Understanding the smart city concept

Leading cities around the world are using data generated on a range of mobile devices, sensors and smartphones to improve the quality of life of their residents by providing better connected services across healthcare, transportation and education. In addition to boosting interconnectivity, development and industrial intelligence, such smart technology enables cities to face the challenges of rapid urbanisation and become more sustainable. With Dubai looking to rapidly transform into a smart city, SME Advisor asked Dnyanesh Nirwan, Director – Consulting, KPMG, to shed light on the core aspects of a smart city and highlight the benefits it offers to private sector businesses…

As major global cities evolve in terms of population, they are slowly becoming growth engines of the global economy, showcasing financial, political and technological capabilities like never before. In terms of operations, these cities require the seamless working of several core systems such as infrastructure, network and technology to provide basic services to their citizens. Moreover, it is critical that these systems work in synergy to provide optimum performance and efficiency. While in theory, the working of these systems sounds quite straightforward, the reality is that cities continue to face immense challenges in terms of cost efficiency, sustainability, increasing capacities and so on. To meet these challenges, cities are looking to become ‘smarter’, or in other words use ICT to make traditional infrastructures more efficient, sustainable and cost effective.

Addressing this highly-debated topic, earlier this year, KPMG released Dubai – a new paradigm for smart cities, a detailed paper that introduces the concept of the smart city and illustrates how smart cities can help tackle the increasing challenges of urbanisation.

Dnyanesh Nirwan, Director – Consulting, KPMG, explains: “The concept of a smart and sustainable city is based on leveraging the power of data and the use of technology to minimise energy, waste and resource consumption; and to attain a higher quality of life by engaging more effectively and actively with residents.

“When we started out with this project and did some initial research, we found that the smart city concept has been discussed from a technology point of view across a vast range of publications. With this paper, however, we wanted to take it a step further and address the topic holistically – exploring areas such as: the role of the government, the opportunities arising across individual sectors and the critical success factors that make or break this initiative, in light of the evolving global market conditions. In fact, to better explain the context of this paper – and the rising emphasis on the smart city agenda – I’d like to mention three megatrends that we identified during our preliminary research. They are

a) Urbanisation: 54 per cent of the world’s population lives in cities and it’s expected to reach around 66 per cent by 2050, which is a huge burden on the city’s administration and resources.

b) Technology convergence: this is changing the way residents live as well as the way businesses operate.

c) Healthy competition between cities: this is because they are trying to become leaders in terms of quality of life and to create a business and innovation hub.”

Four principles of a smart city

What are some of the key steps that help a city transform into a smart city? Nirwan explains: “In my opinion, there are four fundamental steps that any city needs to undertake in order to become a smart city:

1. Capture data: this can be done via sensors, smartphones and several other electronic devices. The idea is to monitor traffic, weather and other specific areas that can help improve a resident’s life on a day-to-day basis. For example, there would be smart meters installed across houses and offices that will be able to calculate energy consumption in real time. This will provide a strong infrastructure backbone to a smart city.
2. Communicate: this entails communicating the data captured back to the servers and the control centres – within a centralised location. The challenge here is to ensure scalability and privacy.
3. Analyse: once all the data is collected at the centralised location, the next step is to convert it into useful insights. This is done using advanced algorithms and computer processors that have data crunching capacity. For instance, data collected on traffic patterns can help ascertain alternative routes.
4. Act: this is when the final insights are used towards implementing decisions that improve the overall quality of life within the city. Let’s look at an example here: insights on energy consumption can support the government’s decision to install solar panels to increase energy efficiency and lower costs.”

Looking at these steps, it is quite evident that the concept of a smart city is largely data-driven. It is then only natural to wonder how cities will work to integrate privacy and security into their models. Nirwan says, “Privacy is an integral part of the smart city concept because data collection is at its core. So, every city needs to have strong policy frameworks that dictate what data can be collected, stored and used. Moreover, security is another primary area that cities need to consider; sound investments should be made in security controls, security analytics and vulnerability management. In fact, this is something that we have strongly emphasised even within the report.”

Impact on the private sector

When exploring the smart city concept, it is important to look beyond the hype and ascertain some of the core opportunities and advantages that it offers to private sector businesses.

“The private sector plays two roles within this whole concept. Firstly, the private sector is a customer of these services that are being provided by the government. Secondly, the private sector can analyse the four-step process we discussed earlier, identify the gaps in the model and come up with solutions to them. In other words, this is a great business opportunity for the private sector to provide value-added services that support the government,” Nirwan points out.

Will these opportunities benefit certain sectors over others? “Yes, I think sectors such as retail, transportation and education, which are vibrant sectors with lesser capital requirements, will be the first takers or beneficiaries of these opportunities. Whereas, the more traditional sectors such as manufacturing, construction and steel will enjoy the benefits in the second wave.”

Working with the challenges

Finally, what are some of the primary challenges or concerns that cities need to consider during their smart city journey? Speaking to Nirwan, we ascertain the following three areas:

1. Integration: this is very important as there are several examples across the world of cities that have launched the smart city project with a big bang but haven’t been able to sustain the whole journey in an effective manner. I think Dubai’s smart city approach has been quite different in that it has taken a holistic approach.
2. Customer first: the customer needs to be at the forefront of all the services that come out as a result of the smart city project. It is imperative to keep the customer at the heart of every service that is being defined and delivered.
3. Telecom infrastructure and services: this refers to the infrastructure backbone that will enable all users with the smart city to access data and networks at a fast speed and in a cost effective manner.