Thought Piece Article

Mitigating Risk with Smart Communities

by JAMES SANKAR
MaY 2022

Navigating cost and risk with opportunities and benefits to transition communities to be more digitally connected, resilient and sustainable.

What does it take to lead change in local government digital transformations, use fewer resources, create less pollution and waste, be more resilient, and improve the quality of all forms of life? 

 "Smart Cities – A Roadmap for Development", a 2016 paper [1] defines smart cities as places where electronic forms of citizen engagement occur and where city assets and services are electronically integrated and designed to improve many qualities of life. For Local Government Areas (LGAs), this means  

  • greater visibility and timeliness of activities and impacts for the region; 

  • faster, more effective city, space and building planning cycles; and 

  • more efficient and agile service delivery in local and regional contexts to meet citizen needs. 

Business cases typically seek to lower costs through greater efficiency reduce errors or disruption through automation or mitigate against known or emerging risks. Improved customer service experiences can be difficult to measure in terms of returns or success.

All tiers of government are sensitive to spending taxpayer money.  However, adopting modern technology requires risk-taking, and involves uncertainty and partners to acquire the skills needed.  Some benefits may only be identified post-implementation. 

This thought leadership article presents a 7-step framework to mitigate risks associated with introducing modern technology through the careful investment in technology, culture, people, and processes. 

Step 1: Embrace a culture of change 

Successful change requires a greater risk appetite with executive-level recognition and support.  Start by identifying the perceived risks of deploying smart technology solutions and rating them against corporate risk settings. Identify low cost, low-risk environments to test broader concepts before scaling up. This can be achieved via a small-scale trial; however, it is important to ensure that trials include a pathway to scale up. Significant cultural change can take 2-3 years to deliver smart technology outcomes.  Change teams should display transparency in reporting, sharing lessons learned and celebrate success.  

Step 2: Be purposeful, agile, aware 

Once you have an established smart city/community framework, it is important to consult widely on technological, people and process opportunities. It is essential to remain objective and focused on the outcomes you seek to achieve. This will help you strengthen and adapt your frame of reference and bring more supporters with you. 

Aligning smart city plans to the overall Council strategy provides project clear relevance and alignment. Consider service performance improvement, service outcomes that directly improve communities served and opportunity to extended benefits beyond LGA through economies of scale  

Step 3: Identify and classify your risks 

 Review your organisation's risk register it is important to gather feedback from internal and external sources.  
These may include: 

 Internal 

  • Compliance, audit and risk leaders. 

  • Organisational peers. 

 External 

  • Government and private organisations. 

  • Peak body associations, such as ASCA. 

 A Sustainability 2020 model [2] showing the correlation between smart city risks may assist to align risks to organisational change programs and areas of responsibility. 

Figure 1. Sustainability 2020 model

To identify local issues and needs: 

 Research your community from past surveys and local news. 

  • Analyse relevant sources of data. 

  • Engage with community groups to understand local issues and expectations. 

Then rank needs in terms of importance and urgency, consider cost options and benefits, look for common patterns to maximise effort and cost, and remember to include and not assume foundational costs to support your program of work. 

Work with peer LGAs on risks that flow beyond government borders and combine procurement purchasing power. Identify risks at a regional level and develop peer associations to share and learn.  

Step 4: Quantify risk and opportunity impacts 

Consider tangible value to compare the de facto do nothing versus doing something to strengthen the case for change.  Analysts point to credible standard measures such as population, economic, social and environmental indicators to calculate value. You will need to explain any causation and ensure it passes the "pub test".  A simple example could be an investment of $X in the deployment of smart light poles will save the LGA an annual cost of $X that will have paid for itself in Z years.  This then reduces future expenditure for the remaining XX years of operation, allowing XX to re-invest in other LGA projects and/or reduce council bills by XXX, benefiting each citizen with lower costs of living. This example assumes street lighting costs can be calculated in hourly or minute increments as opposed to standard daily rates of use. 

