Cities Across Globe Throw Big

By Steve LeSueur, Staff WriterThe growing clout of cities in the global economy is helping them keep pace with ? if not overstep ? national governments that are sponsoring innovative technology projects and ushering in modern, Web-based societies. Hong Kong and Bologna, Italy, are carrying out comprehensive plans to establish a communications infrastructure and provide government services that rely upon cutting edge technology. Kuala Lumpur, Malaysia, and Dublin, Ireland, also are pursuing innovative projects."We're seeing that sometimes local governments are getting out in front of national governments in new technology projects," said Jim Pauli, a principal in government consulting services for Electronic Data Systems Corp., Plano, Texas, a global systems integrator.Indeed, many of the world's leading technology companies perform a significant portion of their public sector work outside the United States. Fifty percent of software giant Oracle Corp.'s public sector revenue now comes from abroad, up from 25 percent a few years ago. Half of EDS' public sector work comes from outside of the United States. For IBM Corp., the figure is about 60 percent. "Cities are beginning to understand that what will make them competitive in the world economy is information and communications technologies," said Jack Pellicci, vice president of global public services for Oracle of Redwood Shores, Calif.Because local governments have more direct contact with citizens, they are in the forefront of developing Web-based applications that integrate government and community information sources and services, industry officials said."The cities definitely are more innovative in the area of e-business and e-community," said Todd Ramsey, general manager of government industry for IBM, Armonk, N.Y.Both IBM and Oracle have worked in Valencia, Spain, on Infoville, a project with a goal to connect and provide online services to 4 million people spanning a large urban and rural region. City services, schools and universities as well as local businesses are being connected through this project."Many European cities are ahead of the U.S. in creating these kinds of smart cities," said Pellicci.Total government spending on IT projects outside the United States will reach an estimated $92.6 billion in 1999. By comparison, public sector spending in the United States should hit $76.4 billion, according to James Macaulay, a public sector analyst with Dataquest, Mountain View, Calif.And public sector IT spending abroad is growing at about 8 percent, faster than the 7.2 percent rate in the United States, said Macaulay. The Asia Pacific market would lead the way with estimated growth of 10.5 percent annually over the next five years.Central governments account for about 53.5 percent of IT spending abroad; provincial governments, 23 percent; and municipal governments, 23.5 percent, according to Macaulay. While conventional wisdom posits that new information technologies are helping to shift power from national to local governments, political and economic experts see other potent forces at work.One of the most important is the rise in urban populations throughout the world. Within a generation, the developing world will be predominantly urban, according to a draft report released late last month by the World Bank's urban development division.Moreover, the world's megacities ? those with populations exceeding 10 million ? will nearly double in number to 26. Of that amount, 22 will be in developing nations.At the same time, improvements in communications technology and transportation have linked cities directly to international markets, making cities important trade and deal-making hubs and the main sources of economic growth in most countries, the report said.The World Bank report, "A Strategic View of Urban and Local Government Issues: Implications for the Bank," highlights the bank's own burgeoning efforts to direct more of its resources toward cities and towns, which, the report said, "are forming the front line in the development battle." While the bank's assistance to cities includes more than IT development, bank officials recognize that cities are playing a larger role in attracting information technology and the infrastructure to support it.Developing cities usually have little trouble attracting investment in IT projects, said industry and bank officials. But this depends upon regulations and laws that can facilitate the use of new technologies. "The private sector is eager to invest resources in cities and countries where the commercial laws, regulations and tax structure provide a favorable climate for businesses, including IT companies," said Tim Campbell, an urban adviser for the World Bank and head of its Urban Partnership.The World Bank recently co-sponsored a conference in Washington bringing together representatives from cities throughout the world to discuss IT development and other ways that city officials can stimulate economic growth. The two other sponsors of this event, called the World Competitive Cities Congress, were KPMG International, New York, and World Congress LLC, New York, an organization that promotes government and industry partnerships aimed at economic development.Much of EDS' public sector business outside the United States includes work with local governments, such as the installation of the Crime Reporting Information System for Scotland Yard. That system put case records online for police and detectives at 260 stations throughout London.In Hong Kong, EDS is providing consulting services to the Information Technology Services Department, which guides other city departments in using IT to improve city services."The Hong Kong government is trying to make Hong Kong the premier digital city in the Pacific Rim, if not the whole world," said Pauli.In Bologna, IBM is participating in a public-private partnership to provide high-speed Internet access to the city's nearly 500,000 inhabitants. Investors include the city of Bologna, IBM, Telecom Italia Corp. of Rome and others. The partnership is designed to move a full set of city and central government services online and provide opportunities for commercial e-commerce, said Giorgio Prister, an executive in IBM's Rome office. The vast amount of IT work overseas allows these companies to take lessons and best practices from one country and apply them to projects in another, officials said. EDS, for example, has tasked key people from outsourcing projects in Australia to help plan outsourcing efforts in Connecticut and other places."The transferability of solutions, both exporting from the United State to other governments and importing to the United States, is a significant market," said Thomas Davies, a senior vice president with Federal Sources Inc., McLean, Va.For technology companies setting their sights on business opportunities abroad, they can expect increasing opportunities with municipal governments as cities expand their roles as centers of world trade and commerce."It's going to be an urbanized millennium," said Campbell.