5 Reasons Why Smart Cities Fail

Smart Cities - IoTBeyond the hype of Smart Cities lies a number of challenges that have made the realization of smart cities a slow and arduous process. Some of the top challenges in my experience are the following:

1- Budget: cities operate on very tight budgets. The budget allocated to information technology is a relatively small part of the overall budget. This gates smart city activities a municipality can engage even before considering any other factor.

2- Organization: there are many stakeholders involved in a smart city project which typically include multiple departments and functions. Cities are organized to function in their own suitable way which does not necessarily match the organization required for smart city program. This necessitates the sign-off of many stakeholders with increased likelihood that an initiative gets derailed.

2- Cost allocation: How the operation expenses are allocated, who benefits and how to divide responsibilities are critical questions. Without clear internal processes to address such questions, smart city programs stall.

4- Benefits to citizens: The executive management – mayors and councillors – have to answer to citizens and as such they are weary of making investments in programs that don’t directly ‘touch’ the citizens with visible benefits.

5- Technology development: Cities like to implement technologies with long life-cycle; in fact, the business case often mandates that as it would be difficult to break even with a shot cycle. Moreover, there is no shortage of technologies so stability is very important. Evaluating new technologies is a time consuming process and cities don’t move too fast in evaluating technologies which creates a cascading flow of new technologies. This again stalls implementation.

Smart City Ranking

Smart City Ranking [Source: Ericsson]

An observation: the structure of the city management has an impact on smart cities programs. A visionary mayor with high power and clout can move faster to implement smart city initiatives than a mayor who share power with a number of councillors. But should there be a change in government, the initiatives are more likely to be stopped with the change of the powerful mayor. Cities that build their initiatives and programs on validated business case win out over the long term: there are many marquis cities where IoT is highly promoted, but it does not mean that these cities actually derive the full benefits of IoT.

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About Frank Rayal
Technology strategy, markets and M&As

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