IoT

IoT : From POC to Profits

IoT : From POC to Profits

The Analysts are predicting the rewards of adopting IoT to be over Trillion Dollars. But most organizations are struggling to justify investments beyond Proof of Concept (POC). Some don’t have enough use cases for monetization. Others report that the changes required to embrace IoT are too expensive and complicated. What would it take to get from POC to Profits?

Contributor

    • Peter Ambs, CIO, City of Albuquerque                              

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Top 5 Learning Points

  1. What is the smartest way to assess a new technology like IOT to understand its ROI for a city?
  2. How do you turn a technology implementation for a smart city from a cost center to a profit center?
  3. How to achieve the balance between technology leverage for its own sake and using technology for better citizen amenities and better resources utilization for the city.
  4. How does a CIO need to plan for the right ecosystem to do the integration, data management, security, and everything else in between?
  5. What are the smartest strategies to tackle the issue of skilled resources for a new technology at a city level.

Show Notes

  • For IoT to be successful for a city, the RoI need not only be financial, it is about improving quality of civic life
  • The ability to reduce cost of utilities through smart implementations of IoT can be an immediate win, which will help us gain trust and credibility
  • It’s the ability to synthesize data into information through business intelligence tools and reporting dashboards and presentation, that makes it relevant to our citizens
  • As a city, it is difficult to try out new solutions because of the expenses involved, so POCs are important
  • When it comes to smart cities conferences, being part of that community and staying connected is very important to be able to learn from them.
  • You have to build the consensus through the collaboration of the resource owner, the broadband networking that’s required and the intelligence community that’s going to use the data and actually can write applications against it.
  • It’s an evolving landscape with many moving parts and I think, the thought leadership and being able to articulate the strategy is key as we move forward.

Summary

‘It takes a city’, and this applies to creating a POC (Proof of Concept) for IoT implementation in a city. While collating data is the easier part of IoT in the civic infrastructure, the challenge will be on how to make this technology more useful for citizens and improve the quality of life. It could be around transportation energy, utility usage or information around it. While RoI (Return on Investment) here does not need to be only financial, the advantage still needs to be proved. The CIO of the city of Albuquerque elucidates on the parameters that will define a successful IoT implementation for governance, the challenges he faces and the models he emulates. The trick is to get the overall strategy of providing data and information to citizens that are relevant and reliable.

As the concept of infrastructure changes from the traditional to the cyber world, it is an opportunity to turn the city infrastructure from a cost center to a profit center. So after a business case is made the plan can be implemented, working with the partners’ ecosystem, integrating data management, security, and everything else in between. Hence it is important to be part of the successful smart cities conferences and staying connected for all new developments.

Finally, in an evolving landscape with many moving parts, in order to move forward, it is important to have clear thought leadership and articulate the strategy.

Transcript

Sanjog: Today I have with me Peter Ambs, the CIO of the City of Albuquerque. Peter, while people are excited about IoT, you do need a proof of concept because you don’t want to jump into new technology without knowing the end game. What are we supposed to do to either get clarity on the endgame so we are not stalled, or have a creative way to move forward with the implementation?

Peter: Sanjog, I always try to address these POCs and anything that we do for new technology in terms of- why are we doing this? What is the benefit to the citizens and what’s the benefit to the city as it provides services. But, as you’ve summarized the challenge very succinctly, there in a sense that we can’t do this just for technology’s sake or just because we have sensors and the infrastructure. We can get data, but how are we going to make sure it improves the quality of life for the city, around transportation energy, utility usage? Public safety is a big issue that we’re looking at in terms of getting a better understanding of how to deploy resources.

We can get data but how are we going to make this more useful technology for our citizens and improve the quality of life, whether that’s around transportation energy, utility usage or information around that.

Many times, the POCs that we have don’t necessarily have a measurable RoI. Our currency is constituency value, and we need to understand what it looks like as we go into a POC. When we do POCs for an emerging tech, it’s a topic of discussion amongst the tech community about how is it going to improve our daily Citizen life. That’s what we need to be able to explain.

