Let smaller players in and smart cities will flourish


August 22, 2017

Now that the federal opposition has forced a probe into the so-called “tech wreck” the government is under more pressure to deliver on smart cities innovation.

Maybe they are not sure of the way forward. As I argued in these pages recently: this is a chance for the nation’s mandarins to accept the fact that government isn’t always best placed to lead this process, but is a key facilitator.

A comprehensive review of procurement practices at all levels of government would be a key reform and a vital step in the getting-put-of-the-way part of the equation.

Local, small-scale will get us there faster

The innovations that will give us smart cities will not come from leviathan government projects, but from small-scale, relatively cheap tweaks of new and existing tech that can be easily scaled up once they have passed the proof-of-concept stage.

The place for government is to get procurement processes right and make sure the door is kept open for private enterprise – in the form of agile start-ups – to do what it does best; take risks and innovate.

At a series of roundtables to examine the challenges and opportunities that smart cities present, participants, including experts in start-ups, communications, business, construction and local government, identified procurement as a critical area of reform.

And a white paper which came out of the roundtable strongly focuses on local government as the sector which can bring about the iterative change we favour to deliver our smart cities.

Local government is the level of administration closest to the people and councils are best placed to know what technologies are going to improve the lives of their constituents. In addition, local government areas can be mobilised to change far more quickly than federal or state-level jurisdictions.

Don’t forget the data

Smart city players also said that the federal government can play a role in liberating the data that will be the lifeblood of our smart cities.

Governments collect colossal amounts of data from both traditional and non-traditional sources, including data they do not even know they have. The potential of this data to make our lives better can only be imagined.

Smart city advocates from the public and private sectors have begun to work together to find ways in which the data can be made available to entrepreneurs without compromising privacy.

Reformed data laws will be critical to ushering in smart cities. But participants at a series of roundtables we held to workshop the opportunities and challenges of smart city delivery noted that the process has to be bi-directional.  “Most people are not going to be able to provide insights beyond what makes them immediately unhappy,” one participant noted.

Data will be key to revealing insights into citizens’ future needs. Correlations that we are currently unaware of will release the next wave of value to society.

Procurement barriers still a drag

We were impressed with the Coalition’s Smart Cities paper; it was at once an analysis of the situation, contained a vision for the future and did not pretend that it was the role of government to implement this.

Presently procurement processes favour projects by behemoth corporations mainly because they have the resources to survive the Byzantine and lengthy compliance processes without going under.

Adding to this bottleneck, avant-garde tech is not being employed because governments are not adept at agreeing to the contracts needed to allow an iterative start-up to deliver more effective solutions.

Local council hierarchy and procurement processes can slow or even stymie progress. As one participant said, “the current council structure is one CEO, five departments and 2000 staff, using procurement processes that go back 40 to 50 years”.

While there is investment being made by the private sector in speculative technology – there is little hope of any of this cash making it through what ends up being a very thin bureaucratic straw.

The way forward is for councils to partner with private enterprise to develop, cheap, small, proof-of-concept innovations that can be quickly altered or dumped with little cost in much the same way that John Maxwell recommends that you “fail fast, but forward” – or learn from your mistakes and use what you’ve learned in your next cunning plan.

In this way the private sector can take the risk – meaning the lion’s share of the expense – while councils reap the benefits and no small kudos for improving their lives of their residents; and importantly saving them time and money.

A little push can go a long way

One way government could move more quickly would be to embrace the iterative approach discussed above, where technology is proven on a small scale, then picked up in other areas. This type of approach in turn lends itself to creative financing options; investments are no longer so massive that only large corporations can propose a solution.

Instead, smaller players can bid for projects using models that break investments into funding parcels over a 12 to 24-month period, with returns coming within five years.

While the private sector is coming to the party and acknowledging the way forward to smart cities, it is up to government give a “big picture” commitment to ensuring quality of life and happiness of its citizens.

Roundtable participants were also excited by the opportunity for smart cities to go beyond social cohesion and improve citizens’ connectedness to the government.

If the government is not sure of its next move, then it’s time for our mandarins to suggest a small scale, iterative approach that allows private enterprise to innovate and entrepreneurs to take risks and give them the data on which they must base their decisions. What is at stake is nothing less than the future of our nation’s economic powerhouses: our cities.

Alok Patel is the CEO of Azcende, a venture capital firm in the smart cities space. He is also the author of Habitats for Humans, a white paper which came out of a recent series of roundtables held in Sydney and Melbourne.

Top photo: green roof at the University of Melbourne Burnley Campus.

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