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The Internet of Things Challenges Smart City

Processes and Culture
Published: 7 November 2013

Analyst(s): Alfonso Velosa, Lily Mok

Internet of Things systems deployed by smart city departments will

generate big data. When using this data, CIOs and business unit leaders
in city departments must satisfy stakeholder expectations, and overcome
organizational and cultural issues to maximize the return on their
investments.

Impacts

There is a mismatch with key stakeholders' expectations about what the IoT can bring to city
departments. This prescribes and limits the capabilities of CIOs and other business leaders to
develop and execute their IoT strategies.
Vendors often offer new technology solutions. As a result, CIOs and other BU leaders need to
avoid getting distracted from pursuing their goals and solving issues with processes and
people.
The arrival of big data generated by IoT systems requires BU and CIO leadership teams to have
champions who will lead the process changes and drive the adoption of big data.

Recommendations

Temper the expectations of senior executives, political leaders and managers.

Assess new IoT smart city projects based on how much they will impact existing technology,
people and processes for both the IT and city departments.
Identify possible change advocates in the organization who could champion technology and
culture change initiatives as they arise.
Engage significant parts of the relevant teams as early as possible in the planning and
development of the solution using an opt-in, participatory process. The more participation the
team has in the development and implementation of the change strategy, the higher the level of
engagement and likelihood of its success in institutionalizing the change.

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Strategic Planning Assumption(s)

Through 2017, 60% of smart city Internet of Things (IoT) projects will fail to achieve the expected
benefits. This is not because of a technology deficiency it is due to employees' low adoption of
using the data in daily activities. This leads to the expected value not being realized.

Analysis
Smart cities are based on the principle of contextualized information and data exchange between
different sectors of a city (see Note 1).
An interesting corollary to this is that city department business units (BUs) are increasingly updating
their embedded electronic systems to IoT systems. The deployment of these IoT systems will
increase the amount of information generated so that it will become big data.
We are starting to see a growing number of smart city projects incorporate IoT elements, whether
they are smart campus projects in the U.S., transportation solutions in Europe or Australia, or the
large number of RFPs from Chinese or Japanese government agencies which contain IoT elements.
This proliferation of IoT projects is the result of four drivers. They:

Solve previously intractable issues in some cases.

Provide new ways for the city department BU to improve the service to citizens and the citizen
experience.
Provide new ways to cost-effectively deliver existing services for the city department BU.
Meet technology and infrastructure vendors' requirements from government agencies, such as
in China.

These IoT deployments will generate big data that needs to be integrated into information
processes, workflow and the operating culture of city departments (see Figure 1). This integration is
critical for city departments, which should also take advantage of the insights generated from data
analytics to improve operations. Such operational improvements include lowering the cost of
infrastructure maintenance, or adding extra citizen value by acquiring real-time traffic or parking
information.

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Figure 1. Structure of Connections Between Things, Data, Process and Culture

Data/
Information

Things

Process

People/
Culture

Source: Gartner (November 2013)

In this document we explore the impact that big data and the information generated by new IoT
system deployments will potentially have on the processes and culture of city departments. These
IoT systems serve the core functions of the city department BU, such as building or vehicle fleet
management and enhanced street lighting or parking capabilities. Because of this, BUs will drive
the implementation of these IoT systems. However, for IoT systems to be used optimally,
cooperation between BUs and IT departments during design and implementation is required.
Furthermore, note that globally, cities can have one city CIO and/or multiple CIOs for different city
departments. However, they all face the same challenges from increasing numbers of IoT
implementations. Thus, we explore the following issues all CIOs should address:

Stakeholder expectations
Vendor offerings
Processes and organizational culture dynamics

IoT-based systems are proliferating in cities for city services that leverage physical assets. As a
result, CIOs need to discuss in depth with city department executives the disruption that the IoT will
cause to their current organizational culture and operational processes. CIOs and department heads
will then need to stay focused on the objective of improving the efficiency and effectiveness of city
department BUs and their citizen services. This will require BU employees to leverage all the
available information in order to get closer to achieving the full potential of smart cities.
Seizing the opportunities created by the big data that IoT systems bring to smart cities depends on
CIOs and executives in city departments following the required processes and leading the
necessary culture changes. Figure 2 explores the impacts and recommendations for city
department leaders and CIOs.

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Figure 2. Impacts and Top Recommendations for City Department Leaders and CIOs
Impacts
There is a mismatch with key stakeholders'
expectations about what the IoT can bring
to city departments. This prescribes and
limits the capabilities of CIOs and other
business leaders to develop and execute
their IoT strategies.

Top Recommendations

City department IT and operations

management teams need to temper the
expectations of senior executives,
political leaders and managers.

