The subject of digitisation is a new one for many cities. Dr Lutz Heuser advises local authorities on the way to the Smart City. He knows how cities can be persuaded to adopt the relevant applications, and who the right people to contact are.
Until 2010, Dr Lutz Heuser was Head of Research with SAP, specialising in the Internet of Things. He came to recognise the Smart City as a market offering lots of opportunities for new service providers and software companies. So, in 2012, he founded his own business aimed at developing software solutions for the Smart City. Today, the Urban Institute group is not just a software company, but also a strategic consultant to municipal authorities. The group comprises four companies in Germany, Hungary, Australia and the USA. Dr Heuser is also one of the core advisors and leading experts in the “Smart Cities and Communities” European Innovation Partnership, within which he is responsible for the entire field of sustainable urban mobility.
What arguments can best be brought to bear to persuade city managers of the benefits of Smart City applications?
Lutz Heuser: You have to focus on the pain-points; the biggest problems the city faces. Ignoring the refugee issue for a moment, those pain-points are in areas such as sustainability, energy efficiency, and traffic congestion. The aim of the “Smart Cities and Communities” European Innovation Partnership, of which we were a founding member, is to support the EU’s climate protection goals. For cities, that translates into more free-flowing traffic, smart energy management concepts and the digitisation of urban infrastructure.
Environmental protection is perhaps not quite the most pressing issue for local authorities – so what is incentivising cities to become “smart”?
L. H.: Don’t underestimate their commitment in that respect. Since the Deutsche Umwelthilfe environmental lobby began suing municipal authorities because of their continual exceeding of nitrogen oxide emission limits, environmental protection is no longer just a nice-to-have add-on. It’ll only be a matter of time before the first fines are imposed. It’s better to invest the money that would otherwise be paid out on fines beforehand in measures aimed at meeting environmental targets.
What is the situation across Europe, and worldwide? Are there similar organisations to Deutsche Umwelthilfe who are keeping a watch on developments?
L. H.: Yes, there are now similar bodies everywhere, and they are gaining steadily in political influence. It’s easy to underestimate how much pressure is already being exerted on cities today. Cologne, for example, faces the threat of a multi-million-euro fine. Every municipality will be hit sooner or later. It’s just a matter of time – we’re not talking about decades, but maybe a time-frame of five years.
So it’s mainly about saving money?
L. H.: It’s also about saving money. But it’s mainly about how the Internet of Things and Smart City methods can be used to stimulate new services. That will attract new economic power into the city, and might possibly also directly generate revenues for it.
And will the city’s people have to pay for it?
L. H.: Individual citizens probably will not. Companies most likely will, because they will benefit. Here’s an example: the city of Darmstadt is taking measures to make traffic flow more freely, and to provide all businesses with real-time traffic information. That can be of substantial benefit to delivery services, enabling routes to be adapted dynamically to the traffic situation. So the same vehicle will be able to make more deliveries, for example. It is an improvement in efficiency which can be calculated in monetary terms. And so businesses would pay the city to get hold of that data. That is just one example of how new revenue streams can be generated for local municipalities.
Who is the driving force behind initiating such a Smart City project?
L. H.: It depends on the size of the municipality concerned. Often it’s the city’s business development agency. They consider how Smart City applications can be implemented beneficially in conjunction with local businesses. In other places, it’s climate protection bodies who launch the projects. And thirdly, more and more businesses and research institutions are approaching cities themselves, because the issue has recently become very “fashionable”. In small communities, the initiative also often starts with the local mayor.
How are Smart City projects normally financed at present? Is there such a thing as a return on investment for cities?
L. H.: That is of course the core task of our institute. We specialise in developing business models which enable municipalities to generate a return on their investment.
Are there typical hurdles or difficulties which cause Smart City projects to fail?
L. H.: There have been a number of major stumbling blocks, and it frequently boils down to the same thing: if the local mayor or the senior city officials do not personally back a scheme, it very quickly collapses. Smart City and digitisation are top management issues.
There are now lots of start-up businesses in the Smart City sector. Can you give any tips as to how they can succeed in the marketplace?
L. H.: Networking is important – you either have to create your own network, or integrate into existing ones. Back in 2012, when we founded the institute, I myself established a network – the Smart City Forum – in conjunction with the management consultants McKinsey. We currently have over 130 members. We have created a community which has acquired some 100 million euros in grants for its members from the EU and from national development programmes in the last two-and-a-half years.
Do small businesses have any chance at all up against the big corporations, who are increasingly discovering the Smart City for themselves?
L. H.: So now you want to know the secrets of my success …? Well, generally speaking: agility, focus, and the third key factor, delivery! The big corporations can only achieve those three elements to a limited extent.
Are there other bodies, alongside your forum, which a company should definitely join in order to succeed on the Smart City market?
L. H.: Another major network to which we have close links is the Fraunhofer Morgenstadt Initiative. But is does cost money to be a member. Cities from other countries around Europe are also part of it. And it is also possible to join the European Innovation Partnership. It’s an open network.
Is that something which would also be useful for electronic component suppliers?
L. H.: Certainly! Lots of electronics manufacturers are engaging strongly with the field of “Smart Manufacturing” (or “Industry 4.0” as it’s known in Germany). The components developed for that sector can in some cases also be used in Smart City applications. But – to cite just one example – there are currently no low-cost, fully functional environmental sensors on the market. The current ones are either cheap or good – so if you know someone who can make better ones cost-effectively, tell them to get on with it!
How do you assess the Smart City market in general?
L. H.: It’s advancing rapidly, that’s for sure. I am currently chairing a DIN standards committee concerned with multi-functional, integrated street lighting. We will be standardising the so-called “Humble Lamppost” by the end of the year. So next year, municipalities looking to move along the Smart City route of digitisation will be able to issue tender requests for those “Humble Lampposts” rather than just for basic street lights. That is an important step for the electronics industry too, of course. It is a sector that offers lots of potential, because the new multi-functional integrated infrastructure demands high levels of hardware integration.
(picture credits: Istockphotos: Veronika Surovtseva)