Sanjog: Non-technical people would understand that the value of machine to machine communication lies in the possibilities it presents. But then they find no earth-shattering need for something new on an all already spilling plate- with more money spent on it. So you do the POC and then you look for additional used cases and if nothing looks compelling enough, that’s like losing face. But still, a lot of this is going on. Who is not thinking?

Peter: Well, I try to tie everything back to a business case and that’s where we’ve been successful when we’ve had POCs. For example- soil moisture sensors. I’ll look at that as a quick case study. We’ve got an aging infrastructure when it comes to our parks and irrigation of golf courses and parks. If we’re leaking water into the ground, we’re not optimizing our water usage. Albuquerque being the highest desert city in the Southwest, water is a scarce resource and we need to make sure that we are conserving it. Being able to put soil moisture sensors into the ground and into our irrigation systems to know when there’s a leak, to be able to cut it off and turn that off immediately or when a sprinkler head pops in a park, are advantages.

Any of these use cases will help conserve water and reduce one of the largest expenses we have as a city – our water bill. The ability to reduce our water cost and usage through smart implementations of IoT can be an immediate win, which will help us gain face as well as trust and credibility. This is why we’re implementing IoT.

…being able to tie it back to a safety issue or to a discrete and concrete business case, is where we can gain that credibility…

I made a joke at one point that we’re putting sensors everywhere and pretty soon there’s going to be a sensor in this chair that I’m sitting in. But we’re doing that with for safety reasons, for some of our transit in those areas. Again, being able to tie it back to a safety issue or to a discrete and concrete business case, is where we can gain that credibility.

Sanjog: You picked up citizen safety which is paramount and it’s above everything else that you may ever do. In the business world it’s the shareholder value and in the government world it’s the citizens’ expectation and the value you deliver, and that is what counts. There could be a risk of the law of diminishing returns when you overdo it because nobody cares after a certain point. You’ve got to do just to a certain extent, so you may have a good use case. But in order to put a matured IoT in place, that means all the related entities- everybody has to come together. While you may have created a use case for this one area, all the investment that you will do has to be somehow justified or the ROI has to be covered in due course. When you’re talking about something bigger, maybe it’s not the end game but rather, what’s your approach to even thinking about something which looks similar to an end game?

Peter: Well, that’s a good question. It requires a holistic view of the environment that we live in. What is important is how Albuquerque could be different from a coastal city, the East Coast or the West Coast or a Midwestern city. We have our own set of issues which we can address with IoT. The idea of having this holistic plan or a Smart Cities playbook is something that we are evolving to. But I think it’s the ability to show some quick wins around some sensor work that we’ve done.

Another example is the air quality. One of the issues we have today in Albuquerque is pollen and how that affects asthmatics and people with breathing issues and allergies. We have sensors for air quality and also for wild land fire smoke that comes into Albuquerque. We report on our ability to sense that, and to sense when plumes are coming in, etc. Then using that data from the IoT sensors, we can provide SMS and real-time information around the air quality situation. If your kids have a soccer game this afternoon and there’s a breathing issue that might be affecting their health, it’s important to know. So it’s that type of data that we’re deriving from the sensor base networks, that’s important to us.

We’ve heard that data is the new oil for local municipalities. So, data is important as a resource that we need to be able to leverage. If we’re data rich and information poor, it’s the ability to synthesize that data into information through business intelligence tools, etc., and reporting dashboards and presentation, that makes it relevant to our citizens. It’s got to be relevant, reliable, and secure. All these systems that we test and deploy have to go through a vetting process, a rigorous testing and proof of concept. So there is data and information available, but it’s important how we present it to our citizens through an open data format.

That becomes part of the holistic strategy of providing data and information to our citizens that’s relevant and reliable, when and where they need it.

I could speak of another example where we’ve made our bus transit location data an open data format. It is now on a mobile platform that provides citizens with a real-time bus location. Why is that important? Because now I know exactly when my bus is going to be here. I don’t have to call 311 anymore because that data is available to our citizens in a mobile real-time platform. That becomes a part of the holistic strategy of providing relevant and reliable data and information to our citizens, when and where they need it.

