UK GOVERNMENT LAUNCHES A SMART CITY INDUSTRY STRATEGY

By Joe Dignan October 10, 2013 

 Summary

Ovum welcomes the UK smart city industry strategy launched on October 9, 2013 by David Willetts, the Minister for Universities and Science. The new initiative is a twin-track approach to place the UK at the forefront of the development of smart city solutions and, in doing so, position it to take a $40bn share of the global $400bn smart city market by 2020. However, a common view of the “smart city” market needs to be established, and barriers to the adoption of smart city solutions remain. The strategy is a useful start, but development of the market needs long-term investment and planning and therefore continuity and stability in government policy.

The strategy builds on existing investment

The government strategy, announced in support of the initiative “The Smart City Market: Opportunities for the UK,” builds on previous investment, including £95m of research through Research Councils UK, £50m investment over 10 years in the London-based Future Cities Catapult center, and £33m awarded to Future City Demonstrator projects this year.

Delegates at the launch heard that the significant opportunities to capitalize on this growing market are in the key verticals of transport, energy management, water, waste, and assisted living. Furthermore, 25% of the services that make up the smart city market are in design, research, finance, and engineering services, areas where the UK is strongly positioned to deliver both at home and abroad.

There is a need for a common view of the market

There are some major issues in attempting to discuss “smart cities” as a market that is instantly recognizable. First, “smart” is an obtuse tag, and there are myriad other tags in use such as “digital,” “connected,” and “intelligent.” “Smart ” is the global industry shorthand for this area of thinking, but if the UK wants to be seen as a global leader in the space, it should not dilute the brand; having opted for “future cities” in its Future Cities Catapult center it should stick with this term.

Second, there should be agreement on what is within the scope of the market and what is not. For example, a full definition of future cities would add public safety and security, education, economic development, and health to the five verticals named above. Indeed, most of the early solutions being implemented by cities use CCTV coverage, for example by the emergency services to improve responses to security threats with a “single view of an incident.” Equally, for those cities that position their future city strategy for economic development, “security” is normally the top consideration in foreign direct investment (FDI) decision-making. Therefore, in Ovum’s view, public safety and security is a critical component of the mix.

Barriers to adoption remain

Ovum has written a number of reports suggesting that the market has passed the inflection point between vision and implementation, but the speed of adoption needs to speed up dramatically if the current level of investment from the supplier community is to be maintained. Suppliers, and those in the IT industry in particular, have invested heavily in R&D to address the challenges of the future city market, with little return to date. The major barrier has been the absence of a customer that has the authority, responsibility, and access to finance to address the horizontal nature of future city challenges.

The UK government’s Department of Business, Innovation & Skills (BIS) recognizes this issue, and the recent investment from the Technology Strategy Board in the Future Cities Demonstrator Challenge and the Future Cities Catapult center are steps in the right direction, but more needs to be done. Interestingly, there was agreement from the panel at the launch event that the UK is one of the most centrally controlled countries in the developed world, and that there is a strong argument that cities should be granted greater autonomy in their future cities strategies. BIS also points to a number of other barriers, such as lack of access to finance, public sector procurement rules, and data sovereignty, but these are secondary to the creation of a functioning customer.

Future city development must be long term

The smart city industry strategy is a useful start to a national strategy for future cities. Willetts pointed out in his address that Britain was the first country to witness mass migration to the city during the Industrial Revolution in the early 19th century, and that a future city strategy is, by its very nature, a long-term commitment. For it to succeed there is a need for policy stability, and with UK elections only two years away it would be useful for other relevant parties to state their thinking on future cities to ensure continuity and allow for long-term investment and planning.