The Stack Archive

Why the ‘Smart Cities’ of tomorrow are crucial in future-proofing economies

Tue 18 Aug 2015

Smart Cities


Global head of market development for IoT at Cisco, Matthew Smith (@mcsmithHKG), looks at the future of the ‘Smart City’ – the opportunities it will offer to an ever-urbanising planet and the hurdles city councils will have to face as they embark on their ‘smart’ journey…

Cities mean many different things to different people. When speaking about them they can generate a very diverse stream of thought. In polling a few people recently, I heard the following descriptions: Noisy, crowded, historic, modern, annoying, compelling, innovative, slums, growth, future.

The last word is significant; the world is growing and urbanising. At the turn of the 20th Century the population stood at only 1.6 billion people, with only 208 million urban residents (13%). According to the latest United Nations population projections, 4.9 billion people are expected to be urban dwellers in 2030, from a population of 8.5 billion people. This will mean that in a 130-year period city populations will have grown by a staggering 2300%.

In 1900, the world consumed about 40 exajoules of energy per year; a per capita consumption of 28 gigajoules per annum. In 2000, the world was consuming 550 exajoules per year; a per capita consumption of 80 gigajoules per annum. After you have looked up exajoule and gigajoule (I had to) the underlying driver for this explosion in energy consumption is industrialisation, a process that will continue in rapidly urbanising cities. Cities use 70% of all energy consumed and a staggering 40% of that figure is used in buildings.

Toverpopulationhe automobile has also created another problem for cities. In 1900 there were about 25,000 cars on the road worldwide – one for every 64,000 people. In 2030, it is projected thar there will be 1.2 billion cars on the road, one for every 7 people. While new cities spring up, the majority of today’s mega cities have been around since 1900 and have simply grown out. The centres of these cities, traditionally the hub for business, have designs and roads over 100 years old. This explosion in vehicles has led to the huge congestion issue we see today. It is said that the average Parisian who works in the centre of the city will spend six years of their life looking for a car parking space. During this time, they can’t be productive and are causing pollution, another huge and growing problem from today’s cities.

What is a ‘Smart City’?

Traditional cities, the cities of the 20th Century, can best be described as ‘mechanical’ and ‘manual’. These cities delivered power, water and heat in a traditional manner and managed the output of finished goods and waste in a similar mechanical and manual process.

The mechanical, manual processes, of the past will be replaced by digital outcomes driven by complex algorithms

As the world started to digitise towards the end of the last century, it enabled growing efficiencies in these manual mechanical services, mainly through the increased speed of data collection to produce metrics to refine the processes of city management.

The Smart City of tomorrow will physically look the same, but have a digital architectural overlay across the traditional, mechanical and physical architecture. This digital overlay will harness the explosion in digital sensing devices to provide real-time actionable intelligence that connects everything to everything else.

The mechanical, manual processes, of the past will be replaced by digital outcomes driven by complex algorithms. These algorithms, whether it is turning lights green to allow an ambulance to proceed at haste to an emergency, or ensuring only areas that are occupied are lighted, heated or cooled, will have the opportunity to drive huge efficiencies and savings. These efficiencies and savings will be essential to manage the rapid urban population growth and the subsequent demands on infrastructure and services.

WiFi meshes and other ‘Smart City’ solutions of the future

In technology we have a saying that ‘if you can imagine it then it is going to happen’. It is the things we can’t imagine that will have the most profound effects on us. These technological breakthroughs can be as significant as going to bed on August 5th 1945 and waking up the next morning to the nuclear era and its impact on the power industry; to something as revolutionary as the iPod was to the consumer music industry. In cities there are many solutions available today to rapidly drive efficiencies and productivity, without having to wait for the breakthroughs, which will surely come.

The overarching initial solution to drive change will be the network itself. To collect information digitally, a connected WiFi mesh over the city will have to be employed. This mesh will be able to collect all the data from the low-powered sensors to start to rapidly digitise, and centralise, the management of city services. With this mesh in place there are countless examples of how the city will be able to become more efficient.


Smart parking solutions will be easy. It will allow a mobile app-based solution to not only indicate where the spaces are, but allow digital payment and even pre-booking. It seems antiquated that if you can book your seat in a cinema, you are still not able to book your parking place near your restaurant. These benefits will also enable better monetisation, with dynamic demand-based pricing becoming quickly available.