Vendors often offer new technology

solutions. As a result, CIOs and other BU
leaders need to avoid getting distracted
from pursuing their goals and solving
issues with processes and people.

The arrival of big data generated by IoT

systems requires BU and CIO
leadership teams to have champions
who will lead the process changes and
drive the adoption of big data.

Start with audits to achieve an up to

date understanding of the existing
technology infrastructure and culture of
your department.

Think about what processes are in place and

if those processes are mature enough.

Regularly measure how much

pressure there is to change and how
easily the organization can do so.

BU = business unit; IoT = Internet of Things

Source: Gartner (November 2013)

For the purposes of this document, when we refer to infrastructure we are referring to the physical
assets of the city such as buildings, roads, water pipes, transmission lines, street lights and sensors
in the water pipes.

Impacts and Recommendations

There is a mismatch with key stakeholders' expectations about what the IoT can
bring to city departments. This prescribes and limits the capabilities of CIOs and
other business leaders to develop and execute their IoT strategies.
The main consideration here is that a city's political leaders might wish to deploy IoT systems in a
department that may not have the capability to execute the strategy. Furthermore, some city
departments and their IT teams may not be able to work together to ensure these systems deliver
on their promises.
Another consideration is that the IT department could be too far ahead of its city department in
terms of developing the IoT strategy. In this case, the departmental IT team may be thinking of

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adopting technologies that are too advanced for what the city department employees have been
trained for. Any IoT projects that either the BU or the IT department initiates may have a low ROI if
they are not aligned with what the city department really requires. Also, the BU or IT department
could miss out if projects are not properly tied into the BU's processes, or the city department
employees underutilize the BU systems. As a result, if they are to go ahead with IoT projects, city
department leaders and the IT leadership team must invest time and effort in ensuring that
expectations and readiness are aligned.
Some factors which impact all these elements include:

Citizens. The starting point and most important factor is citizens' expectations about city
services. Citizens' demands for enhanced city service capabilities are tempered by local
adoption patterns for technology. The leverage of technology and items such as smartphones by
citizens in each location may push their city governments to change faster than they would
normally. If they do not do this they could raise dissatisfaction levels. This will be something that
political leaders care about, which raises pressure on city department IT leaders to respond with
strategies that account for not just political drivers but also the technological sophistication of
interested stakeholders and citizens in general (see "Market Trends: Smart Cities Need TechSmart Citizens to Succeed").
Mindset. A city department's cultural barriers for example, from silos and command and
control management may not support a new environment that encompasses an interactive,
cross-boundary service model supported by the big data generated from IoT systems.
Maximizing value from this requires strong engagement and integration across all the relevant
city departments.
Skills sourcing practices. Many city departments rely on external providers to supply key
technical skills for IoT system deployments, which will delay city department employees from
adopting these systems. This is because they do not have the knowledge, skills and abilities to
understand, utilize and achieve the benefits or enhancements that the new systems and
solutions will provide. In turn, this highlights a need for upgrading technology skills across the
workforce, both at staff and executive levels. An inventory and assessment of staff skills for
both the IT and operations teams will help the development of plans for the training and
education required to embark on IoT projects.
Budget constraints. Some IoT initiatives could either be underfunded or have core parts such
as the training of personnel not funded at all. This could lead to the IoT project not delivering
on its stated benefits or achieving the full potential that justified the original ROI analysis.
(Note that for some projects the justification for starting the project is based on a mix of ROI
goals, such as asset optimization and improved citizen services.)
Governance. The city department business and IT leadership teams need to ensure that their
objectives align throughout the governance process. This will ensure that the prioritization of
investments and project budget process reflect a more nuanced understanding of what both
sides should be accountable for when delivering and leveraging the IoT to improve citizen
services.

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Socio-economic environment. A final factor that will come into play for IoT deployments is the
economic and social development milieu that will be encountered. For example, for cities with
extensive resources, projects might be more aggressive in terms of their impact and have a
broader scale. Developed cities may implement projects that align across multiple city
departments, depending on the resources and employees. Whereas a city with fewer
proportional resources or less funds may only be able to implement limited solutions within a
specific city department. Thus a developed city could likely manage a full-scale implementation
after the pilot has been run, and an underdeveloped city may have to continue running limited
implementations.

Recommendations:
CIOs should work with the BU management team to:

Temper the expectations of senior executives, political leaders and managers so that they align
with the realistic capabilities of employees.
Understand and factor into IoT project plans the current level of technology adoption by
citizens, and citizens' expectations for how services could be improved and adapted to suit
their changing lifestyles. This is not just to communicate new or enhanced services it is also
to highlight to stakeholders the benefits of these investments in IoT projects.
Ensure that budget plans and resource allocation for any IoT projects align with executive
leaders' objectives and expectations.
Assess any potential IoT programs to identify employee skills gaps that must be closed to
achieve leadership's objectives.

