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City-as-a-service – new business and investment model

While there are plenty of opportunities for local councils to create cost savings – especially by cutting through their internal silos and using ICT and infrastructure technologies on a sharing basis across the various city systems – the problem remains that before these cost savings can be made, significant ICT investments are needed. The reality is that most cities are unable to provide the upfront investments for this.

In talking with several councils here and overseas, what they tell me is that with the pandemic, several councils are fast-tracking some of their projects. Councils with smart city structures in place are well positioned to now get funding for the projects they have been developing.

The city (its local council) indeed can be a catalyst and there is significant value in utilising its current assets, data sets and its community leadership to provide the right platform to encourage outside investments.

With a smart council in place (no silos and open government, transparent, open data and open systems), local councils are well-positioned to utilise their soft power and influence to create smart city projects for which sound business models can be developed.

For this to happen, an important shift will need to be made within local councils. Rather than developing these systems themselves, they should consider developing the services they need in co-operation with industry. In this way, many of these platforms can be provided on a service basis (city-as-a-service).

With the right foundations in place, a council could outsource some of its assets to an organisation that can develop this further into a smart city platform that will become the smart hub for the city and from which most projects can be developed. The leading smart cities in Australia are well positioned to look into such financial structures as they have a good understanding of what they need to still remain in control, the levels of security and privacy that are needed and the way they can provide the services developed on these platforms to their citizens.

A fundamental element of these platforms is connected infrastructure. Once that is in place, this can not only be used for the current projects councils are working on but at the same time, it will be the platform from which new services can be built and launched. This is not something councils should be directly involved in, but they can facilitate it.

However, by securing interoperability and through facilitation, it can bring parties (and infrastructure) together and attract private investment that would profit both the council and the private companies involved.

By having this industry platform at arms-length of the city, the smart city hub can investigate broader sharing of the platform to reduce the overall costs. The city then buys these projects back in the form of services that will be developed on the platform.

In this way, the council moves from a CapEx model to an OpEx model and thus overcomes one of its major investment problems.

Such a platform can also be used to look for other investment and financing opportunities from state and federal governments, financial institutions, superannuation funds and so on. At this point in time, many of the smart city projects will start funding themselves.

There will be internal opposition to such models, but the reality is that there are very few other financial options left for councils to successfully invest in large-scale smart city systems.

Paul Budde

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