Sanjog: Especially when it is about citizens, so you could spend the same tax dollars on something which the city could use -because there are many priorities. When you look at the rationalization process, how do you justify something which is for the most part good to have, something without which the world will still continue, the city will still thrive? When will you come to a point where you will need to prioritize for, say a children’s library over IoT? Who is doing this thinking and rationalization and prioritization? How do we ever get to a point where a relatively technology-centric initiative gains attention and ground, so that you get to do things which could be more progressive? Who is teaching and who is thinking and who is learning about it enough so that you get IoT on the table amongst other things, and it gets the attention it deserves?

Peter: As IT has become transformative and we are charged with innovation, it’s no longer about keeping the lights on, running payroll and providing a service and storage. These emerging technologies are now entering into our government space. The best way to put it is, show me your budget and I’ll tell you what your priorities are. Your budget then is this ongoing process that involves your goals and initiatives. In the city, the budget is created with inputs from the mayor, the city council, the stakeholders, and the community that’s involved. So we can use some gamification type of activities around that to make sure that the priorities are being met in a municipal budget.

…as IT technology has become a transformative and we’re charged with innovation now, it’s not just about keeping the lights on and running payroll and providing a service and storage but as technologist, we are now faced with these emerging technologies such as IoT and many others that are entering our government space.

I tend to rather speak on the value of the technology and the things we can do with this solution. Everything we do today has a digital component to it, so if that includes IoT, Blockchain or augmented reality or some other emerging technology, then we need to meld that more into the everyday language that we use, for providing citizen services. It used to be steel and concrete, roads and bridges, but today it is merging into the cyber world with sensors. Data is being derived from that. It’s an intersection of the physical and the cyber, and it allows us to get the information from these resources. This can tell us how we’re performing and what’s going on, in case we missed that relevancy piece.

We have to get it in front of our elects and decision-makers so that they can see the value of what an IoT application or any other emerging tech can bring. Everything that we do today needs to be online or have an online component, meaning that it is citizen transaction online and mobile. However, people are getting a little bit of mobile app fatigue right now. There are these two schools of thoughts around responsive design and mobile in the application world. But the ability to do everything on a mobile platform is a challenge that we’re facing across the board. That’s because there are conversations with the millennial group that wants their application. I have had this heavy working day with our public safety in our CAD systems that we use for dispatch. They wanted that to look like Amazon because that’s the world they live in and that’s the world they expect to work in. These Amazon qualities that meet the citizen expectation, need to be into everything we do. That’s is where I’m trying to head our decision makers to where we need to be.

The infrastructure has traditionally been steel and concrete and roads and bridges, etc. Now have this is merging into the cyber world with sensors and data being derived from that. It’s this intersection between the physical and the cyber.

Sanjog: When you are talking about the value, is it monetary? Or can you still continue to focus on safety or wellbeing of the citizens, because even what we’re finding, at least based on my conversations, the city themselves are trying to figure out ways to create revenue to sustain because only taxes sometimes are not enough. In that case, you have to almost think like a business. Are you able to show enough money -making capability as if you were a business for IoT, for you to allow it to fly and go beyond the POC. If not, then we are sinking some dollars into it, which could have been used elsewhere. So yes, we are getting that ‘nice-to–have’ output but then it will only go so far. It’s only a matter of time before people will say, “Yeah, you did something with IoT that looks good”. But before it matures, people will start losing interest and you will not be able to see through the way it’s supposed to. How do you prevent that? From the get-go, should you not be thinking monetization and profits when you are adopting IoT?

Peter: Certainly, Sanjog. I should be able to tell you how much a service costs, and what the sustaining model looks like.

