Realising the ROI on your Smart City Investments

Eden Strategy Institute was invited last week by Mayor Pak Hendrar Prihadi, Professor Suhono Hardo Supangkat from SCCIC ITB, and the Singapore Smart Cities Network to Semarang (pictured above), Indonesia to conduct a workshop on “Developing an Actionable Smart City Road Map” for 50 government officials from the Greater Semarang area.

Semarang is the capital and largest city of Central Java, as well as Indonesia’s fifth most populous city. As part of Semarang’s smart city initiative, it has invested in different types of sensor networks, hotlines, and CCTV feeds to centrally monitor the performance of Semarang’s internet connectivity, smart lighting, buses, water levels, telecoms, hospitals, and even taxes collected from various tolls.

These technologies provide a live feed of information to ensure the city works well, optimise and prioritise service delivery, and improve decision-making. Semarang has numerous performance indicators to ensure it keeps its multi-year workplan on track, and has a singular vision to improve the quality of life of its citizens.

The impressive progress that Semarang has made in a matter of years places it among the more advanced Indonesian smart cities we have engaged with. With some profiling Semarang could be an excellent smart city role model for other Indonesian cities, not least because many of the platforms had been developed in-house by the city government.

We might consider that a city like Semarang has already achieved a Phase II smart city standing, based on Eden’s Typology of Smart City Development Phases (see insert below). Where could the next stage of development lie for such city?

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One pathway could certainly be to shift towards a third phase of Smart City development, to layer on more extensive sensor coverage, build new models, train more users, and evolve towards using analytics and autonomous infrastructure actuators to increase the responsiveness of a city.

At the same time, a mayor’s role is to lead the city towards smart city initiatives that will materially improve the quality of living. This can sometimes be done by leapfrogging a city’s development to Phase IV.

Smart city solutions often lend themselves to resolve the typical frictions of a city, such as traffic congestion, pollution, or floods. Mayors also have the opportunity of extracting greater returns from their smart city investments, by considering how they can materially enhance the value drivers of a city.  

A city like Semarang, for example, has unique strengths in the diversity of its population, its strategic location, its cleanliness, and even the relatively large number of universities it has. Phase IV smart city development could, for instance, look at how its universities could use augmented reality or 3D printing to accentuate into the creativity observed on Semarang streets, nurturing a new breed of designer-entrepreneurs. GPS technology could help new audiences to enjoy its cleanliness and vicinity to untapped assets such as ancient temples, beaches, and mountains, bringing in tourism dollars. Its international airport and location as an entrepôt hub for Central Java could be enhanced with special export zone policies and smart factory or smart warehouse investments.

 Local creativity expressed in Semarang street art

Local creativity expressed in Semarang street art

Smart cities deliver the most value with the broadest range of quality of life parameters, including eGovernment, healthcare, safety, education, lifestyle, as well as economic drivers such as job creation, sector development, FDI, and trade.

In our next post, we will examine different Public-Private Partnership models that can help to fund smart city projects.