We are all familiar with the image of a futuristic smart city that leverages cutting-edge technology to improve the lives of its citizens. However, bringing a city into the digital age is an expensive, complex, and daunting endeavour which presents serious challenges.

In their report “The Alliance Approach to Smart Cities“, Michael Flynn and Steve Hamilton introduce an innovation framework for financing, partnership, procurement, and governance of smart city projects that they call the Alliance Approach.

Here’s what they propose:

  • Innovative financing. Cities are often strapped for cash, but traditional financing options are not always available to them due to weak credit ratings. That’s why it’s imperative to look into unconventional solutions such as getting financing from vendor partners, creating a revolving innovation fund, issuing mini-bonds, and more.
  • Collaborative partnership. Smart city projects tend to involve multiple government agencies as well as several vendors, therefore it’s important to ensure that the collaboration is mutually beneficial and that the private partners are incentivised to make the project a success (this can be done through gain-sharing arrangements that allow them to add a new revenue stream).
  • Nimble procurement. Cities should ensure that their requests for information (RFIs) encourage partnership, require the demonstration of the technologies in question, and promote business models that are focused on shared value creation. It is also advisable to look for ways to test new technologies without long procurements or take advantage of the technologies that have already been proven in tests in other jurisdictions.
  • Dedicated governance. It’s important to have and empower a dedicated Smart City Champion that oversees the entire project. This can be an individual, a team, or an entity such as a project management office.

The authors advise cities to first consider their needs and their resources, then prioritize initiatives that are most likely to benefit their residents, and then apply the Alliance Approach framework to implement them. They also recommend to “start small, and learn from the results, whatever they are. If the pilot proves a success, scale it up; if not, move on to the next thing.”