The lack of a holistic, framework-based approach and a viable revenue model are stalling large-scale smart city projects in India, according to Gartner, Inc. As a result, many small pilot projects are underway, but no big citywide projects have been announced. Gartner predicts that through 2020, less than 10 percent of smart city projects implemented across India will be of a large-scale, city-wide nature.
“While many Indian cities have announced smart city projects, a structured approach in selecting these projects has thus far been missing from most city councils,” said Ganesh Ramamoorthy, research vice president at Gartner. “To succeed, technology product management leaders of smart city products and services must focus on a long-term, consultative approach and innovative revenue models.”
A key benefit for city councils in the holistic, framework-based approach is that it takes into consideration the current state of the physical and IT infrastructure of the city, the city’s challenges, the citizens’ needs, and the existing capabilities of the city machinery to deliver critical services. This approach helps identify the gaps in various hardware, software, network, connectivity, security and information management infrastructure that must be bridged to implement a scalable, future-proof and cost-effective smart city service delivery infrastructure.
Engaging early on with the key decision-making officials in city and state departments beyond IT, such as the departments of public works, utilities, state highways, and state urban and rural development, will help product managers of smart city products and solutions not only gain entry into large-scale physical infrastructure projects, but also offer the Internet of Things (IoT) component that will help make physical infrastructure smart in the future.
However, project managers may find convincing officials of the benefits of high impact, long term smart city investments difficult. Most city officials are favouring smaller projects as they can be implemented quickly and the return-on-investment is faster.
“The good news is that India’s central government has now appointed a CEO for every designated smart city to ensure long-term continuity and a more holistic approach to smart city development,” said Mr. Ramamoorthy. “The city CEO office will need time to establish the necessary protocols, policies, procedures and mechanisms, as well as other modalities for interdepartmental communication, transaction and functioning with respect to smart city projects.”
Funding for smart cites will also require serious consideration. Gartner believes that of the current funding, only about 20 percent will be used for IT-based smart city product, solution and service implementation, while the remaining 80 percent will be used for physical infrastructure development.
As a result, city officials will likely look to the service providers to fund initial projects. Product managers of smart city solutions, services and products must therefore think carefully about the revenue model of the projects that they are targeting in order to ensure they get reasonable returns on their investments.
“The challenge is the limited budget of the city council, which does not really permit the city to build, operate, maintain and support the entire smart city infrastructure,” said Mr. Ramamoorthy. “The limited budget also limits the ability of the city councils to enter into a contractual agreement, which includes a one-time implementation fee, to build the service delivery infrastructure.”
Relying on the citizens to fully pay for smart city services that service providers introduce could be another challenge and could become a huge deterrent for the adoption of the smart city services, which, in turn, will impact the usage volume necessary for the revenue model to be successful. Gartner believes that product managers must take a long-term approach that mutually benefits all the stakeholders – the city council, commercial establishments in the city, the citizens and the service providers.
Gartner clients can read more detailed analysis in the report “Tapping India’s Smart City Opportunity Requires a Long-Term Strategy and Innovative Revenue Models.” Digital futures will be a key focus at Gartner Symposium/ITxpo taking place November 15-18 in Goa, India.
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