A comprehensive analysis from Forrester Research explores the role the information and communications technology (ICT) will play in creating the foundation for smart cities -- whether those cities are newer communities being built from scratch or centuries-old metropolises.
The report, "Getting Clever About Smart Cities: New Opportunities Require New Business Models," suggests that new management approaches will be required to manage urban areas, as the population in those areas grows by an anticipated 2.3 billion over the next 40 years. That data (which comes from the United Nations) suggests that 70 percent of the world's total population will live in cities and surrounding regions by 2050. According to Forrester, a smart city is one that "uses information and communications technologies to make the critical infrastructure components and services of a city -- administration, education, healthcare, public safety, real estate, transportation and utilities -- more aware, interactive and efficient."
Here are some examples for ways that technologies can affect different "systems" required to keep a city up and running, in good health.
You'll notice that examples marry some combination of the following:
- Intelligent sensors that keep tabs on things and places
- Business intelligence and analytics applications that can help slice, dice and make sense of the data
- Wireless networks and other mobile communications technologies
- Alerts and workflow automation
Of course, you're wondering, how can cities and towns find the money to invest in this technology?
I'm thinking, of course, about state and local governments in my own country, the United States, which are particularly budget-constrained as a result of the recession. Globally speaking, though, public-sector IT budgets have been just as stable this year than for commercial sectors. So, for example, 26 percent of public-sectors surveyed as part of the Forrsights Budgets and Priorities Tracker Survey (which is a global survey) in the second quarter of 2010 said they expected budget increases of 5 percent to 10 percent, while 11 percent expected growth of IT budget growth of more than 10 percent. That compares with responses of 31 percent and 13 percent, respectively, for IT managers with companies in the business services and construction sector. There were two technology areas, in particular, where more public-sector IT managers planned to invest than their commercial sector counterparts:
- Industry-specific applications
- Networking equipment
Realistically speaking, though, it will a lot of IT spending and investment to lay the IT infrastructure for smart cities. That's one reason that Forrester expects new technology funding models to be instrumental in the successful construction of smart city solutions. Here are three sorts of financial options that the report's authors expect to emerge:
- External funding through the likes of regional banks (ala the Inter-American Development funds) and country-level development banks.
- Starting with initiatives that can help boost city fee-based revenue, and then using that as the basis for other investments. Examples would be systems for approving building permits or managing property taxes. Save money to invest is the idea.
- Find someone to share the risk. Some technology or telecommunications vendors -- Forrester offers Telefonica as an example -- are helping cities put IT infrastructure in place for a share of the risk or future revenue. In the Telefonica example, the company is receiving fees for managing a mobile parking program in San Juan, Argentina.
- Create a potential revenue source for citizen data. Although this one sort of creeps me out, Forrester suggests that some cities might look at way of letting commercial interests use their data sets. So, you might imagine that in an age of data signage in subway cars or on buses or in train stations, it would be smart of a city to know when the most people are using the system -- and charge accordingly for the right to advertise to those commuters.
- Other vendors might be willing to provide technology for early projects in order to use certain smart cities as reference accounts. Cisco, through its Smart+Connected Communities program, jumps to mind, as does IBM with its Smarter Planet initiative. There are others, of course, but these vendors are particularly aggressive.
- Finally, don't forget the potential for private-public partnerships. An example is the IBM funding of the Traffic Prediction Tool in Singapore. The project, which was initiated in conjunction with the Singapore Land Transport Authority. As the technology moves to other places around the world, Singapore stands to earn a cut of the action.