Cities turn the corner on 'smart city' investment

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Market research firm IDC Government Insights says cities will start putting in place the IT building blocks for smart city systems and applications in 2014.

This year cities around the world start getting smart, according to an analysis by IDC Government Insights, which studied trends in the smart city movement to use data analytics and IT in improving civic life.

Up to now, says IDC, cities have been mostly nibbling at the edges of the smart city concept. In a full realization of the idea, cities would use embedded sensors and mobile and cloud technologies to understand the costs and efficiencies of traffic flows, water management and other infrastructure problems. 

The goal is a more livable city, one that improves services for its citizens and offers competitive advantages for attracting tourists and industry. 

In 2014, IDC predicts, some 15 percent of cities around the world will be in what it calls the “opportunistic phase” of smart city maturity. Technology investments — some needed to support this smart city push, others a consequence of it — will result.

For one thing, IDC says, somewhere between 15 and 20 percent of traditional IT spending will be redirected to the cloud.

That’s not required for cities to go smart, according to Ruthbea Yesner Clarke, IDC’s smart city strategies director, but it saves city governments from having to switch money from capital to operational expenditures.

“I haven’t come across a city government yet that thinks that’s a brilliant way to do business,” she said, noting that “operational budgets can be cut at someone’s whim.” 

Also, she said, “when you are looking at such things as the sensors you need for a smart city and you simply want to manage all of that and not buy, then cloud becomes an enabler in moving to the next innovative thing quickly and easily, and there are obvious business models for that.”

For many cities, cloud might be the only way they can become smart. Cloud is what lets cities big and small leapfrog the state of the art without going through the painful process of getting there, according to Jesse Berst, chairman of the Smart Cities Council.

“If you are a small or medium-sized city in particular, you could never afford to custom develop these kind of sophisticated [smart city] applications,” he said, in a recent interview with GCN. “You could never afford the staff for that, or the hardware or such things as the 24/7 disaster proof server farms you will need.”

There will also be a big increase in spending on the Internet of Things during 2014, IDC predicts, to a total of $265 billion worldwide. The term is a current buzz phrase used to describe the spread of embedded sensors and how they are interconnected so the data they collect can be analyzed. 

In a smart city context, sensors connected to the IP network would be used to measure traffic flow or energy use in buildings.

Over five years, cities are looking at an average yearly IT spending growth rate of 11 percent, which “is pretty high compared to a ‘normal’ IT spend,” IDC’s Clarke said. The rise is being driven by the aspiration of cities to reduce waste and make cost savings, as well as to improve public safety and transportation and better prepare for weather disasters.

“There are value propositions that are almost impossible to ignore, and that means cities have to find ways to pay for all of this,” Clarke said, “That’s where the cloud and mobile apps help to push them over the edge in being able to adopt all of these things.”

Mobile will occupy a central part of the smart city movement, Clarke believes, as cities try to shift more and more to e-government and self service. 

 “That will cause a lot of changes to what’s happening in city IT,” Clarke said. “Because you can’t have the traditional [online] user interface and workflow when you are talking about getting usability out of native mobile apps.”

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