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Smart cities market: Three factors to think about before going to town

Smart city projects look like a promising opportunity for IT service providers, but channel companies will need to deal with multiple stakeholders and potentially shaky funding.

The smart cities market looks ripe for exploring, but be careful out there.

The sector has a lot going for it as a potential market for channel partners: enormous spending projections, the potential for stellar growth, a need for consulting services and demand for the internet of things.

Earlier this year, Persistence Market Research predicted that the global smart cities market would eclipse the $1 trillion mark in 2019 and expand at a  compound annual growth rate of 18.8% through 2026. The market researcher contends that "favorable government initiatives" along with "brisk urbanization" will spread the smart cities concept worldwide.

The near-term demand seems to be focused on smart city pilot projects and consulting gigs to help cities figure out where they are going. The city of Philadelphia, for example, issued a request for proposal for "consulting services to develop a smart city roadmap," according to the solicitation document. The RFP was closed to bidding in April and the city expects to award a contract in late May with work commencing in July.

Philadelphia's Office of Innovation and Technology, the city agency that released the RFP, is looking for a contractor that can, among other things, develop a plan for assessing existing assets and legacy systems to determine how they can be leveraged for "IoT solutions," according to the RFP. The plan is also to include recommendations on "open integration architecture and IoT platforms" that will permit interoperability.

It all looks promising, but channel companies have a few things to consider before rushing into the smart cities market. Here's what to prepare for.

Multiple stakeholders

Channel partners may be used to doing business with CIOs or technology departments. While CIOs and other IT leaders are definitely important participants in smart city projects, they are far from the only ones. Philadelphia's smart city roadmap RFP, for instance, is a collaborative effort that involves not only the Office of Innovation and Technology but four other city agencies: the Office of the Chief Administrative Officer, the Philadelphia Water Department, the Department of Streets, and the Office of Sustainability.

The only way to get everybody talking is to have them all in the same room, not in multiple rooms.
Jay Boisseaupresident, Austin CityUP

The emphasis is on bringing everyone "into the fold," noted Ellen Hwang, program manager for innovation management at the Office of Innovation and Technology.

The story is similar for the city of Austin. There, a nonprofit consortium called Austin CityUP is developing a smart city roadmap and will soon submit to the city council. The consortium has more than 50 members representing city government, higher education institutions and IT vendors such as Dell and Intel.

"The only way to get everybody talking is to have them all in the same room, not in multiple rooms," said Jay Boisseau, president of Austin CityUP, speaking at a recent CompTIA conference.

Overarching objectives

The smart cities market will likely involve a lot of IT products and services, but the projects aren't all about sensors, public Wi-Fi networks and big data analytics. Smart city initiatives are focusing on broader goals, rather than discrete bits of technology. So, IT solution providers should keep in mind the big picture -- and how technology enables it -- rather than "selling what's on the truck" as Jascha Franklin-Hodge, CIO for the city of Boston, put it in a SearchCIO article.

Austin's smart city effort, for example, aims to address major challenges stemming from the region's rapid population growth. Boisseau said the most pressing issues are mobility (as in transportation) and affordable housing.

"We care deeply about safety, health and education," he noted, "but the great population increase in the last few decades has put a large amount of pressure on those issues."

Philadelphia, for its part, is looking for smart city projects to boost citizen services, accelerate business growth and promote environmental stewardship. As for the latter, the city is looking for advice on how to "become a more sustainable city through IoT solutions," according to the consulting services RFP.

Hwang noted that Philadelphia's smart city initiative is bringing in the city's Greenworks program, which focuses on "healthy, affordable and sustainable food and drinking water" among other areas. Greenworks falls under the Office of Sustainability.

Indeed, food supply is one field where channel partners may find an IoT application that supports smart city initiatives. IoT Agenda has covered the use of IoT in food safety and agriculture.

Sustainability issues

It's one thing to get seed money or a donation in kind for a pilot or proof-of-concept project. The Smart Cities Council, for example, in February awarded grants to Austin, Texas; Philadelphia; and three other cities, which will receive readiness workshops along with products and services. The bigger problem facing smart city projects is how to keep them going over the long haul.

Dipping into the city tax coffers is probably not a viable option, so cities need to consider other funding approaches. IT solutions providers should look into a long-term game plan for a given smart city project before investing in a sales effort,  bearing in mind the nuances of the public sector and its bid and proposal costs.

Boisseau said his group is exploring different funding methods, from revenue-sharing models to private equity.

Channel partners should keep an eye on funding developments, organizational structures and key pain points as municipalities and private-public consortia gear up for smart cities. The path to the smart cities market should start with some intelligent opportunity analysis.

Next Steps

Read about harnessing smart city technology for citizen safety

Find out why smart city platforms aren't yet ready for prime time

Catch up on a meeting of smart city leaders

This was last published in May 2017

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