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The Risk You Don’t Want to Take

Why communities should invest in the Internet of Everything now for a more competitive and prosperous economic future

What if someone told you that just by retrofitting street lighting to make it more energy efficient and intelligent, your city could save $62 million over the next 10 years? That is what Chicago has in view. The city is taking the first steps in implementing technologies connected through the Internet of Everything (IoE), including intelligent street lighting, to help position itself for a better economic future. For the urban services market, the potential economic value to be realized through the IoE is huge – at approximately $2 trillion over the next 10 years, it’s not an investment governments want to forgo. This value creation comes from the increased revenue an integrated IoE ecosystem can generate, as well as the cost savings that will be realized through greater efficiencies and worker productivity.

The Risks of Falling Behind

Even with a post-recession revenue recovery showing up on the books of many municipalities, there is a growing recognition that there is no going back to the way things were. The IoE helps illuminate a path forward, bringing with it potential revenue and cost savings. In fact, the biggest risk governments take when they don’t invest in the IoE is falling behind in economic development. An article in a recent issue of Harvard Business Review discusses how there have been three major IT transformations since the 1960s. The first was IT-enabled process automation, computer-aided design and manufacturing resource planning; the second was the Internet; and now the third is the Internet of Things or Internet of Everything. The article goes on to observe that "The third wave of IT-driven transformation has the potential to be the biggest yet, triggering even more innovation, productivity gains, and economic growth than the previous two." Considering we are still in the early stages of the IoE revolution, cities that get a jumpstart now can position themselves for a better economic future.

Federal policy makers see the IoE as strategic to the country’s future. In January 2015, Congresswoman Suzan DelBene (D-WA) and Congressman Darrell Issa (R-CA), chairman of the Subcommittee on Intellectual Property, Courts and the Internet, announced the launch of the Congressional Caucus on the Internet of Things. In a recent statement, Issa urged decision-makers to realize the importance of the IoE movement. “It’s critical that lawmakers remain educated about the fast-paced evolution of the Internet of Things, and have informed policy discussions about the government’s role in access and use of these devices. I am excited to co-chair the IoT Caucus and ensure federal policy spurs, rather than stifles, our innovation economy.”

Unfortunately, as many cities have found, cities don’t go out of business but the businesses can go out of the city. If communities aren’t creating an environment that is competitive, where there is access to technology for businesses to thrive, they will be less attractive to young talent that will help the economy prosper in the future. The municipalities that invest in and create a hub of innovation will blaze an economic trail that’s hard to follow.

Making the Case

Seeing into the future is hard work. The late Stephen Covey often coached the leaders with whom he worked to “begin with the end in mind.” To unlock the potential economic and social benefits of the IoE, municipalities can similarly begin with the end in mind. The first steps include making the case for (and getting stakeholders to support) investments in IoE technologies and solutions.

Ensure leadership comes from the top. When looking at the successes of some of Cisco’s partner cities, they all started with a visionary leader. It is easier to receive buy in from all stakeholders when the vision comes from the mayor, deputy mayor or other visible leader. Some cities, such as Barcelona, have a dedicated smart cities director that works for the CIO but also has a direct line to the administration. In Chicago, the CIO is responsible for the smart cities effort and coordinates the various departmental efforts.

Take an IoE inventory. Start by assessing your municipality’s strengths and weaknesses when it comes to technology, business process management, data analytics, connectedness and security. This will help set an IoE baseline and determine where growth needs to occur.

Prepare a plan. Very early on in the process, a plan should be established that prioritizes initiatives in accordance with goals. For instance, maybe traffic is one of the community’s main challenges, so a city can start by implementing road sensors to collect data as its first IoE initiative. These small steps can go a long way in gaining support for a more long-term connected or smart city plan. In Nice, France, for example, smart parking alerts drivers to open spaces and has the potential to reduce traffic congestion by 30 percent, boost parking revenue and reduce CO₂ emissions.

Don’t sweat the initial setbacks. Municipalities will encounter the same stumbling blocks as they do with any large government initiative, including funding. It’s important to look to the successes of other cities and be creative. Various funding models exist from bonds to public private partnerships. Procurement is another common challenge. Often, however, delays occur not from the procurement process itself but because of the inertia it takes to wade through the bureaucratic policies. This is where it becomes even more important to have a dedicated resource to the initiative to push the procurement through in a transparent and expedited manner.

Keep your eye on the prize. At all times, cities need to keep an eye towards the economic value at stake in connecting the unconnected or implementing IoE technologies. The revenue and cost savings can’t be ignored, and should be a constant driver for investment in the IoE.

Going Global

As the IoE continues to proliferate, it will increase economic competition on a global scale. India already has a plan in place to build 100 smart cities in an effort to attract current and new residents to build their careers and lives in the country. The value of investing in IoE now can’t be ignored. For communities across the U.S., it could be the deciding factor on their future economic prosperity.

For more information, visit www.cisco.com/go/convergencegov and Impact of the Internet of Everything [Infographic].