One Smart City business model is illusory’

Most technology companies involved in Smart City development think they can compete in the whole value chain. Well, they cannot. And no one wants that to happen. That’s what the participants (mainly from telecommunications) of the Smart Cities Industry Summit (25-26 Sept) in London were told in a panel session on business models. The inevitable question was: where’s the money?

‘Why do business models not move forward? Because we are locking in positions for a long time’, said panelist Duncan Botting. Cities express in general that they predominantly need a resilient, flexible, approach to major issues such as climate change. However, reality is that most influencers chase standardisation and set business models, which is hard to achieve in the evolving setting of Smart Cities. ‘One Smart City business model is illusory’, Peter Manolescue from Vodafone said. The panel stressed that we must break up the value chain. Companies must know their limitations and identify where in the value chain they can compete or better collaborate.

‘There is money to earn that doesn’t currently exist’

Embedded efficiency
In an estimated Smart Cities market size of 3,1 trillion euro for the next twenty years, the inevitable question was: where is the money? This can be found in two areas, according to Simon Giles from Accenture. First, there is a lot to gain from embedded operational efficiency. How can you do the things you do now better through, for example, enabled technology? Second, there is money to earn that doesn’t currently exist. Giles refers to products and services in the area of information transaction and he illustrates his belief with an example in parking. Would people pay a euro for the guarantee to have a parking lot at a set time in a busy street? They probably would. This euro can be split by different partners who provide this service together, such as the data and analytics providers.

City’s role in the information economy
For city administrators it would be worthwhile to investigate how they can play a role in this information economy. Will they be able to address master planning beyond the level of real estate, and move from developing physical market places in the past to digital markets in the future? That is a fundamental question cities will have to answer. And before they can take this brokerage role, cities must know what lifestyle they envision for their citizens. Vision comes first. Always. ‘It is time to move away from the techno-fetishism’, Giles said.

Source:smartcities in europe