In Search for the Right Business Model

Smart Cities require both Government and citizens to be fully engaged. We expect the investment for Smart Cities will mainly come from the government. The fund allocated for this kind of projects are from the taxes collected. It is seen as a service by the government to the citizens. But how do we sustain these services? Do we have another business model that also generates revenue for the Local Councils/Governments?

I have posted a similar question on one of the Linkedin fora. You can still participate the on-going discussion here.

I have seen some PPP business models sustain the deployment of services through revenue-sharing. However, these business models use “penalties” as their “revenue.” For example, when the government invests on speed traps using the PPP model, they revenue share based on the number of summons issued. Also in the case of smart parking, any overstayed vehicles will be summoned and revenue-shared with the operator/investor.

I do not agree with this model because we are trying to educate the citizens to be more discipline. What if the trend of summons collection drops? How will this PPP model be able to collect the so-called revenue from warrant/penalties? The income falls as the people becoming more aware and self-discipline. In business, we want revenue to increase every year, right?

I have also seen a case when there is a citizen uproar on the “efficiency” of the summons being issued and also due to high disputes, the government suddenly slows down the nationwide deployment. On the one hand, the government might listen to the citizen, but on the contrary, the project will be suffering. When this happens, the business model just collapse. So, how do we derive an excellent sustainable business model for a Smart City deployment?

About the Author

Dr. Mazlan Abbas is an IOT Evangelist, Thought Leader and CEO of REDtone IOT. You can reach him on LinkedIn at https://my.linkedin.com/in/mazlan/ or Twitter at http://twitter.com/mazlan_abbas . Check all presentation slides HERE.
For further details, check out http://about.me/mazlan.abbas

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