Making cities smarter — Bridging the gap between what citizens expect and what governments deliver

An estimated 3 million people move to cities every week. In 2007, for the first time in human history, more people lived in urban areas than rural ones. What is more, by 2050, city dwellers are expected to outnumber rural populations by a ratio of 2:1. At the same time, consumers today enjoy the convenience of digital service delivery that many private sector companies now put at their fingertips. So, most people want — and expect — the same level of service from government that they receive from online retailers. Many urban areas are struggling to keep up with the population trends as well as the increasing demands from their constituents. The result is increased congestion, reduced quality of life, lost economic potential, and negative health outcomes. Today, cities around the world are increasingly looking to implement initiatives that respond to these challenges.

A smart city can have a multidimensional socioeconomic impact. The biggest benefit for the constituents is the increase in the quality of their lives by enhancing every aspect of the daily existence of citizens. From safe streets to green spaces, from a reasonable commute to access to art and culture, a smart city creates an environment that promotes the best of urban living and minimizes the hassles of city life.

Moreover, a smart city is a business-friendly city, ensuring that jobs and tax revenue form a healthy economic platform. Cities have long been important centers of trade and commerce, leveraging the proximity of so many diverse citizens to help drive an innovative economy.

And finally, a smart city ensures that economic growth and quality of life are promoted not just in the short term, but for future generations as well. Being a good steward of the environment and promoting sustainable consumption of natural resources is part of the overall smart city vision.

What makes a city smart?

A smart city is more than a slogan, or the latest buzzword. A smart city looks across every aspect of a city’s operations to use technology to improve outcomes. The digital infrastructure of a smart city allows individual entrepreneurs access to data that can unleash tremendous value. It also sets the stage for a network of partnerships between government, business, non-profits, community groups, universities, and hospitals, all focused on one goal: creating a smarter city.

Smart cities projects may include traditional physical infrastructure assets, new technologies and connectivity, transportation systems, and safety and security features. They may also include aspects of a project associated with economic development, tourism hot spots, citizen sociality, and sustainability.

Collective intelligence and citizens as sensors

The technology’s true power is its ability to facilitate the process of cocreation. Citizens equipped with mobile phones capable of capturing, transmitting, and receiving information.

A classic example is the navigation app Waze, which helps drivers find the most efficient routes in cities around the world. By actively sharing reports through the app or simply keeping it open while driving, users map out traffic in real time, pinpointing congestion, speed traps, accidents, and other hazards. Drivers just open the app and enter their destination, and the system taps into this knowledge from the crowd, guiding every user toward the best possible route. The bidirectional information flows enabled by cloud computing and mobile technology allow drivers to self-organize in a way that was impossible even a few years ago.

The biggest challenge: Return on Investment

While the smart cities movement offers exciting new opportunities for governments, their citizens, and businesses, finding the money to support such products or services can be a complex undertaking.

Legacy infrastructure and limited budget are the main hurdles for cities becoming smarter. In order to achieve the desired results, major infrastructure modernization is required. This usually comes with a high price-tag proposition that can be daunting for any city. As cities look to upgrade their infrastructure with smart technologies, paying for those projects presents a significant challenge of introducing smart technologies on a wide-scale basis. Constrained by tight budgets, cities need to identify business models that can help to attract private financing in order to make the introduction viable and financeable.

Smart city projects need to have a clear, measurable return on investment (“ROI”) in the relatively short term, whether it is a definite improvement in traffic, crime, air quality or a successful revenue sharing arrangement with a potential vendor.

But, while the traditional definition of ROI is associated with analyzing cost incurred versus revenue generated, ROI from a city government perspective can be vastly different. ROI can go beyond monetary benefits, to measure outcomes such as customer satisfaction and environmental impact. A project might offer a clear positive socioeconomic impact, but there may be no way to assign a value to that benefit, including the potential to generate revenues.

References

[1] Eggers, S. Hurst and M. Kelkar, “Delivering the Digital City: Building a Best-In-Class Digital City”. Deloitte Center for Government Insights, 2018

[2] B. Buntz, “Strategies for Smart Cities Success”, Internet of Things Institute, 2018

[3] A. Meola, “How Smart Cities & Iot Will Change Our Communities”, in Business Insider, 20 December 2016

[4] Deloitte, “Private Sector Participation in Public Sector Financing: An Introduction”, May 2018

[5] J. Skowron, M. Flynn, “The challenge of paying for smart cities projects”, Deloitte,2018

[6] T.D. Fishman, S. Hamilton, “Using Public-Private Partnerships to Advance Smart Cities”, Deloitte, 2018

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