Quantifying costs can also be strengthened by benchmarking with peer performance.  Whilst annual reports can glean some insights, contacting peers to understand their metrics may help to enable accurate comparisons to be made. 

Step 5: Step back and review risks and weave them into your enterprise strategies 

Regular reviews of your project risks should reveal common patterns.  Explore applying risk mitigation strategies to multiple risks and manage any unintended bias by considering: 

  • A sequenced approach to develop the architectural foundation of the solution. 

  • Build in effective cost and accountability controls. 

  • Develop your data repository and network before IoT sensor deployment. 

  • Include contingencies to accelerate successes from proof of concept and pilot activities. 

Step 6: Leverage Partnerships on your terms 

To remain nimble and flexible on project delivery, leverage your partnerships internally, externally, and with technical specialists to complement your teams’ skills to deliver a smart city transformation. 

Partnerships take time to form and build trust.  Consultants bring external perspectives, they are not bound by internal politics and are more likely to openly state obstacles preventing successful change. Contractors bring specific skill sets to support short term gaps in critical activity areas. Hiring contractors may help grow internal knowledge and capacity to deliver future projects. 

Key capabilities should remain in-house where possible, such as a solutions architect, data curator and cybersecurity expert to allow you the flexibility to source generic solutions and expertise from different partners as required. Ideally a panel of similar partners can help deliver timely value for money outcomes. 

To accelerate and scale, re-assess the costs and benefits of current pilot costs to determine whether to build or buy as you grow, consider renegotiating to maintain and extend financial returns.  

Step 7: Governance, Audit and Risk reviews 

Today's world is defined as a VUCA World (Volatility, Uncertainty, Complexity and Ambiguity) [3] and coupled with greater technical system interdependency means governance is vital for achieving successful outcomes. 

The introduction of modern technology heralds many benefits, but it also has the same potential for harm. Smart cities create new benefits and new residual risks [4] from cybersecurity threats,  greater reliance on high skilled teams and increased data and processing costs that can increase carbon footprints. 

Conclusion 

These seven steps may help you to better consider both the direct intended benefits and unintended residual risks of smart city technology. ASCA is a trusted community and a unique safe space to share good practice amongst members to (a) build cases quickly and confidently, (b) set yourself and your environment up for success, and (c) have controls in place to track emerging trends, proactively manage change and take purposeful opportunities to quantify value and deliver on that as your guiding north star.  

 Interested in developing a community of practice on digital transformation from an opportunity and risk perspective?  Contact me at james.sankar@australiansmartcommunities.org,au or if you have other ideas to form a group as together, we are stronger. 

References  

  1. Musa S (2016) Smart Cities - A Roadmap for Development. Journal of Telecommunications Systems Management 5: 144. Doi: 10.4172/2167-0919.1000144 

  2. Sustainability 2020, The First Two Decades of Smart City Research from a Risk Perspective, Shadi Shayan, Ki Pyung Kim , Tony Ma and Tan Hai Dang Nguyen; doi:10.3390/su12219280 www.mdpi.com/journal/sustainability  

  3. Harvard Business Review: What VUCA Really Means for you - https://hbr.org/2014/01/what-vuca-really-means-for-you 

  4. Rob Kitchin & Martin Dodge (2019) The (In)Security of Smart Cities: Vulnerabilities, Risks, Mitigation, and Prevention, Journal of Urban Technology, 26:2, 47-65, DOI: 10.1080/10630732.2017.1408002  

 About the Author 

James is an ASCA board member supporting membership services. He is also the chair of the Standards Australia IT-269 committee responsible for IEC Electrotechnical and Electrotechnology Smart City Systems. He has more than two decades of experience successfully leading service transformations to support a secure guest Wi-Fi global service, unified collaboration platforms, collaborative storage, cybersecurity, and professional services.  

He owns and operates Smart Footprints a carbon neutral consulting, advisory and managed services company bringing together Internet and Data expertise and applying this to Smart Sustainable Cities.  The aim being to develop and adopt “smart” standards that can meaningfully progress a much-needed transition in the way we work, rest, and play in a sustainable way.