How to Make Money from Smart Cities

As cities around the world grow in size, we are beginning to see that strained resources, infrastructure, and services are causing natural limits to urban growth, which in turn limits the economic growth opportunity.  To combat this, cities as diverse as Barcelona, Nice, Kansas City and Songdo in South Korea, are starting to leverage advanced technologies and data analysis to create smart, connected cities.  These cities, and others around the globe, are building out new digital services such as smart lighting, traffic, waste management and data analytics to reduce costs, tap new sources of revenue, create new innovation business districts and improve the overall quality of urban life.

Not only will the creation of smart cities generate huge value for the cities and their inhabitants, but great opportunities will also exist for the vendors and partners who help to create and operate these digitally smart cities of the future.  However, the question is where and how can partners such as infrastructure providers, technology and services companies, and communication providers participate?  And, what types of revenues can they generate from helping to create smart cities?

Based on our extensive experience in creating and supporting smart cities around the world, Cisco has identified a number of essential ingredients required to deliver and run a successful smart city.  The Cisco Smart City Business Architecture categorizes a set of requirements in a number of different business layers, with each layer supporting the layer above and increasing the potential business return as we move up the stack.

Starting from the bottom, the layers comprise:

1. Network Connection – connecting all of the solutions, data and applications through fiber backhaul or licensed cellular.
2. Network Access – a managed Wi-Fi, or other unlicensed wireless network, to connect all of the sensors and applications.
3. Technology Platform – a platform to allow new devices and solutions to readily and securely “plug and play” into the overall architecture, and to connect to cloud storage and compute services.
4. Smart City Solutions – the combination of devices and applications that deliver the specific solutions, such as smart lighting, parking and traffic management.
5. Platform Monetization – opportunities to leverage the platform and network create new sources of revenue in areas such as advertising, data analytics and subscriptions
6. Shared Operating Platform – a shared platform to consolidate the management, customer care and service issues across all of the solutions.
7. Professional Services – services to support areas such as systems integration, planning and design.
8. Program Leadership – services to program manage the entire implementation, operations and partner ecosystem of the smart city initiative.

Cities will need vendors and partners to provide solutions and services in each of the different layers of the business architecture to make their smart city initiatives a success.  Future blogs will explore how much revenue is available in each of the layers of the business architecture and how providers can best capture it.

We’d like to know what you think. Tweet us @CiscoSPMobility.

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