Many times in the government we implement systems with capital dollars. Then in year one, we’ve got the OPEX support in maintenance, so the total cost of ownership over the expected life expectancy of an application needs to be able to tell you what that’s going to be. It needs to be able to sustain itself through a budget process that changes every year. To get to that point, you need to go through the requirements that the impact the project. The idea that we want to turn our city infrastructure from more of a cost center to a profit center is intriguing to me. Right now we are looking at all the resources that we own as a city, street lights, traffic systems, bus shelters and parking, whether it’s fleet of vehicles –and real property. For example, we are working on how we take all the resources that the city has traditionally used, and market them to the private sector through a P3 type of an arrangement for IoT implementation. Even if it’s a small implementation of telecom – everything that we do today needs to look towards automated and autonomous vehicles.

The idea that we want to turn our city infrastructure from more of a cost center to a profit center is intriguing to me and that’s something that we’re doing right now is looking at all of the resources that we own as a city.

The idea that we want to turn our city infrastructure from more of a cost center to a profit center is intriguing to me.

The network we need to support vehicle and the infrastructure communications is going to require high speed, low latency bandwidth applications. We need to meet the network needs- whether that’s 5G, Wi-Fi, low power WAN, or deep fiber into the neighborhoods. So, we have to think differently about how the city resources and assets can be marketed to telecom providers for smart city type applications. Then we can also gain some revenue from these underperforming, underutilized assets that the city owns.

It could be as simple as providing a kiosk or some advertising on a bus shelter to become a digital type of component that can give revenue and will then self-sustain. This could also be an investment fund for smart city type of applications around IoT and other emerging technologies. But we’re not going to be able to do all of this with the existing static budget that we have because that’s already been squeezed and optimized to the point where we are only providing the city services that we always have. Now we’re expected to provide smart city apps across the board and so that’s an area that we’re starting to come to an agreement upon with our elected officials and our city resource owners. It has to be around the real property, infrastructure, traffic and parking, and the ability to market those as tangible assets for a smart city applications.

Sanjog: We definitely have spent enough time in terms of seeing how you justify and how you do POC. But when you want to go mainstream and literally embed that in your DNA, it would actually require us to handle the management and integration of data, the applications and security of all these. To build a platform from scratch is usually very complicated even for commercial organizations, let alone the city government, mainly because this is not your core focus. Would you just go ahead and buy or rent it- is that the best way for organizations? Particularly in your case, does it make sense? So you’re not unnecessarily creating complexity and changing the way you function till the time you have seen it to completion and introduction and seen some value? Then you may decide whether you want to bring some of that platform in-house. What’s the best approach that you would recommend?

Once we are done with the POC, a business case is built and we’re ready to roll, but then in order to take it to a point where it’s actually used, it requires working with the partners’ ecosystem to do the integration, data management, security, and everything else in between. All of that requires some platform building. What’s the recommended path to biting at this big apple? One bite at a time, a smaller bit chip away at it or we should take this in-house because nobody else will know any better?

Peter: A medium to the large-sized city like Albuquerque, in terms of a population, has a corresponding budget. We have to use technology intelligently. In many ways, we’re looking at emerging applications and solutions. We need to be good identifying our specific needs. I’ll give you an example. Our city elects came to us here recently and told us they saw a sensor based application for pothole identification for Boston. We tried that here in a little POC in Albuquerque, but potholes is not our big problem. What may work in one city doesn’t necessarily work for us here, so we have to see how things play out with applications that are bleeding edge and those that need investing in the R&D. For an emerging tech solution, we don’t have the luxury to go out and try things out and see if it’s going to work or not, nor can we afford it.

We want to build a portfolio of partners that have tried and tested this and now have commercialized their application. If we were to create a government-as-a-service type of a platform, I can never do it with internal resources or capabilities. We need the private sector, the research university, and the startup- the entrepreneurial community who have these ideas and know how to bring them to market. In times of Everything-as-a-Service, Government-as-a-Service has to be about creating a platform of government services. We’re going to need those PPP type partnerships and ones that are involved in civic technologies. There’s a growing community of civic technology companies and organizations that are supplying government solutions to municipalities. OpenGov, for example, is one we have recently signed a contract with because we saw the work that they did in Boston and in other cities.

