London, 11 June 2012 – The huge and diverse market for ICT-based smart city initiatives is driving a flurry of “smart” and “intelligent” vendor solutions, says Ovum. Yet this market’s potential is being inhibited by immature standards, rigid and siloed infrastructures, limited budgets, and fragmented and politicized decision-making, warns the global analyst firm.

As part of its ongoing research focus* on the market potential surrounding smart cities, Ovum finds that while modernization is crucial for cities to deal with pressing issues such as population growth, climate change, and resource limitations, urban solutions may not emerge quickly enough to keep pace. Vendors are rushing to offer sophisticated solutions to address everything from traffic patterns to crime, public health, and weather. However, Ovum believes that, to be effective, these solutions will have to be informed by comprehensive, accurate, and timely data, in amounts so massive that ICT will be essential.
“ICT cannot solve these problems by itself – plenty of concrete, asphalt, pipe, and wire will also be required – but effective solutions must have ICT at their core,” explains Warren Wilson, lead energy & sustainability IT analyst at Ovum. “These offerings must be capable of collecting, managing, analysing, and responding to vast amounts of data, if they are to be comprehensive and effective in addressing cities' mounting challenges.”
Ovum’s research classifies digital city solutions in two main categories. The first is large-scale, formal, “top-down” projects, driven primarily by public authorities and developers, and attracting the biggest names in IT, such as Cisco and IBM. The second type, which complements the first, consists of projects that are smaller, more spontaneous, “bottom-up” solutions, aimed at making cities more efficient and livable, for example by improving social interaction, fostering collective action, and providing innovative urban services. However, while investment in both types of solutions is growing, numerous impediments stand in the way of the market achieving its potential, and raise doubts about whether the pace of innovation will be rapid enough to effectively address the myriad pressures that cities face.
“Multiple initiatives will be required to address the major inhibitors; some are under way, but much more effort is needed. Some of the most important requirements involve opening up more data, breaking down silos, broadening stakeholder participation, and avoiding duplicative efforts,” says Wilson.
Ovum believes that solution providers and their urban customers must address these issues together. Cities must also apply intelligence of their own throughout the process of assessing needs, developing requests for proposals, choosing vendors, overseeing implementation, and managing their solutions over the long term. They must also recognize the value of exploiting both top-down and bottom-up solutions.
“Yet, despite some obvious obstacles, things are moving in the right direction,” concludes Wilson. “Large vendors are adhering to standards and opening up data; application showcases and competitions are sparking creative new solutions; and certain cities are becoming beacons of innovation.”
Ovum is hosting Smart Cities Europe 2012 on 19th – 20th June, in association with Imperial College London. The two-day event, in the Lancaster Hotel, London, will explore how to digitally link utilities and services within a city, enabling new technical and business opportunities. Smart Cities Europe 2012 will also draw on the expertise of Ovum analysts and invited speakers, delivering the world’s leading cross-sector forum for the exchange of knowledge and insight related to digital cities.
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*recent research includes:
Opportunity and Innovation in Smart Cities, (May 2012)
Digital Urban Renewal (April 2011)
Is There a Smart City Market? (April 2012)
Is Your City Smart Enough? (March 2011)
 
Claire Booty
Tel: +44 (0) 20 7017 7916
Email: claire.booty@ovum.com
 
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Ovum provides clients with independent and objective analysis that enables them to make better business and technology decisions. Our research draws upon over 400,000 interviews a year with business and technology, telecoms and sourcing decision-makers, giving Ovum and our clients unparalleled insight not only into business requirements but also the technology that organisations must support. Ovum is an Informa business.