Smart cities may seem like a novel idea for now, but they’re becoming more of a necessity than people might think. For companies looking to capture the potential of the IoT market, it’s essential to understand the forces driving the need for smart cities as well as the trends that will give rise to new market leaders.
Before thinking about specific aspects of smart cities that present new opportunities for businesses (which is covered in our latest ebook), it’s important to know the challenges that are sparking the need for change. Urbanization trends are the predominant factor, but “urbanization” is too broad a topic for companies to innovate around.
Urbanization trends have created a ripple effect of external forces that will affect businesses moving forward. The following four external forces that will create tangible opportunities for smart city innovation in the coming years.
Climate change isn’t a new topic. Climate departure, on the other hand, is a much more daunting realization than the simple fact that Earth is getting warmer. In 2013, 14 ecologists published a paper explaining that climate departure — the point at which the global climate transcends historic data and enters an entirely new state — will hit around 2047.
It’s no coincidence that climate departure is running parallel with urbanization predictions. According to research from UN-HABITAT, cities already account for 70% of global greenhouse gas emissions despite claiming just 2% of land area. And as urbanization grows, this challenge will only continue to increase.
Scaling to meet urban demands simply won’t be possible without innovation in energy efficiency for sectors like transportation, industrial activities, waste management and more. Smart cities will be the key to making infrastructure and operations more efficient.
The Evolution of Employment
For a century, wisdom has dictated that job seekers find employment in large, stable corporations. These corporations have always been the center of activity for the workforce—employees commute to the office, work their 9-to-5, and commute home.
However, mobile and cloud technologies have given rise to a new workforce reality. Some have called it the “gig economy.” The gig economy has defined a workforce that is increasingly based on a project model. More and more people are moving to freelancing, consulting, project-based programming, and other “gigs” as their primary means of employment. But this is only the beginning.
As remote working and the gig economy continue to become the norm, cities will face pressure to provide universal access to fast, reliable broadband connectivity. If cities don’t adapt, they risk losing skilled workers to up-and-coming urban areas that offer greater support for new employment trends.
Consumer Demands Becoming Citizen Demands
This external force is similar to the gig economy challenges, but on a larger scale. Businesses have been dealing with the consumerization of IT since the dawn of smartphones, but now the focus has to turn to the consumerization of cities.
In December 2016, smartphone penetration eclipsed 80% in the United States, solidifying what people already assumed—that constant connectivity is now a fact of life. In the same way that employees started to expect consumer conveniences at their places of work, citizens will increasingly expect consumer innovation to integrate into city life.
It’s already happening, but consumer demands to control the city from their pockets—finding transportation, locating nearby restaurants and events, contacting representatives, etc.—will grow to the point that becoming “smart” will be the only option.
Citizens Becoming Service Providers
Cities don’t just need to become more efficient service providers—they have to empower citizens themselves to be service providers in the smart city.
Just because there are public smart city services available doesn’t mean citizens will automatically opt in. There must be incentives for people to break habits and adopt the smarter ways of living necessary to keep cities efficient. According to the International Electrotechnical Commission, this means “citizens should … no longer be the users of city services, but also the providers and developers of smart city solutions.”
One example of this is how citizens are becoming energy producers through renewable programs. Adding solar panels to a home allows citizens to generate their own energy rather than relying solely on the grid services from the city.
All of these external forces are pushing cities to become smarter—both for greater efficiency and to discover new revenue streams that make up for the eroding services model. The time is ripening for businesses to contribute to smarter systems, especially as the proliferation of IoT yields seemingly endless amounts of data.