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Wanted: Cities with Smarts


Smart cities increase economic activity and livability for citizens and businesses, according to a recent study by ESI ThoughtLab. Here’s what businesses need to know when selecting a metropolis to call home.

Cities became a major topic of discussion this year as U.S. municipalities from Boston to Los Angeles waited for Amazon to select the location for its second headquarters. But Amazon wasn’t the only enterprise looking for a new home. More than one-third of respondents in our recent study on workspaces said they’d consider relocating to enhance their workplace in the next five years, and an even greater percentage — 43% — said they’d seek an area with a compelling smart city vision.

No longer is it enough to just be a thriving metropolis. Cities are now expected to also serve as digital innovation hubs, providing access to talent and ideas. To do that, they need to be “smart,” and not just “smart for smart’s sake” — they need to embody characteristics that ultimately offer tangible benefits to the businesses they host, both at a foundational and technological level. For many cities, this requires a fresh way of thinking that draws on the latest technology and capitalizes on data analytics, both to attract businesses and to foster growth and prosperity.

ESI ThoughtLab recently teamed with a coalition of organizations with urban and technology expertise to research the impact of smart city solutions on urban performance. As part of the analysis, the study calculated a “smart city maturity score” for 136 worldwide cities, and stratified the cities into three categories: beginner, transitioning and leader.

The study also defines the characteristics of successful smart cities and how they create business value; outlines the most effective path to becoming a smart city; and calculates the benefits of smart city investments and their impact on economic competitiveness, business growth and living standards.

Top insights from the study included:

  • Expect more smart cities in the near future. Most cities in the study expect to increase their smart city maturity over the next three years. The biggest jump will be from cities rated as “beginners” in the study, whose average maturity score will increase from 1.2 to 1.8, pushing many of them into the transitioning stage. Since the resulting benefits will make them more attractive to residents, workers and businesses, this should lead to additional economic growth as part of the virtuous cycle.

  • Ten pillars define smart city success. Every city faces a different set of issues, but all need to develop a smart-city vision that encompasses five foundational and five tech-enabled pillars (see Figure 1). Cities designated as “leaders” in the study gave higher priorities to every smart city pillar than less mature cities did, except in the area of infrastructure. Beginner cities placed a lower priority on foundational pillars such as talent, payments and funding, which may undermine their future success.

Figure 1

  • Smarter cities equate to better business. ESI ThoughtLab’s analysis found that as cities become smarter, they’re better able to reap the benefits of investments in new technologies and systems. With sound governance, adequate funding and talented workers, smarter cities can capitalize on investments in innovation to generate new revenue streams and cost efficiencies. At the same time, they increase economic activity and livability for citizens and businesses.

    Currently, cities see livability improvements as the main initial benefits from smart city investments. But in three years, they expect economic and financial benefits to grow materially as the virtuous cycle gains momentum.

  • A city’s progress can be judged by its progress on a roadmap. While the path to becoming a smart city varies by city, there are eight steps that should be part of every roadmap (see Figure 2). The key challenge for urban leaders is to incorporate the concerns of their stakeholders and the use of fast-changing digital technologies into a properly staged roadmap that will lead to the best results.

Figure 2

  • Stakeholders agree on two top issues. Government leaders, citizens and businesses have different perspectives on the problems facing cities, but climate change and mobility/congestion are among the top priorities for most stakeholders. In general, expectations are high for future development of mobility and environmental applications, and both citizens and businesses are willing to pay more to for those investments.

  • IT infrastructure matters. Cities identified as smart city leaders are far ahead of others in the use of emerging sources of data, such as IoT, real-time, AI, predictive and geospatial data. Over the next three years, however, cities at all maturity levels plan to increase their use of a wider variety of data. This will make it crucial to lay the IT groundwork, since most smart technologies run on sensors and other connected assets that are linked together through wireless and broadband networks.

  • Tech adoption will rise. The most attractive cities will be those unafraid to adopt the latest technologies. Cloud-based technology, mobile apps, citywide data platforms, IoT/sensors, biometrics recognition and geospatial technology are now used by more than half of the 136 cities in the survey. By 2021, the use of blockchain, drones, augmented and virtual reality (AR/VR), AI and connected vehicles will skyrocket.

By drawing on the latest technology and capitalizing on data analytics, cities will be better equipped to solve urban problems, provide high-quality services, and drive sustainable growth. That’s the kind of city that businesses will increasingly seek to settle into as they plan their own digital future.

To read the executive summary, e-book and full report, or to access the benchmarking or city comparison tool, please visit ESI ThoughtLab’s Smarter Cities 2025 website. For more information, read our blog, or visit us at Cognizant Center for the Future of Work.

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