounting partners.

“It’s also interesting starting from New Zealand because we have the largest banks as customers so are able do some neat things with the next generation of banking, where online banking and accounting are closely tied together.”

The Generational Change in accountants

Drury doesn’t see much of a generational divide between those adopting cloud technologies, he finds the new way of doing business is liberating older accountants and business owners as much as it is enabling younger ones.

“One of the neat things I’ve seen is that a lot of people come up to me who are in their fifties and sixties who say ‘I was thinking about getting out of the industry as I’m bored with accounting but you guys have made it exciting again.”

On beautiful software

A marketing tag line of Xero is “beautiful software”, something you don’t expect when talking about accounting technology. Drury sees this more as a philosophy than an advertising slogan.

“We came up as part of the Apple generation. Beautiful isn’t just about being pixel perfect – it’s all about having great values and having software that delights people. “

“WE did surveys at the start and people hated doing their books, they actually used the word ‘hate’. Now they love doing Xero.”

Building a partner ecosystem

The key to success in the software industry lies in building a developer and partner community. For cloud computing companies that requires having an open Application Programming Interface so other businesses can access data and provide complementary services.

“When we saw the way the small business market was changing on the cloud, we made sure we had a nice, open API. We said ’lets make it really cheap for people to buy a commodity general ledger but super easy for developers to build these line of business applications,’” said Drury.

“One of the really neat things we’ve seen is a lot of accountants are now moving over to the product side, so you go to the trade show and you see people we were selling product to with their bookkeeping hat on and now they’re selling software, so that change has been remarkable as well.”

Building the supply chain

One of the great opportunities Drury sees is in growing the logistic chain where cloud services become electronic data interchange (EDI) platforms plugging small businesses into larger businesses’ data and procurement systems.

“Take Coles supermarkets, they have probably have 2,000 very small suppliers who drop off a pallet of jam every six weeks, it’s very expensive for them to deal with all of these companies.” “Now there’s so many small business running in the cloud it’s effectively providing an electronic data interchange.”

“So we see a lot of interest from large businesses seeing how much they can improve their supply chain by now electronically connecting to small business.”

Connecting business, customers and governments

“In this early stages of this transition of accounting moving to the cloud you think it’s just moving from MYOB or QuickBooks to Xero, it’s actually that we’re connecting businesses, we’re connecting the banks” “we’re also seeing a lot more interest from government.”

Drury cites the New Zealand government’s $1.5 billion revenue department’s IT upgrade as an example where open data and APIs could save taxpayer funds and improve the delivery of services.

“The impact of the cloud is a whole lot different, it’s not just the next interface for accounting, it’s a fundamental change where everything connects. Big business to small business and business to government as well,” says Drury.

The aims of Rod Drury and Xero are big and audacious, we’ll see how well both the company and cloud computing can deliver in revolutionising the way businesses, banks, governments and consumers communicate.

Evolving cities and Silicon Valley’s private buses

What do Silicon Valley’s corporate buses tell us about the way our cities are evolving?

One of the phenomenon of Silicon Valley’s development has been the rise of the ‘Google Buses’ – the private services run by the big tech companies to shuttle their workers between home and their workplaces.

The Bay Area’s private bus shuttles are a real time illustration of how regions evolve around industries and economies and how cities and communities are in many ways dynamic, living creatures themselves.

An effect of the Google Buses is that San Fransisco is experiencing a ‘reverse sprawl’ notes Eric Rodenbeck in his Wired Magazine story Mapping Silicon Valley’s Gentrification Problem Through Corporate Shuttle Routes

It’s about more than gentrification as we’ve experienced it thus far: It’s about an entirely reconfigured relationship between density and sprawl, and it’s going to need new maps to help us navigate this landscape.

Driving those buses is instructive as well and Buzzfeed has an interview with an anonymous driver employed by one of the bus companies. The driver’s tale shows the scale of the phenomenon.

This bus holds 52 people and that is 52 cars that are not on the road in one trip, and we have 70 routes in our system. That’s thousands of cars everyday.

Driving cars is fundamental to the American – and Australian – lifestyle. The modern American city developed around the motor car and that mobility is the defining feature of the Twentieth Century.

So maybe the Google Buses are an early part of the redefinition of our cities to meet the the needs of the 21st Century and cars are not the driving factor.

In this vein, Jarrett’s Walker’s Human Transit blog teases out some of the issues behind these developments.