Vendors often offer new technology solutions. As a result, CIOs and other BU
leaders need to avoid getting distracted from pursuing their goals and solving issues
with processes and people
Technology vendors tend to focus most on technology solutions for IoT initiatives. A significant
number of technology vendors engaged with city departments have a broad perspective of the
issues. However, most will likely have a narrower view based only on technical capabilities and
solution offerings.
Improving the focus of vendors requires that BU and IT leaders work together. This is to avoid having
those involved deploying new IoT solutions without fully understanding the core strategy and tactics
needed to deliver the enterprise's mission.
In some cases, vendors' IoT solutions may be funded by external parties, such as other
governments, government agencies or international parties. They may even be mandated and
funded by central government decree. Yet even these "gifts" must be assessed with regard to the
opportunities and constraints of your particular organization.
All vendors' IoT systems need to be assessed based on:

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Strategy. The mayor and city department leaders have a broad variety of objectives for
delivering city services to citizens and stakeholders. They also tend to have a broad variety of
constraints that range from funding to political schedules. City department BU and IT
employees need to make sure that they are clear about how any particular vendor's IoT system
aligns with these goals and objectives. They need to answer a key set of questions about what
citizen value, service or cost optimization, or revenue enhancement the project offers the
department and/or the BU. This will help stop the project going astray or over budget just
because a particular technology offering looks attractive. An interesting example of how
technology can seem attractive is that although U.S. astronauts used a specially designed pen
to write in space, Soviet cosmonauts used a regular pencil to meet the goal of being able to
write in space.
People. The culture of any organization tends to have its own rhythm in terms of the way it
works. Employees may value data and information as being key to the success of their jobs.
Alternatively it may be secondary or close to irrelevant, especially if their department has a core
mission to deliver just "jobs." Beyond the value it should deliver, any vendor's IoT system has to
be judged against the culture to ensure an understanding of not just the required level of
training but also the required level of organizational change.
Processes. IoT systems and the data they generate also occur in the context of the BU's existing
procedures and processes. This has many factors ranging from not just the level of data
used, but also manual compared to online processes. That is, the operations team could
manually manage the jobs for buildings maintenance, or the management of its fleet of vehicles.
Alternatively, the operations team may have a centrally managed system to track the use of
critical assets such as controlled pharmaceuticals or vehicles. Considering this early on in any
conversations or assessments of a vendor's IoT system is critical. This will help avoid the
installation of an IoT system that requires significant extra resources to fix process issues, or
issues related to integrating the new technology into existing infrastructure.
Technology. Finally, any IoT system needs to be assessed on how well it aligns with the overall
technology architecture of your department and the BU. Also, the IoT technology and
architecture, its alignment with the IT currently in use, and your IT enterprise architecture has to
be considered. This will determine what some of the key integration issues are. Because of this,
an understanding of your technology infrastructure, capabilities, limitations and architecture is
also needed to clearly assess any potential vendor's IoT system offering.

Recommendations:

Using the four parameters of strategy, people, processes and technology assess all potential
IoT projects even "free" projects that could drive your department and particular BU.
Factor in BU and IT issues related to these four parameters.
Before embarking on any IoT project, as with any technology project, ensure that you have a
clear set of goals and objectives. This is to avoid embarking on a project just because of
enthusiasm for an attractive technology. Ground it in a foundation of citizen value and/or cost
optimization and/or enhanced revenue for the city.

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Start with audits to ensure you have a current and in-depth understanding of the BU and IT
factors involved in instigating an IoT project. This starts with a verification of the goals and
objectives for the specific service area. The audit should then extend into understanding the
architecture for both the operational technology (OT) and IT infrastructure, and the processes
and culture of the BU, and any resource limitations.
Assess readiness for new IoT projects by rating potential projects on the way they may impact
existing goals, technology, people and processes. This is for both the BU and the IT
department.
Integration and change management strategies need to be a critical part of the planning,
design, execution and deployment of any new IoT solutions. They should focus on how to
engage with existing city infrastructure systems and drive changes to people skills and
processes.
Ensure any new IoT systems are aligned with your goals by rating them in terms of how well
they match and support existing enterprise goals, culture, processes and technology.