We don’t have the luxury or the affordability to go out and really try things out and see if it’s going to work or not when it comes to an emerging tech solution.

This is what Albuquerque will achieve by entering into a contract with OpenGov, in terms of a data presentation and visualization of the data we have. Albuquerque was an early adopter in the OpenGov movement. But being able to just provide data that’s traditionally been stored in firewalls, file formats and the public portal, is not good enough anymore. Now, that data will also have to be put into data visualization. In this context, it will help us understand whether we are getting better or worse or staying the same spot in terms of providing city services and creating livability within our city. That is the key is leveraging our private sector partners.

Sanjog: Do you think anyone out there is cooked to a point where they could lead and guide you? I mean, while they may know more than you because that’s not your core job and they’re the service providers, do you think IoT has reached that level of maturity they would have an idea on the type of integrations that you are looking for?

Peter: Certainly, there are some leaders in this space that we pay attention to. Chicago is doing some great work, so is Washington DC, New York City, Las Vegas and Kansas City. Those are some cities that we see in the leader space of IoT. We certainly need to watch and learn from the work they’re doing so that we can apply it here in Albuquerque. When it comes to smart cities conferences, being part of that community and staying connected is very important, so we all are able to learn from them. Nobody should be doing this in a vacuum and having to rewrite the playbook every time.

Being part of that community when it comes to smart cities conferences and staying connected is very important.

Sanjog: Here, the connectivity that you need would definitely require you to interface with your ecosystem partners. It could be third-party services and others. You should not undermine this whole IoT initiative because someone else is not as excited about the whole approach, and they are not stepping up to bring in their technology. Their approach to integration doesn’t make you wait because you’ve got a lot bigger purpose behind it. They may have profit motivation or something like that. Are you supposed to then rally the troops, to become the Pied Piper, get these guys to step up and run shoulder to shoulder with you to bring this IoT? Or can you literally, have ways to get them to come along but not necessarily at the same pace as you. What I call it is- it takes a village to put IoT together. Do you need every household in the village to be equally excited for you to pull this off?

What I call it is- it takes a village to put IoT together. Do you need every household in the village to be equally excited for you to pull this off?

Peter: I think you need to get the key elements, the elements that are going to be around the infrastructure, excited. Traditionally for our transformation around traffic and to create the intelligent traffic system, cities have fiber in conduit throughout an entire community for traffic control. We need to leverage that. If you can’t, you have to spend millions of dollars implementing fiber right along next to it. So, other cities can access the ITS network through the conduit and get access to the infrastructure that exists there.

A big part of my challenge is telling that story to the resource owners. We need to identify the infrastructure that is needed to support, the transport mechanism which is the low latency high-speed wireless broadband, and the deep fiber to transport the data from the sensors to the gateways, then back to the analysis boxes. Then, there are the end users who are going to use this data. You have to build the consensus through the collaboration of the resource owner, the broadband networking that’s required and the intelligence community that’s going to use the data and actually can write applications against it, etc. I think those are the key players that you need to get involved.

Sanjog: I wanted to bring back the talent issue which is almost crucial with any initiative, whether business or technology. Something new, though the underlying integration and other types of things you will do, may have some commonalities but this is a brand new area. Even as a CIO, you have a lot of experience but there are certain things you may not know in order for you to lead this initiative. You need those extra sets of eyes, ears, and brains to support you. How are you going to do this? Are you going to totally rely on outside companies which come and deliver? Or is there a capability development internally, from a talent standpoint that’s your ambition. If you are, then we know that budgets are always a big constraint when it comes to HR in the government sector. Means, the salaries and everything else are always not as high as what the world would pay outside in the commercial sector. These are some of the challenges people face. If you were to outline your talent strategy, what would make sense in your specific case to pull this off from a talent standpoint?

The million-dollar problem of talent, we cannot go into it without having enough confidence in the ability of people to pull it off. It’s like a workforce capability development issue and that could mean outsourced contractors, or in-house, specialized consultants. If you had to build your talent blueprint to build and sustain IoT, what would that look like?

