The smart city concept might be ready to turn the corner.
Smart cities seek to become more efficient in the way they manage infrastructure and deliver services to residents. The scope includes everything from reducing the energy consumption of buildings to improving vehicular traffic flow around town. Information technology provides a foundational piece of the smart city and vendors have been talking up smart city technologies and their potential. Channel partners who have existing relationships with local governments could play a role in making smart cities happen.
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Some industry executives and analysts believe the discussions around smart cities will transform into action this year. Nishant Shah, a senior analyst covering public sector technology at market research firm Ovum, said he believes it will start to become a mainstream approach.
According to the United Nations' World Urbanization Prospects report, 67% of the world's population is expected to be urban by 2050.
"The market seems to be at an inflection point between talking about what 'smart city' means and understanding how to implement it," he said.
Shah said evidence of this shift includes the increasing maturity of the demand side, the nascent development of standards and the arrival of investment. The latter, he said, stems from stimulus funding from government, sovereign wealth funds and venture capital.
The momentum appears to be growing, but smart cities technologies continue to face obstacles. Projects, as they grow beyond limited pilots, will necessarily involve multiple city departments, which will add to the complexity of engagements.
Jim Anderson, vice president for Schneider Electric's smart cities initiative in North America, said the thinking around smart cities has begun to mature. Vendors, for example, are doing a better job of providing solutions that speak to the needs and business models of city governments.
"Vendors are starting to put together business cases that resonate with cities," Anderson said.
Shah also noted the improvement of vendor solutions.
"Vendors' smart city offerings are becoming more sophisticated with existing cases proving the potential return on investment that can be achieved," he said.
IBM, with its Smarter Planet effort, Cisco Systems Inc. and Oracle Corp. are among the IT companies engaged in smart cities. Providers of operational technology -- systems that manage physical infrastructure such as electrical grids -- are also part of the picture. Suppliers in that sector include Schneider Electric and Siemens.
While industry develops more targeted smart cities technologies, government managers have become more familiar with the smart city concept, therefore, more willing to explore projects. Some industry executives also view smart city technology adoption as a matter of competitive advantage.
"Everyone is thinking about growth from an economic development standpoint," Anderson said. "If you are not doing something, you are falling behind your competition."
Overall, governments may adopt smart city technology as a way to contend with the challenges of an increasingly urbanized world. The United Nations' World Urbanization Prospects report states that more than half of the global population now lives in cities and that 67% of the world's population is expected to be urban by 2050. The percentage is higher still for the more developed regions of the planet, where "urban dwellers will likely account for 86% of the population," according to the UN report.
Market research suggests that the demand for smart city technology will follow the urbanization trend. Navigant Research predicts that the global smart city technology market will expand from $6.1 billion in 2012 to more than $20 billion in 2020, a compound annual growth rate of 16.2%.
The intelligence of the smart city relies on multiple components. Among those is open data, which government agency employees, businesses or individuals are free to access and analyze. The federal Open Government Directive, which launched in 2009, requires federal agencies to post high-value data sets to the Data.gov website, focused attention on open data.
IT service providers specifically have a massive market opportunity [around smart cities].
senior analyst for public sector technology, Ovum
Local governments have since moved to make their data more accessible. Steve Mills, senior associate with Booz Allen Hamilton's Strategic Innovation Group, said cities are exploring open data initiatives, noting that the company has begun to leverage the data cities are making available. In one example, Booz Allen analyzed motor vehicle theft data in San Francisco and was able to zero in on an area in the city prone to such crimes and a time of day in which they were most likely to occur. Mills said cities can use that type of insight to make resource allocation decisions.
"A key cornerstone of the cities of the future will be the use of these kinds of analytics," he said.
Mills said Booz Allen is advising government customers on how to structure data science groups to provide that analytics capability. There are a number of pressing questions: Who should the data science group report to within the city? Should it function as a centralized unit or should data science resources be embedded within different city agencies? How will the group prioritize the problems to be tackled through data analytics?
A city needs to share as well as analyze data. Data exchange will call for the integration of IT with operational technology applications that automate buildings, manage transportation systems and support other city infrastructure components.
Anderson cited the convergence of IT and operational technology as a key enabler for smart cities. He said networks will become extremely important as the means for sharing information across city departments and among different verticals within a city: transportation, energy, water, security and building management among others.
Network-connected sensors are another facet of smart cities, for example, sensors can monitor the availability of parking spaces, vehicular traffic flow and a city's water supply. Machine-to-machine (M2M) communication platforms harness the sensors, making the data they generate available to citizens or city employees.
AT&T and IBM are targeting the M2M field in an alliance initially focused on solutions for city governments and mid-sized utilities. Rick Qualman, vice president of strategy & business development, Telecom Industry, IBM, said the companies will offer a platform of services, featuring a set of core components including M2M communications. M2M enables the Internet of Things, which aims to connect a growing array of sensors and other physical devices to the Internet.
IBM will involve the channel in this initiative. Qualman said the company plans to recruit ISVs that will build additional services on top of the AT&T and IBM platform.
"It is a pretty broad set of ISVs that we are looking to work with," he said.
Other elements of smart cities include predictive modeling and display technology. Predictive models will help city managers make decisions based on the data gathered from sensor networks and other sources. Displays in the form of dashboards will help managers visualize data once it's collected and analyzed. Digital signage, meanwhile, will provide public communication, including informing motorists of alternate routes.
The interdepartmental nature of smart cities creates a complex environment for companies hoping to provide solutions.
"Anything involving multiple city departments complicates funding/budgeting for projects," Shah said.
The level of difficulty, however, depends on the city and the degree to which a technology has been proven, he noted. The situation becomes still more complicated when multiple cities aggregate into urban clusters. Shah said cities in the Northeast U.S. will, over time, begin to behave like a continuous urban corridor. Securing funding among departments in administratively separate cities will prove a difficult task, Shah said.
Anderson suggested that getting multiple departments to work together on a project will become an issue -- even before funding becomes a consideration.
But the need to get multiple parties on board may provide a role for channel partners.
"The smart city space is interesting because it inherently requires close coordination between a number of players that have not traditionally demonstrated robust cooperation," Shah explained. "IT service providers will find themselves working with banks, mobile operators, real estate developers and all levels of government in order to be successful."
Shah said service companies can provide a combination of project management and technology expertise as they design interconnected systems.
"IT service providers specifically have a massive market opportunity," he said.
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