The concept of extended organization is an IT (Information Technology) impact on organization, where organizations become leaner and more adaptive in facing changes. This concept was used by the Provincial Government of the Special Capital Region of Jakarta (DKI Jakarta) on implementing Jakarta Smart City (JSC) to improve public services by collaborating with other parties. As a government institution, DKI Jakarta has limitations and inflexibility in terms of budget, resources, compliance with regulations in managing urban resources, so this collaboration is a way to create new capabilities and values to support new Jakarta, that is efficient and innovative. The research methodology used is qualitative approach by collecting data through documentation studies and interviews. The result of this study are the implementation of extended organization concept in JSC and what challenges do DKI Jakarta faces on implementing it. The implementation of extended organization in JSC presented in a map of capabilities and values provided by each parties. There are 5 (five) challenges faced by JSC, namely the amount of information that must be managed, benefit management, platform interoperability and change management, knowledge management, and many parties who want to work together with JSC. This research is expected to be a lesson learn for other organization especially government institution who want to apply the concept of extended organization.