3Q 2018

Innovative Business Models Key to Accelerating the Smart Cities Market

City leaders recognize that smart technologies can help address 21 century urban challenges and improve quality of life, economic opportunity, and livability for their residents. However, cities often have difficulty raising adequate funding and attracting financing for smart city projects. Scaling from pilots to commercial deployments has been particularly difficult for some cities around the world.

The proliferation of innovative business models has contributed to accelerated growth in the global smart cities market over the past several years. Models such as public-private partnerships (PPPs), energy savings performance contracts (ESPCs), as a service offerings, investment recovery through advertising and marketizing, and social impact bonds (SIBs) are being used to help accelerate the adoption of smart city technologies. Federal funding in several countries has also been instrumental in laying the basis for commercial solutions.

This Navigant Research report examines the evolving landscape of smart city business models. It provides an overview of recent case studies and examines the impact of different business models on various smart cities markets. The study also examines the benefits that will result from the successful implementation of innovative models. Recommendations are provided to smart city suppliers on how to take advantage of developing business models to access new market potential. Navigant Research also provides recommendations for government agencies looking to access new sources of funding and financing.
Pages 16
Tables | Charts | Figures 3
  • What are the key business models currently being deployed in the smart cities market?
  • What business models are most often used for different smart city applications?
  • Where are innovative smart city business models being deployed?
  • Which actions must cities take to attract and access new funding sources?
  • How can suppliers leverage new business models to capitalize on the growing smart cities market?
  • Government agencies
  • City managers
  • Smart city suppliers
  • Communications equipment and infrastructure providers
  • Telecommunications companies
  • Smart city service providers
  • IT players
  • Investor community

Spark

Context

Recommendations

Smart City Business Model Definitions

Business Models Are Evolving to Drive Smart City Development

National Government Funding an Important Driver for Smart City Projects

New Forms of PPPs Essential for Smart Cities Market Growth

Performance Contracting Can Remove Upfront Funding Barriers

Suppliers with as a Service Offerings Can Increase Competitive Edge

Investment Recovery through Advertising and Marketing Fees Has Demonstrated Cost-Effectiveness

SIBs and Green Bonds Are Some of the Most Underutilized Business Models in the Smart Cities Market

The Emergence of City Platforms Is Shaping Business Model Development

Suppliers Are Leveraging Innovative Business Models and Partnerships to Gain Competitive Advantage

Cities Are Utilizing Innovative Approaches to Procurement to Generate Smart City Business Opportunities

What Does Navigant Research Recommend?

Suppliers Should Extend ESPCs and as a Service Options

Suppliers and Cities Should Explore the Use of Marketing and Advertising for Project Funding

Suppliers Should Work with Cities to Demonstrate the Benefits of Digitization

Cities Should Utilize SIBs and Other Outcome-Focused Business Models

Cities Should Further Exploit the Value of Their Assets

Cities Should Design More Open and Flexible RFPs

Cities Should Develop Innovative PPPs to Lower Risks and Leverage Private Sector Expertise

Cities Should Reinvest Energy and Maintenance Savings to Drive Further Innovation

  • Stakeholder Views on Effective Smart City Financing Models
  • LinkNYC Link Kiosks
  • Smart City Business Model Definitions
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