Finally, this joke is on the lords of Silicon Valley itself. The industry that liberated millions from the tyranny of distance remains mired in its own desperately car-dependent world of corporate campuses, where being too-far-to-walk from a Caltrain station — and from anything else of interest — is almost a point of pride. But meanwhile, top employees are rejecting the lifestyle that that location implies.

While I don’t agree with Jarrett’s proposition that the geeks riding these buses want to mingle with strangers given the locations they live – I’d argue they’re attracted to those locations because their peers live there and downtown amenity to good restaurants and bars – he raises a very good point about the mismatch between where the workers and the jobs are.

Jarrett’s point touches on land use zoning and its effects on the evolution of cities. An excellent piece by Alexis Madrigal in The Atlantic tracked Silicon Valley’s iconic techonolgy sites, most of which have been demolished due to the pollution partly caused by zoning requirements for underground tanks.

The issue of zoning is also raised by Rodenbeck who points out that zoning issues with carparks are what has made employee buses more attractive to the giant tech employees.

Zoning different land uses makes sense on one level as no-one wants to live next door to a tannery, heavy metal waste dump or quarry, but there’s a risk with fixed ideas that our cities will become less responsive to economic developments, particularly in an era when people don’t want to, or can’t, dive across town to get to their jobs.

What Silicon Valley’s corporate buses really show is that our cities are evolving around the needs of today, not yesterday. It’s something governments, businesses, investors and communities should keep in mind.

Image of Google shuttle bus stop from David Orban through Flickr

Can Russia build a Silicon Valley?

Can Russia build its own Silicon Valley in Skolkovo?

Like many other countries, Russia is trying to build its own equivalent of Silicon Valley at Skolkovo on Moscow’s outskirts as Tech Crunch reports.

Across the world governments are trying to find a way to replicate Silicon Valley – from London’s Tech City to Australia’s Digital Sydney, the hope is they can create the same environment that built California’s success.

In some respects, Russia should be well placed to create their own Silicon Valley having had the same massive Cold War technology investments as the United Stated. The old Soviet system also left a deep scientific and mathematics education legacy.

As the Tech Crunch article points out though, the Russian financial and legal systems are working against the nation with most local startups looking at incorporating in offshore havens like Luxembourg and Cyprus rather than taking their chances with the local tax laws and courts.

If finance was the sole criteria for succeeding then Skolkovo would be almost guaranteed success with twenty billion US Dollars of private and government fundiing behind the project.

Funding alone though isn’t enough, and most industrial hubs are the result of happy accidents of transport, natural resources and skills being found in one region.

It might take more than a load of cash for Russia to build their own Silicon Valley, but with a shrinking and aging population the nation needs to find a way to diversify away from simply being an energy exporter.

Image courtesy of Skolkovo Foundation through Flickr

Can governments save declining cities?

Detroit’s decline illustrates the limits of government powers in the face of economic and historic forces.

Following yesterday’s post on comparing the relative problems of Detroit and the Chinese ghost city of Ordos, The Fiscal Times has a somewhat wistful description of Motor City’s decline by one of the city’s sons, Eric Pianin.

Pianin’s story charts the various attempts to revitalise the city following the disastrous 1967 riots that triggered the middle class and white flight from downtown.

As last week’s events show none of these efforts worked, which begs the question of what governments can do to save cities and regions facing structural decline.

Every city has an economic reason for existing — it could be transport links, natural resources or an industrial cluster. When that reason fades the population moves on.

For Detroit, the high point was the late 1960s as the US motor industry reached its zenith. Through the 1970s the sector languished and was then displaced by smarter, better Japanese competitors.

In the face of this there was little local, state or Federal governments could do. Detroit’s importance, wealth and population were destined to decline as industry left regardless of how much money was spent on grand schemes to revitalise the town.

Perhaps sometimes we just have to accept there are limits to government power and the predicaments of cities like Detroit are the natural course of history.

Over time, it may be Detroit manages to reinvent itself however the city will almost be very different, and smaller, city that it was in its heyday.

View of Detroit Central Terminal Station by Jason Mrachina through Flickr.

Why Australia is losing the digital race

Despite the best intentions of government, Australia is falling behind in the digital economy. What can the nation’s political leaders do?

This story originally appeared in Business Spectator on 17 June 2013
At the beginning of this century, Melbourne hosted a meeting of the World Economic Forum. Among the visiting luminaries was Microsoft founder Bill Gates who laid out his vision for governments in the digital economy.

“The Government itself needs to become a model user of information technology,” Gates said at the time.

