While the public sector is the “natural owner” of the majority of applications, a large part of the investment required could come from the private sector
Smart city applications can improve some quality-of-life indicators by 10–30 per cent, says a report from the global management consulting firm, McKinsey. It also finds that even the most cutting-edge smart cities on the planet are only at the beginning of their journey.
Smart Cities: Digital solutions for a more livable future analyses dozens of current applications and builds on a multi-year body of work by the McKinsey Global Institute (MGI) exploring urbanisation and technology. It assessed how smart city applications could perform in three sample cities with different legacy infrastructure systems and baseline starting points.
It found that these tools could reduce fatalities by 8-10 per cent, accelerate emergency response times by 20-35 per cent, reduce the average commute by 15-20 per cent, lower the disease burden by 8-15 per cent, and cut greenhouse gas emissions by 10-15 per cent.
In a snapshot of deployment in 50 cities around the world, McKinsey says that wealthier urban areas are generally transforming faster, although many have low public awareness and usage of the applications they have implemented.
“Asian megacities, with their young populations of digital natives and big urban problems to solve, are achieving exceptionally high adoption,” says the report. “Measured against what is possible today, even the global leaders have more work to do in building out the technology base, rolling out the full range of possible applications, and boosting adoption and user satisfaction. Many cities have not yet implemented some of the applications that could have the biggest potential impact. Since technology never stands still, the bar will only get higher.”
The reports also confirms the importance of public-private partnerships. It says that the public sector would be the natural owner of 70 per cent of the applications examined but 60 per cent of the initial investment required to implement the full range of applications could come from private actors. It sets out that half of the initial investment made by the public sector could generate a positive return, whether in direct savings or opportunities to produce revenue.
The report concludes that becoming a smart city is not a goal “but a means to an end”. “The entire point is to respond more effectively and dynamically to the needs and desires of residents. Technology is simply a tool to optimise the infrastructure, resources, and spaces they share,” says McKinsey. “Few cities want to lag behind, but it is critical not to get caught up in technology for its own sake. Smart cities need to focus on improving outcomes for residents and enlisting their active participation in shaping the places they call home.
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