Smarter Cities? Venturing with Evaporating Budgets

On invitation by the Smart Cities team at Oracle, yesterday we helped facilitate an executive roundtable of European and US city leaders facing recessions on both sides of the Atlantic during Oracle OpenWorld in San Francisco. Cities are unlike businesses and are reluctant to respond deep drops in revenue by radical cost-cutting that would affect services. We learned first-hand about ongoing measures to cut costs and raise revenue: more efficient use of software, better collection of fees, taxes and penalties; creating shared service centres, and reducing staff overheads by cutting external contractors first and planning for 5-15% staff reductions in the coming years. Administrative and customer service technologies clearly are a blessing in this process, turning the city into a self-service environment that, albeit pre-occupations about digital literacy, is clearly heading towards greater accessibility and transparency.

Smart & Sustainable? Later please...

When the discussion came to smart urban technologies and sustainability agendas, we found that little was happening. It was largely political leaders who made announcements and placed demands on technology to deliver green cities, yet additional resources are not available beyond stimulus packages or external grants that have provided at most a short-term leap but no fundamental re-thinking of cities' often immense service operations.

In the current climate, cities are struggling to reconcile the expectations of citizens (more, better, for less taxes); the dire economic realities of surviving in times of crisis; and propagating sustainability and innovation agendas - all at the same time.

Partly, the instinct to respond to crises through calls for cost-reductions can be blamed. For example, most US government agencies forbid foreign travel by employees today, even if travel costs were covered. Looking outside is seen as a political risk and irresponsible - when it should be the way by which ideas can be found to innovate and come out of the crisis stronger. By starving the curiosity and creativity of their employees, governments are unlikely to come up with innovative approaches to deal with crises.

Our exchange turned to the question of cost-cutting vs technology venturing by identifying major opportunities in a city to reduce the cost of major service areas through technology opportunities. Urban lighting, maintenance of urban trees (EUR 220 million per year in Paris alone), water management, and services for the disabled all offer great opportunities to use sensors, automation, and consolidation to create vast efficiencies. And improve quality.

Yet, it is rarely the technology departments that can stimulate such change, their influence tends to be dwarfed by public works, utilities, infrastructure and other major services departments. IT is seen as a tool to cut costs (however one measures this) by creating leaner processes - but not as a transformative tool to be applied to fundamentally change services. And the inherent struggle for more influence, budget and resources all work against the need to seek synergies not just in savings, but design.

Cities struggle to proceed on a smart agenda and instead go leaner and leaner. American cities in particular mourned the lack of capital grants to deliver technology leaps, with European city leaders nodding. There is no change on the horizon with federal or state budgets planning deeper cuts in the years to come.

How then can technology venturing be brought (back) to American cities?

One promising area will be the understanding that technology is a process of piloting, evaluating, learning, buying. This is a logical and simple concept, yet most cities pursue massive roll-outs to immediately generate results rather than having a continuing innovation pipeline that may not require vast budgets, but a clear agenda for exploration and change. Like 22@ Barcelona's Urban Lab, cities should begin to take pre-procurement intelligence, testing and innovation seriously to enable smarter investment choices in major urban services such as lighting, waste management, transport.

A second promising area is to involve citizens and other interest groups more directly in understanding the possibilities of change, as allies in pushing through hard reforms. Cost cutting and staff redundancies are already on the agenda, yet citizens may not appreciate the opportunity of smart investments that have a truly transformative impact. Stockholm acted wisely when involving all organisations representing visually impaired and blind citizens, as well as about 300 individual impaired users, in developing its approach that led to the ground-breaking e-Adept navigation system for the blind - all of whom retained the pressure on political and administrative leaders to keep going.

And e-Adept pointed to a third promising area: The vision that technology would not only cut costs, but create value. Value not only in the immense leap in quality of life for the visually impaired users, but value as applied to society and the economy as a whole. Instead of delivering an additional social service, the city generated EUR 17 million per year in direct economic benefits with the vision that accessibility for all means receivers of social services today may be employees and entrepreneurs in the future.

Like any risk-taker, cities need to regain their optimism - and take citizens along.

Fundamentally, city governments under fire must regain confidence that they are not on a one-way, cost-cutting road that will eventually reduce their service offering. Instead, cities should venture and pursue policies that are more open to co-investment by external social and business partners and make sure that citizens take an active role in the hard choices - with optimism.