“Literally seeing government work with its citizens, with its businesses will change how we do our taxes, licences, registrations, all these things, on a basis where you don’t have to know the organisation of government and its various departments, you don’t have to stand in line, you don’t have to work with paperwork.”

Last month in Brisbane, the Federal government re-released their Digital Economy Strategy with the ambitious goal to make Australia a “leading digital economy by 2020”. A key part of the strategy is for the government to allow citizens to “fully complete priority services online”.

Thirteen years after Bill Gates articulated the need for governments to move services online – and he was by no means the first person to do so – the Federal government has posted a target to partly achieve this by the end of the decade.

It’s hard to see how achieving such a belated objective will put Australia in a position of leadership in a rapidly changing world, although this is a direct consequence of deliberate decisions made by the nation’s leaders, and society, over the last thirty years.

Thirty years ago the debate on Australia’s position in the global economy resulted in the Hawke government’s Clever Country policies. In many ways, today’s Digital Economy Strategy is an echo of the Labor’s halcyon days under Paul Keating.

Keeping things in perspective

In Sydney on the day before re-releasing the strategy, Minister Conroy channelled Paul Keating in talking about the J-Curve of technology adoption at a lunchtime panel with the Australia Israeli Chamber of Commerce.

Preceding Senator Conroy’s panel was Anna-Maria Arabia, general manager of the Questacon National Science and Technology Centre in Canberra, who described her trip to Israel to look at how the nation that derives 40 per cent of its export incomes from high tech industries is nurturing its technology sector.

Arabia was accompanying Federal minister Bill Shorten and she described a meeting with the chief scientist of the Israeli Ministry of the Economy, Avi Hasson, where Shorten asked him about the success rate of Israeli government research and development projects.

Hasson’s reply was very different to the risk averse response often heard from Australian bureaucrats, ministers and business leaders.

“Had I been told that we enjoyed an 80 per cent success rate I would have concluded the government was investing in the wrong projects,” Hasson is quoted as saying. “Such a success rate would have meant we were investing in low risk projects and, quite frankly, the private sector could have taken care of that.”

The risk-reward equation

In Australia, there is no such vision or appetite for risk. At best the Federal government has announced another review of tax rules and industry support programs while the opposition is vague on its plans to support innovation and R&D should it occupy the Treasury benches later in the year.

While it’s easy – and fair – to criticise both sides of politics, the business sector is equally negligent with its reluctance to invest in research and development while claiming R&D tax credits for projects that are closer to capital improvements rather than real innovation.

Two weeks ago the ABC Business Insiders program had featured an interview between Business Spectator’s Alan Kohler, Dow Chemical CEO Andrew Liveris and Australian Business Council chief Tony Shepherd where they discussed Australia’s role in the modern global economy.

Australian born Liveris, who is also chairman of the US Business Council and sits on the Obama’s board of innovation, said Australia needs a vision building on the country’s strengths.

At present he warns the country is in a state of rigor mortis having “lost the will to innovate.”

Thinking beyond mining

When Gates visited Australia in 2000, he warned that the nation needed to think beyond mining and agriculture and secure a place in the high tech economy.

That warning was disregarded and Australia as a nation made the decision to focus on domestic consumption driven by rising property prices and mining exports.

Reserve Bank of Australia governor Glenn Stevens summed up that national decision in a speech made to the Australian Industry Group in 2010 where he dismissed Bill Gates’ warning about ignoring high tech industries at the beginning at the decade.

“Ten years on, though, it does not seem to have been to Australia’s disadvantage not to have built a massive IT production sector,” Stevens sneered. “On the contrary, the terms of trade are at a 60-year high, the currency just about equals its American counterpart in value and we face an investment build-up in the resources sector that is already larger than that seen in the late 1960s and that will very likely get larger yet.”

Stevens’ speech illustrates the Australia we have today – high-tech industries along with the research, development and innovation are something other countries do.

The vision for Australia being a global leader in the digital economy by 2020 is a laudable and equal to any of the noble objectives proposed in the Gonski education review or the Asian Century report.

Unfortunately to achieve those aims, and to overcome the deliberate national decisions we’ve made over the last thirty years, it’s going to take more than the modest and belated objectives of last week’s re-released Digital Economy Strategy.

Category: government

A geek’s tour of Barcelona

The digital bus stop

Smart parking spots

Smart lighting and monitoring

Smart rubbish bins

Power savings

Barcelona and the future

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