Ahead of the release on November 5 of a major report by Enterprise IoT Insights into the state of the smart city market, entitled How to buy / sell a smart city – procurement models to make every city smart, we present five burning questions for five leading solutions providers around the issue of funding in smart cities.
These questions will be posed in turn, across a ‘5×5’ series of five articles (see bottom for all series entries). Here, we ask, effectively, if the holy trinity of smart city applications – lighting, parking, and bins – really deliver the clearest ROI (they do), and what kinds of incalculable but invaluable returns might be worked into the equation besides.
3 / 5 | Which smart-city applications provide the clearest (hard) ROI? Which provide the best additional (soft) ROI?
Markus Keller, senior vice president for smart city, Deutsche Telekom –
“The ROI for street lighting is three-to-five years, depending on the luminaire and the business model. Primary savings come from reduced electrical consumption, followed by reduced operational expenses and maintenance. The ROI for parking is five-to-seven years, depending on the parking sensing technology selected and the interest of the city in having dynamic and flexible parking rates.
“For street lighting, the soft issues are things like increased safety and citizen satisfaction, based on where and when the city provides the lighting, and things like its colour. The safety issue does not get added to the calculation – it would require historical data about incidents in the area. Satisfaction is not really measurable in financial terms.
“For parking, the soft issues are reduced traffic, improved air quality, and quality of life. There is also a business impact from monitoring illegal parking and limiting parking zones, where businesses could benefit from quick parking turnover. Again, these don’t get added to the ROI calculation – we would need historical traffic data in the impacted areas to be able to do this.”
Alicia Asín, chief executive, Libelium –
“Smart lighting and smart parking are the most direct solutions to visualise the ROI – the first for the direct savings produced by the correct use of public lighting, the second for all the products and services that can be deployed with the parking nodes.
“Smart parking allows instant monetisation of the service. Irrigation solutions in parks and green areas are also profitable – providing control of the gardens and optimising water consumption. On average, they save up to 30 per cent of the water supply.”
Itai Dadon, director of smart cities and IoT, Itron –
“It’s hard to generalise. All cities have different priorities. But some examples provide evidence of plans and expectations. Paris expects to achieve energy savings of 30 per cent by 2020 by updating 180,000 streetlights.
“Copenhagen is targeting a 50 per cent reduction in energy use, and expects to lower operating costs by more than 60 per cent. Glasgow wants energy savings of 60 per cent from smart street-lighting, and a higher ROI by placing lights and traffic controls on the same network.”
Max Claps, global future cities team lead, SAP –
“Quick wins include smart street lighting, linear asset management, and city dashboards that enable evidence-based decision making. All smart city solutions provide soft ROI. Street lighting projects generate energy and operational savings, but they also bring increased safety.
“Smart parking projects can reduce traffic and increase revenues for the city, but they also drive business for local retailers. Congestion charging reduces traffic, and so reduces pollution – thus improving quality of life for citizens. Many of those soft KPIs are considered in smart city investment cases, not bolted afterwards.”
Mike Monteith, chief executive, Thoughtwire –
“Smart buildings have a clear and demonstrable ROI, driven by cost reduction, cost avoidance, and increased revenue. Preventing costly equipment failures, extending the life of equipment, increasing tenant retention, energy cost savings, lowering cost of emergency events, and higher asset value are clear examples.
“All smart city solutions can provide added value in the form of soft ROI, whether it’s tenant comfort, public safety, or sense of community. Most soft ROI measures can be shown in monetary figures. Safety solutions can be measured in emergency situations. Comfort and safety can be correlated with productivity and retention.
“It depends on the business case. If a building manager’s primary focus is energy savings, then tenant comfort and safety can be considered an added bonus. Some solutions are specifically implemented to try to capture these intangible value propositions, such as public safety.”
This is an excerpt and forerunner for a report and webinar, titled How to buy / sell a smart city – procurement models to make every city smart, to be published on November 5. Sign up to the Enterprise IoT Insights newsletter here to get the next instalment in the 5X5 series, updates about the report, and related news. Register for the webinar here to hear from speakers from AT&T, Cisco, the City of Cardiff, Cradlepoint and Navigant.
Smart cities 5×5 | How hard is it to fund smart cities? (1/5)
Smart cities 5×5 | What’s so good about PPP? (2/5)
Smart cities 5×5 | Which smart city apps provide the surest ROI? (3/5)
Smart cities 5×5 | Should cities build a central data platform? (4/5)
Smart cities 5×5 | Does the tech industry need a new way to sell to cities? (5/5)