Peter: We would have to utilize the capabilities that exist in private sector, the solutions that come with their skills and the training that comes with the solutions. But we don’t have that capability in-house today. The developers we have are not big lead developers, for example. They don’t teach that at the colleges and universities. Today I am working with our local higher education community college and the coding boot camps to develop an IoT curriculum where they could use the city as a lab. As a city we’ve built an IoT network, the LPWAN is in place in Albuquerque to provide the communications backbone between the sensors and the gateways. But nobody’s using it at this point because it’s brand new. Then, we’ve got sensors in the underground and infrastructure.

For IoT solutioning, whether that’s a big lead developer or say someone that understands the ecosystem that’s involved in IoT, the network, and the sensors and gateways, and coming up with practical solutions that they use in that infrastructure. That’s one way.

There are two things. Firstly, we’re working with the local university to develop the center of excellence so to speak or this capability capacity for IoT development. For IoT solutioning, whether that’s a big lead developer or anyone who understands the ecosystem that’s involved in IoT, the network, the sensors, gateways, they need to have the ability to come up with practical solutions that can be used in that infrastructure. That’s one way.

Since all of this has to be secure, we’re working with the local cyber security companies to develop the IoT security model around. That’s a whole another area that security needs to be baked in from the beginning. Again, as a city and as an IT department within the city, we can’t do this on our own. We never really have and we never will be able to it. It takes a community of stakeholders to move this effort forward.

Sanjog: When you are looking at the talent pool, especially outside companies who would do this security, since they’re so new, what’s your benchmark? Someone like yourself or even in commercial sectors looking for outside capability, what’s your approach to inviting someone to actually help you when we know that the whole industry or that whole space is so new. Is it like a leap of faith?

Peter: To a certain degree, we’re leveraging the competencies around Cyber Security that are coming out of our university system here. This will help to know what our vulnerabilities are, what the threat landscape looks like, and what the weakest link in the infrastructure is. We cannot afford to have an IoT device getting compromised since it will have a downstream effect where public safety is compromised or a skater system is infiltrated through an open vulnerability that exists in some firmware in an IoT device. It’s that whole environment. We know that many of these endpoints in our environment were never safe –security was an afterthought. So to retroactively go back and look at all the devices that are on a municipal network, is difficult. You can have tens of thousands of endpoints, so understanding how you are going to manage the threat landscape needs a vulnerability analysis. That’s where we’re at today and that’s why we’re using the knowledge of our partners in that realm.

Sanjog: Given the initiative is new, coming from the left field with so many unknowns, would you rather have been a mercenary or a leader to pull this off?

Peter: Maybe one of each. It certainly takes thought leadership, a vision, and a playbook. Cities today are putting together their smart cities playbooks and their strategies around how they’re going to evaluate, how they’re going to deploy and what are the areas of government that will benefit. Is that utilities, energy, transportation, citizen engagement, or is it public safety? I feel it’s all of that! How do we choose which ones to prioritize? Well, maybe it takes that mercenary, good cop, bad cop deployment of thought leadership, but a mercenary, to go in and push. We used to call that rogue IT or skunkworks. Well, today, we’re seeing some of our best solutions come from outside of IT. Those who take up an initiative, show value in an application.

It’s an evolving landscape with many moving parts and I certainly think, thought leadership and being able to articulate the strategy is key as we move forward.

Cities today are putting together their smart cities playbooks and their strategies around how they’re going to evaluate, how they’re going to deploy technology for the areas in government that make sense.

Sanjog: On behalf of the show and our listeners, thanks so much, Peter, for sharing your views on how the leaders from a city and the even commercial sector can look at the type of initiative IoT is, see how they can move it beyond POC and actually take all the way to profits.

Contributors

Peter Ambs

Peter Ambs, CIO, City of Albuquerque

Peter has been the CIO for the City of Albuquerque for the past six years and is a recognized leader in the field of civic technology. Peter has a rich background in providing technology leadership and implementing innovative solutions. ... More   View all posts
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