These sensing platforms can also drive multiple digital solutions without having to create multiple physical structures. Cameras that manage parking will also enable more efficient traffic enforcement. The same platform can again, employing different analytics, provide heightened safety and security for a city. Dynamic management of lighting and the conversion to LED will also lead to huge power savings.

Efficiencies will also spring up. Having sensors on garbage cans will allow better route planning for the cities fleet of garbage vehicles. With better planning it may also mean fewer vehicles. Driverless cars will also be better enabled by this digital overlay, increasing adoption and the associated efficiencies. It is said that if you deploy 9000 driverless Uber-based taxis in New York City, the average wait time will be 38 seconds and the average fare will be fifty cents a mile. The outcomes, once you start down the path to creating a Smart City, are simply staggering.

City silos and the barriers to becoming ‘smart’

For cities, becoming ‘smart’ is not as easy as it seems. The barriers to entry can be high financially and also politically. Looking at the politics of it first, cities have traditionally, in their mechanical and manual state, been run in silos. These departmental silos were traditionally the most efficient way to run things, and in developing them, it has created barriers to the free flow of information, and also states within states, where power and knowledge are the kingmakers.

To be truly smart these silos will need to be broken down, with the free flow of information collection, utilisation and dissemination between all. The Internet of Everything, the connection of people, process, data and things, to be truly effective, will need this concession. In a conversation with John Scully, ex-CEO of both Apple and PepsiCo, he foresees the Internet of Everything as the potential end of the middle manager. Decisions made in the past through human data collection and analysis and lengthened by politics and proprietary thought, can now be made through smart algorithms with access to infinitely more inputs driving more rational and data driven outcomes. No wonder there is often resistance to change.

The global conversion from traditional to LED street lighting is creating the potential for savings of up to 80% on power bills

Finance is another barrier to entry. Cities, while generally having great credit ratings, are constrained, like businesses, by cash flow constraints. To invest in the large capital outlays required for implementation, where results may not be seen for a year or two, will mean sacrificing existing services. No matter how visionary the mayor of a city, if that person needs to close a school and hospital to deliver something they know will bring exponential benefits in a couple of years, if the election cycle is out of alignment, they may never see the fruit of their endeavours.

However, there is light at the end of the tunnel, and it may not be the proverbial train heading towards this opportunity.

Cities are beginning to see the opportunity, and are starting to coordinate their information by creating Chief Information and Chief Digital Officer appointments. Visionary mayors and City CEOs are pulling their teams together to drive change in very hands-on approach, and it is the smaller cities that are leading. In recent conversations with Mayor Paul Pisasale of the City of Ipswich in Queensland, Australia, there is a desire to go at scale and go quickly. They see the benefits and have the drive to push these changes through.

The economics of smart cities

On the finance side there is also innovation; the global conversion from traditional to LED street lighting is creating the potential for savings of up to 80% on power bills for some cities. If you make one in three of these lamp poles smart at the same time, there is the opportunity to throw the WiFi mesh over the city to start the process of ‘Smart’ management. Infrastructure funding from visionary companies such as Whitehelm Capital is providing the ability for cities to lease out and ‘smarten’ these assets while receiving a well-needed cash injection.

The Smart City should be seen as a fundamental requirement to future-proof economies

The concept of ‘fast-follower’ in technology as a safe bet is also being turned on its head. Becoming a ‘Smart City’ first will allow cities to attract knowledge workers to create applications from this new oil well of data. This in turn will attract the newer and cleaner high-tech manufacturing industries. There is a reason that Tesla set up its manufacturing plant in one of the most expensive states in one of the most expensive countries in the world. Tesla’s plant, fully automated, utilises highly-skilled knowledge workers to maintain it – and these workers will want to live in progressive, efficient, safe cities. The first to move will attract such industries; the fast-followers will be left standing as depreciation cycles of investment mean twenty-year decisions will be made in favour of the innovators.

This concept of the Smart City should be seen as a fundamental requirement to future-proof economies. The cities and economies that lead the way are going to capitalise not just on the efficiencies for their own domains, but be seen as thought-leaders globally, with the ability to replicate and export this thought-leadership in forming the nexus of a new industry based around smart city solutions.

The future is big, it’s bright, it’s here and it’s NOW.


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