'Buy from startups' strategy pays off for City of Antwerp

Abstract

A new administrative coalition has forced Digipolis Antwerp to rethink its procurement policy. In 2015 the City of Antwerp reorganised its ICT architecture from silo-based systems dependent on large suppliers to a modular approach, for which the re-usable components are provided by a network of startup companies.

Most of the components are based on Open Source Software, and many are published as open source, but that is a strong preference rather than a hard requirement from our side. We no longer have a strict set of purchase conditions, so participants are free to propose any price model. Our main requirement is that we do not want to pay any licence costs.

Policy context

Over the last decade, the New Flemish Alliance (NV-A) has achieved electoral successes at all levels and become the largest party in Belgium. As a regionalist and conservative party, the NV-A is part of the Flemish Movement striving for Flemish autonomy. Economically, the NV-A advocates liberalism, smaller government, stronger ties with the European Union, and tax reductions. After winning the Belgian local elections of 2012, party leader Bart De Wever became Mayor of Antwerp.

To Peter Crombecq, CIO of the City of Antwerp and CEO of Digipolis, this meant a shift of emphasis from social to economic issues. The new coalition made us rethink our procurement policy, he says. Traditional tenders are only accessible to large companies that have the resources to write extensive bids, resulting in an expensive ICT infrastructure that lacks innovation. Innovative power is typically located in small companies, which we were unable to reach through our traditional tendering process.

Description of target users and groups

So we set ourselves a challenge to become ten times less expensive, ten times faster, and ten times more innovative, Crombecq continues. Obviously, these are radical targets — that's why we call them moonshots — but they work very well in mobilising people. For four years now, we have been doing three or four of these moonshots each year, and our 'buy from startups' strategy is one of them.

Technology is developing incredibly fast, something that is reflected in the expectations of our citizens. Rigid systems and processes organised in the silos of traditional suppliers stop us becoming fast and agile. So rather than forcing another round of austerity on ourselves, we decided to change our ways fundamentally by adopting the Quadruple Helix Innovation Model.

Description of the way to implement the initiative

The idea to buy from startups was born in January 2015, Crombecq says, but after five months trying to develop a plan, we were about to give up. We had never worked with startups before. So were could we find these? And how could we bind them to us in a network? We somehow had to make ourselves attractive to these parties.

So we organised two meetings in which we invited some startup gurus to help us. Omar Mohout, a technology entrepreneur and advisor who teaches at the Antwerp Management School, told us we were actually almost there. We just had to create a web page, a Meetup account, and a Twitter account. To bootstrap us, he would retweet our Requests For Proposal (RFPs) to his followers.

Our initial target for the end of 2015 was to have reached 100 startups. In fact, we managed to reach 300. And now there are 700 of them in our network, from all over Europe. Each time we publish an RFP, they are notified automatically via a MailChimp mailing list.

Discussions take place in the DigAnt Café Meetup group, now boasting more than 2,000 members from startup companies, public agencies, universities, the creative sector and civil society.

Technology solution

Antwerp City Platform as a Service

Previously, large ICT project were awarded to one of the big firms and took two years or more to implement, Crombecq explains. Now we divide large projects into several smaller projects, and each can be supplied by a different company in parallel. The result is a large collection of micro-services serving as building blocks for any software application needed.

Naturally, this required the City of Antwerp to completely overturn the way its ICT was organised. The Antwerp City Platform as a Service (ACPaaS) now consists of more than 40 components that can be used to build new applications. Whenever new functionality is required, an existing component is amended or the market is asked to develop a new component. The basic idea is to have a large number of re-usable components, each of which excels at performing a single task. This minimalistic and modular approach resonates strongly with the Unix philosophy. What we are purchasing is often not yet available as a product, making this a form of pre-commercial procurement. Sometimes what we buy is essentially a proof of concept.

The current set of components has been developed by many companies. Our role is to orchestrate these components and the startups. Within their own domains all these startups have proved to be very innovative, allowing us to work on cutting-edge smart city applications based on the Internet of Things (IoT), Artificial Intelligence (AI), and blockchain. Since all the components have to be based on open, well-documented REST/JSON APIs, everything can be combined with everything.

Main results, benefits and impacts

Procurement process

In addition to setting up this component-based architecture, Digipolis also had to completely overhaul its procurement process. Requests for new functionalities are published on the Digipolis portal, and interested parties are invited to pitch. After a second round of pitches, in which the actual offers and quotations are made, the contract is awarded. Since each step normally takes two weeks, the full procurement cycle takes only six weeks to complete, though it can be extended if necessary. And since the budget per contract is about EUR 100,000, risks in both time and money are low.

Most of the components are based on Open Source Software, and many are published as open source, Crombecq says, but that is a strong preference rather than a hard requirement from our side. We no longer have a strict set of purchase conditions, so participants are free to propose any price model. Our main requirement is that we do not want to pay any licence costs, but even that is not a fixed rule — for example when a supplier has specific intellectual property that we need.

Return on investment description

We have been working this way exclusively since 2015, Crombecq continues. Since then we have invested about EUR 4,000,000 on 55 components, so that makes about EUR 70,000 per component on average. At the same time we have been able to deploy these components more than 300 times in an extended range of software applications.

One of our goals is to get rid of the huge licence costs involved with solutions from traditional suppliers based on SAP, Oracle and the like. Sometimes they do participate, but most of the times they don't even make the second round because of their high prices and their inability to work in an agile way [i.e. delivering a functioning software update every two weeks].

Processing all the pitches can be time-consuming for the staff of the City of Antwerp. Last month, for example, they saw 22 participants — an exceptionally high number — invited to present solutions based on blockchain. Nevertheless, Crombecq says the investment in time is highly rewarding. It is great to have a dozen startups on the floor sharing their knowledge and enthusiasm — it enriches and infects our own people.

Going the other way, we organise bootcamps and hackathons to break open traditional systems and make their functionality available to new applications. We have two coaches helping startups in shaping their pitches. All in all, the interaction brings us and the startup community closer together, enabling us to get what we need.

Track record of sharing

Many of the ACPaaS components are available under an MIT open-source licence from the Digipolis Antwerp GitHub account.

Although the Cities of Antwerp and Ghent share the same Digipolis ICT organisation, they currently do not cooperate on the development of software (components) because of their different political priorities. For example, where Antwerp refers to its Smart City initiative as the City of Things, Ghent's socialist administration calls its municipal innovation initiative the City of People.

Open City Platform

The Flemish ICT Organisation (V-ICT-OR) and Digipolis Antwerp recently started the Open City Application Programming Interface (OCAPI) project to find out whether the ACPaaS and Flemish Virtual Municipality (VlaVirGem) software can function as a starting point to create an Open City Platform that can be used by all Flemish municipalities and other public agencies. The project is financed by the Flemish government.

Lessons learnt

According to Crombecq, current procurement legislation is not an impediment at all to the Antwerp initiative, and the risks are low. Over the last three years we have done hundreds of assignments like this, of which more than 90 percent worked out well. Large project failures will never happen again, simply because we no longer have projects of that type.

In the traditional setting, documents describing the requirements often ran to sixty or more pages. Nowadays we no longer come up with our own specification broken down into a list of requirements. Instead, we put the emphasis on communicating our problem — in a ten-page document at the most — and leave it to the creativity of the startups to come up with their own approaches. To that end, we did have to retrain our business analysts to become architects.

For the future we aim to broaden our startup network. So for each project we want at least one new company in the top three pitchers. That way we will diversify the suppliers we work with.

Categorisation

Type of document
Open source case study
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