Not only companies, but also cities and public administrations are increasingly thinking about complementary and new digital business—and corresponding service models due to growing digital networking, smarter services, omnipresent access technologies, and dynamic customer requirements. Thus, the development and implementation of smart city technologies is a unique opportunity for cities of various sizes to make digital innovation potentials more usable for residents, visitors, and local businesses. This paper describes the application of the Digital Innovation and Transformation Process (DITP) in an urban environment, as it collects, analyzes, and evaluates digitalization goals, customer values, and actions of a small city, which focuses on digitalization in northern Germany and combines it with related research work within the area of digital services for smart cities. The investigation aims to analyze and focus the municipal governments’ intention for the digitization of urban space by using the first phase of the DITP. Possible business concepts and best practices were gathered and experiences from the use are used to improve DITP approach.