An outcome-led approach to financing city services
Atos Director, Global Strategy Smart X
Cities today are searching for smart ways to harness technology to solve their most important challenges. Lowering costs and improving public services while attracting more investment cannot be achieved by departments working in isolation. Increasingly, there are opportunities for cities to re-think how they procure and manage different parts of their infrastructure using a more integrated approach.
Addressing long-term issues sustainably requires collaboration between engaged departments and partners. Many city departments, however, still have a strong focus on procuring technology based on technological functions and price. Instead, departments should collaborate to procure and deliver integrated infrastructure and services around key outcomes.
For example, one city department can only look at replacing existing infrastructure, such as bus shelters. A more comprehensive strategy could involve public safety, street lighting, public transport services and resilient designs to lower the costs of repair and maintenance. The city is better served because existing infrastructure is used or upgraded to achieve a broader goal. The result is an improvement of services beyond an individual department’s focus area.
Leading more open partner ecosystems
Orchestrating and reconfiguring procurement of infrastructure and services in this way means that budgets from multiple departments can be pooled and savings on operations budgets can be shared with contracted business partners. This, in turn, attracts more investment from providers and partners — which means the up-front investments (CapEx) for the city will be lower and, in some cases, will provide the option to pay an annual service fee only (OpEx).
Critically, the city needs to remain in a leadership role, with a clear vision for how to procure and finance interrelated city services and infrastructure. For example, sharing data with service providers can help improve services and/or reduce the cost of delivery. In so doing, cities can create more open partner ecosystems and attract more service providers by operating a multi-sided market.
This is explored in the Atos paper Smart city economics: a multi-sided approach to financing the smart city. It is important for the city to take the lead in financing the renewal of services; transparency in the financing of services is what taxpayers demand. Given the complexity of city infrastructures and the array of technological solutions now available, a more outcome-driven vision and approach to procuring city services will be essential to generate savings, alleviate budget pressure and make real changes happen to improve city services