Cisco UK & Ireland Blog

Funding more intelligent cities: part 1

July 7, 2017

The financial conundrum

Stu Higgins, Head of Smart Cities and IoT – UK Public Sector and Matthew Smith, IoT Market Development Director

From waste management to lighting, from transport control to education, our cities and towns are continually looking for new ways to deliver better services to residents while improving local infrastructure. Yet there is a constant pressure to do more with less, as the population ages and grows in size, and pressure on public services increases.

While many of our towns and cities are credit rich, the majority are cash poor, often resorting to selling off parts of their estate to keep afloat. While this offers much needed short-term revenue however, it can also jeopardise long-term security. The global sell-off of airports several years ago for example, primarily priced for their take-off and landing fees, may have resulted in much needed cash injections, but having since evolved to accommodate shops, cafes, restaurants, hotels and car-parks, have become lucrative long-term revenue-generators for their private owners.

The dilemma

Struggling to keep basic services afloat – libraries, recycling facilities, community centres –few cities are able to fulfil their ambitions to become smart. Yet, new creative models that focus on an initial cash injection and longer term digital outcomes could result in recurring savings that could then be used to create a smarter town or city.

Solving the conundrum

For most local councils, the financial backing needed to kick-start such an initiative is probably only feasible through private funding. Embraced by governments regardless of political persuasion, Private Finance Initiatives (PFIs) are however often viewed with suspicion by those who believe they either offer little benefit to the public sector (see airports above), or even worse, can be financially damaging.

What would reap rewards though, is if the savings and potential future revenue streams made from that initial investment were shared between local council and backer. Looking at lighting again, that 60% cost reduction could be used to modernise other areas of the city’s infrastructure, generating further savings and in many cases, a platform for new digital solutions that could create previously unimagined revenue streams for all parties and a cycle of reinvestment, year on year.

This socially responsible and economically viable model could facilitate a technology platform that enhanced over time, would result in an innovative city that also attracts potential employers, bringing in yet more wealth. And not only would cities no longer have to sell precious assets to keep afloat, but they wouldn’t even incur an initial financial outlay.

A platform for success

As for the underlying technology needed to create a smart city, delivered by a trusted provider and market leader that understands the needs of local government, it should lie unobtrusively in the background, with each iteration becoming even more reliable, and cheaper, over time.

Cisco is already working with towns and cities across the world so we like to think we know a little bit about making cities and regions smart. Our platforms disrupt traditional technology models, supporting multiple applications, and the ability to add new functionality over time allows them to evolve and accommodate the long-term needs of millions of residents.

This type of investment could completely disrupt the finance sector too, changing the face of public-private partnerships and demonstrating that a more socially responsible approach – one that focuses on what the investment can deliver rather than just ROI – isn’t merely possible but benefits all participants.

Living the dream

A mutually beneficial, socially responsible way to privately fund our vital public services and improve our living spaces … sounds like a pipe dream?

We don’t think so. More next time on making this dream a reality, but in the meantime, find out how Cisco is helping create intelligent towns and cities and supporting local government.

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