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 consider if the current smart cities procurement model is broken, and wherther cities should redefine their needs for vendors should find new ways to sell to cities?
5 / 5 | Do cities need to re-define their needs for technology vendors? Does the technology industry need to find a new way to sell to cities?
Lani Ingram, vice president for smart communities, Verizon –
“There is no such thing as a smart-city-in-the box – that we come up with an answer and everyone does the same thing. I don’t think the industry is mature enough for that. It will require great creativity.
“The PPP / P3 model is one very creative model, but there will be others. There will be grants, and performance-related models, and revenue share deals. There is the whole question about what we do with data, and how soon that happens, and whether it will enable cities to afford these activities.
“There is not a one-size-fits-all business model for cities, just as there isn’t a one-size-fits-all solution. Every city is unique. We are not talking about software solutions on iPhones. We are talking about infrastructure – which people’s lives depend upon, which the flow of the city depends on. We have to protect the data in a way that is so much stronger than normal. And all those factors impact the speed at which this rolls out.
“There are lots of questions that need to be answered. Is this getting easier? Yes, there are more business models, better solutions, more testing. Are we done yet? Is this the way it is going to roll? Are we at a tipping point? No. There is work to do.”
Markus Keller, senior vice president for smart city, Deutsche Telekom –
“I don’t think cities have to change. They are following a very normal path, which is to solve the most important and obvious issues first – the parking, lighting, and air quality. After these, most cities will start to consider how to use the new data they generate with existing city data and third-party data to create new solutions to more complex problems.
“If anything, cities need a very strong focus on the second step to achieve their goals – they don’t need to re-define their needs, but they should have a longer-term view, and take a broader cross-departmental approach.
“The technology industry needs to think more like a city does – by offering longer term, longer lasting technology, rather than just the latest and greatest. Cities are used to implementing technology that lasts 10-20 years, so new technologies without a track record may prove difficult to sell.”
“It will be an evolving process. The city will start in its comfort zone and procure the same way it always has. Changes to procurement methods and models will only come after a few innovative first movers come up with proven business/procurement models.”
Alicia Asín, chief executive, Libelium –
“The public managers of cities must have greater awareness of what their investment in means. The purchase of devices and applications should not reduced to a single initial outlay, but to maintenance and renewal to ensure quality data over time. The data history is important and basic for decision making.
“Does the tech industry need to change? Probably. Normally the decision-making processes of public bodies are too long, sometimes as long as two years, by which time the technology has changed.”
Max Claps, global future cities team lead, SAP –
“Governments need to do a thorough assessment of what their communities need most and work from there. Based on issues that hit home, like traffic and crime, they can go forward with implementing the right technology. They must be open to innovation. This will empower them to discover new value by combining data from previous domains that historically operated in silos.”
Scott Nelson, chief product officer, Digi –
“With cities, the purchasing authorities are centralised, and they tend to spend as cap-ex, rather than op-ex, which most commercial enterprises prefer. It’s possible that some entities are able to sell in a ‘you-save, you-pay’ model, where the selling entity is paid a percentage of savings. This too is not new and has risks when the selling entity is not entirely in control.
“An interesting consideration would be if city governments allowed certain entities to install infrastructure and charge for use via consumer models like toll roads. While this doesn’t yet exist, it’s not hard to imagine IoT-based solutions that could be easy enough to deploy and valuable enough to consumers that a consumer model with a city license could work – better knowledge about location or timing of city services might be an example.
“If cities want to take full advantage of IoT technology, they will. IoT is inherently distributed and cooperative. City governments are neither of these – in terms of their governance and management.
“We could see more of a marketplace model wherein licenses to set up and sell data are granted so companies can collaborate and innovate with the data that is gathered to create value for citizens as they are uncovered and developed. An example is the SalesForce marketplace and the Apple App Store models.”
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.