The arrival of big data generated by IoT systems requires BU and CIO leadership
teams to have champions who will lead the process changes and drive the adoption
of big data
The key value of IoT systems is in the data that can be used across the divisions in not just one city
department, but also across multiple city departments. They offer the opportunity to drive synergy
between city departments, and between the silos within city departments.
These IoT systems need integrated, solutions-oriented thinking. This is so that they can work with
unique systems environments developed to provide specific citizen services and the silo
mentality that some government organizations are prone to. Because of this, CIO and city
department leaders should take advantage of these IoT deployments to drive collaboration and new
approaches to the problems faced across departments.
The success of any new IoT system will ultimately depend on effectively changing the behavior of
the organization. One key approach is to leverage both top-down support and vision from senior
management as well as a bottom-up effort using the drive and execution from champions selected
from regular staff. Leadership needs to establish the vision, strategy and funding for projects.
Furthermore, departmental champions need to work as change advocates for leveraging the
benefits of IoT systems not only to improve citizens' services, but also to change the way city
departments operate as coordinated entities.
Executives can leverage existing best practices to set the direction of the change for the
organization. One such critical best practice is to appoint a senior leader who will be responsible for
developing and implementing the change management strategy for the IoT deployment. This senior
leader is particularly necessary for major, multiyear initiatives that will likely involve complex and
significant changes in organizational structure, people, process and behaviors. The senior change
leader along with the entire executive management team needs to be accountable for the
change. Also, they need to be supported by champions from middle management and key rank-andfile employees, to instill change across all the IT and city departments.
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Finally, the changes from IoT-driven big data are also the result of ongoing societal and
governmental pressures faced by city departments. One best practice that Gartner has seen other
enterprises use for successful organizational change is to carefully assess how prepared an
organization is for change and how flexible it is; that is, can it proactively anticipate and respond to
the emerging needs for change? Answering this will help leaders determine the speed of change
that is appropriate for the IoT deployments. It will also challenge the deployments' viability in terms
of how likely it is that they will meet the goals in the time frame set by the political leaders or the
budget cycle (see "Organizational Liquidity: Change Management for Tumultuous Times").
Recommendations:
CIOs should work with the BU management team to:

Evaluate the BU's current operational processes and their maturity, to ensure they can support
the successful deployment of new IoT projects. Start by planning top-down and bottom-up
approaches. This is done by leveraging the vision and support of the senior leadership team as
well as the support of change agents from among the regular staff of the BU and IT
departments.
Appoint a senior leader in the BU to develop and implement the change management strategy
for the organization in preparation, and in parallel to the IoT deployment. This leader will be
critical to ensuring that the change is integrated into the organization's processes and not
rejected by its culture.
Identify a list of potential change advocates in the organization who can champion these
technological and cultural change initiatives as they arise.
Schedule regular meetings with the different BU leadership teams. Do this on an ongoing basis
to review and analyze scenarios about the impact IoT-driven big data could have on
organizational processes.
Regularly map how much pressure there is to change the organization, and how easily it could
be changed, so realistic schedules can be set with senior managers and political leaders.
Engage a broad number of individuals from the relevant teams as early as possible in the
process for the structural change. In particular, engage them in the planning and development
of the solution using an opt-in, participatory process. The more say the team has in the
development and implementation of the change strategy, the higher the level of engagement
and likelihood of its success in institutionalizing the change.

Gartner Recommended Reading

Some documents may not be available as part of your current Gartner subscription.
"'Internet of Things' Deployments Pose a Challenge to Smart-City Information Strategies"
"The Internet of Things Will Shape Smart Cities"

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"Cool Vendors in Smart City Applications and Solutions, 2013"

"Hype Cycle for the Internet of Things, 2013"
"Hype Cycle for Operational Technology, 2013"
"Hype Cycle for Smart City Technologies and Solutions, 2013"
"Singapore IDA: Building an "Intelligent Nation" With the Power of Information"
"The Information of Things: Why Big Data Will Drive the Value in the Internet of Things"
"Peer Advocates Put a Face on Organizational Change"
"Organizational Liquidity: Change Management for Tumultuous Times"
"The Crucial Nexus Between Information, Operational and Consumer Technology"
Evidence
1

The analysis and advice provided in this document is built from constant scanning of the market,
as well as from the aggregation of analysts' experience and ongoing interactions with end users,
financial organizations, technology providers and policymakers. We used a range of sources to feed
our perspective on the topics discussed in this document:

Gartner customer inquiry and conversations.

Discussions between Gartner analysts with expertise in key technologies as well as vertical
markets.
Previous Gartner analysis of smart cities and the IoT.
Attendance at industry conferences and technology service provider vendor briefings on smart
cities and the IoT.

Gartner analysts also leverage secondary sources of information, including government and media
reports on projects and smart city developments.
Note 1 Definitions
Gartner defines:

The IoT as the network of physical objects that contain embedded technology to communicate
and sense or interact with their internal state or the external environment.
OT as the industrial subset of the IoT.
A smart city as an urbanized area where multiple sectors cooperate to achieve sustainable
outcomes through the analysis of contextual real-time information shared among sectorspecific information and OT systems.

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