Case Study on Smart Parking in Majlis Perbandaran Klang as Representation of Frugal Innovation Business Model for Smart Cities

Background - Like many cities in Malaysia, the Klang Municipal Council (MPK) is embarking into smart city initiatives. However, like many other local councils, one of the biggest challenge faced is the funding for smart cities, primarily because they operate on conventional business model. They mostly receive federal government funding. It is unlikely for them to sustain their smart city initiatives on the current business model. Local authorities need to identify a more viable business model to ensure success of their smart city ventures. One of the smart city initiatives that MPK has introduced is the smart parking solution. This study explores the business model that MPK has adopted in its smart parking implementation, and study how, if at all, it has succeeded in addressing the business model financial sustainability challenge. The introduction of frugal innovation concept may shed light towards the MPK smart parking business model, and extend the principles derived from the implementation of MPK’s smart parking business model to the business model of other city services. Purpose - By studying the business model of an already ongoing smart city solution, this study seeks to discover practical learnings that can be emulated by other local councils and smart city practitioners to address the complexity of the smart city ecosystem. Design/methodology/approach - The study will be conducted via a case study on a local council that has a track record of being successful in delivering city services and is able to sustain itself financially. For this purpose, the proposed study subject is Majlis Perbandaran Klang. MPK manages about 35,000 parking bays, with a pre-pandemic annual parking revenue of RM7.5 million. In 2020 MPK, together with a local private company, became one of the first local council to introduce a cashless smart parking system, as one of its initiatives towards becoming a smart state. MPK later joined other local councils in Selangor to offer its smart parking services via another smart parking system that was developed by the Selangor state, where the smart parking was then standardized throughout the state. The study compares data on parking before the implementation of smart parking, with parking data during the implementation of smart parking by MPK itself, and later with MPK’s parking data during the implementation of the state-wide smart parking solution. Interviews and surveys are also carried out with the relevant stakeholders involved with MPK’s parking operations to compare the implementation of the 3 phases of parking. Findings/Expected Contributions - This study expects to discover key learnings on the implementation of smart parking in MPK, including how the smart parking business model, which leverages on digital applications and collaboration with other players, differs from the conventional parking business model adopted by other local councils, including those utilizing tokens, cash payments, scratch cards or even manual administration, and were namely operated by the local councils themselves. This study would identify any improvement in revenue, capital expenditure and operating cost. Other findings observed are resource utilization efficiency, namely parking turnover and enforcement effectiveness. Five common elements of a smart city that regularly surface: the citizen, the problems, financial sustainability, inclusivity and technology. Although technology is an important enabler for smart city, there is a need to be careful not to fall into technological determinism. A smart city merely uses technology to address those specific problems. Hence a smart city should be a city that intuitively adapts and responds to the problems of its citizens. A smart city’s chances of success is increased by a an innovative business model. By observing the implementation of smart parking business model in MPK, the study identifies success factors and lessons learned that can potentially be applied to other smart city solutions as well, and subsequently applied to the frugal innovation concept, which literature has shown to be a game changer. A conceptual framework is developed to depict frugal innovation applicability in smart city business model by applying the concept to the five elements of smart city mentioned above. Research limitations- The study is geographically limited to MPK. A further study on other Malaysian local councils could portray a more accurate representation of the success of smart parking in Malaysia. Furthermore, this study is also only done on one smart city service, i.e. smart parking. The application of the frugal innovation concept to smart city business model can be more accurately tested if other city services can be similarly studied. Originality/value - Many other areas and industries have benefited from frugal innovations, but smart cities have not been very visible in this aspect. As the concept is a proven one, it would potentially benefit the smart city agenda