5 Things to Remember When Building a Smart City Business Case

Improvements in communications, mobility, and data management have provided public sector managers with a new range of investment opportunities. With limited access to capital and organizational resources, managers need to ensure they make the best resource allocation decision. ‘Best,’ in this sense, covers equity, efficiency, effectiveness, inclusion, and transparency, along with other issues. This requires developing a convincing business case that covers more than just the incremental cash flows that accrue to a city.

The following five steps use a case study approach that can help cities make the best decision in allocating limited resources. This produces a business case that identifies stakeholders along with a quantified estimate of the materiality of the economic and social change.

City officials have different objectives depending on their local circumstances. Examples include becoming carbon neutral, reducing crime rates, improving the visitor experience, delivering efficient operations, and increased transparency. Any smart city proposal must support a broader political narrative or an electoral mandate. An investment can be indicated, with a positive net present value, though if it is not consistent with a mayor’s or other elected official’s story it may not receive appropriate organizational support.

As our case study, consider a smart city application that manages the collection and management of commercial garbage receptacles. This may be consistent with city objectives of improving tourism or contribute to a wide goal of environmental sustainability.

One technical proposal would be to install a sensor in the bin that detects a range of conditions. These conditions could include:

Indicative results of the contribution of possible benefits available from the sensor technologies of amount and overflow are shown below in Figure 1.

Here, the analysis takes a wide view of stakeholders, and applies in these ways:

As sensor technology improves additional technologies may become available. This may apply in the following ways:

These incremental monitoring technologies would likely be too expensive to install and maintain at this stage, though as sensor technology costs decrease they may be appropriate.