The provision of public services by the public sector became commonplace in many developed countries in the late nineteenth century, be it a municipal development of gas and water services or healthcare. However, this custom has never gone unchallenged.
There is an alternative form of public management gaining more traction. This attitudinal shift has been reflected in the importation of private sector businesses doing the traditional work of government – think private energy companies that are lighting up our homes.
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This trend has been driven by a number of factors – be it ideological reasons or cost efficiency – however, one of the key drivers behind governments looking to the private sector more and more is their need for help in keeping up with the pace of technological and cultural change.
The need for smarter cities and collaboration
In 2007, a major shift occurred as more people began to live in urban areas than rural ones.
Today we can see that 2007 signalled a growing urbanisation pattern. According to Deloitte, an estimated 3 million people move to cities every week. By 2050, urban citizens are expected to outnumber rural ones by a ratio of 2:1.
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Although public sectors differ from country to country, many are saddled with limited budgets and legacy infrastructure. This is why all over the world in places where we see an increase in urban population we also see an increase in things like congestion and adverse health outcomes.
Governments around the world are trying to remedy these issues. However, according to Deloitte, just 16% of cities can self-fund required infrastructure projects.
As a result, cities are enlisting the support of private and non-profit partners to advance their smart city agendas.
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The collaborative city: It’s a win-win
The proliferation of smart cities are providing the private sector with an opportunity to work with governments. Given that this means new business for the private sector and greater cost-efficiency and expertise for the public sector, it’s a mutually beneficial partnership.
For example, last year, Verizon, the telecommunications company, worked with Sacramento, California, to advance their technological ranking in the US. As part of the deal, Verizon installed intelligent traffic technology at 15 intersections to monitor problem areas identified by the city, while collecting data to improve traffic flow. Verizon is also in the process of installing Wifi to 27 city parks to help increase communications.
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Hubert Riley, Vice President, External Affairs at Verizon, wrote: “Successful public-private partnerships combine the technology and innovation of governments, cities and companies to benefit citizens. By working together for the greater good, public-private partnerships can help accelerate the pace of change and implementation of smart cities infrastructure.”
How to create successful public-private collaborations
Many business leaders are already fully aware of the benefits of working on smart city initiatives. However, they often struggle to get in on the action. This is because smart city projects are competitive and the complexity of a private-public relationship can be sometimes unclear.
According to Deloitte, cities need to develop a business case that clearly sets out the value for all involved. Of course, the value can take different forms, from direct returns on investment to indirect benefits such as exposure.
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Deloitte also recommends that cities should create a third-party entity which can provide role clarity, political feasibility and simplify procurement.
For Deloitte: “A third-party entity can help partners and cities navigate the complex structure of both city governments and private corporations.”
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