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Published: 22 November 2023
Contributors: Alice Gomstyn, Alexandra Jonker

What is a smart city?

A smart city is an urban area where technology and data collection help improve quality of life as well as the sustainability and efficiency of city operations. Smart city technologies used by local governments include information and communication technologies (ICT) and the Internet of Things (IoT).

Areas of city operations where ICT, IoT and other smart technologies increasingly play an important role include transportation, energy and infrastructure. As a city updates its systems and structures to incorporate these technologies, it becomes smarter. However, exactly which cities should be considered smart cities or should claim the mantle of the “smartest” city is a matter of debate. 

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Understanding smart cities

Just as the body’s nervous system governs how humans respond to the world around them, evolving technologies are empowering cities to respond to changes in their local urban environments.

Technologies to collect data—including real-time data—are central to smart city initiatives and the benefits they promise. Data-driven insights help local governments improve urban planning and the deployment of city services, ranging from waste management to public transportation, leading to better quality of life for residents.

More efficient city services can also help cut carbon emissions, contributing to global efforts to address climate change while also improving local air quality. In addition, smart city solutions can be an engine for economic growth, as better infrastructure and technological innovation can encourage job creation and business opportunities.

The U.S. Department of Transportation has identified three hallmarks of smart cities and communities:1


Networks of sensors gather and integrate data that can be used for various applications and city services.


Connectivity enables municipal officials to interact directly with the community as well as monitor and manage city infrastructure.

Open data

The local government is committed to an open data philosophy and routinely shares operations and planning data with the public.

The evolution of smart cities

Tech and data-driven efforts to improve urban environments date back to at least the 1960s, when government officials in Los Angeles, California gathered data and used computer programs to identify impoverished neighborhoods in need of intervention.2

The term “smart city” began appearing in academic literature in the 1990s and its definition has evolved and expanded over the years. A 2018 report from the McKinsey Global Institute noted that while city officials once leveraged smart city technologies “behind the scenes,” smart city solutions now increasingly include engagement from city residents. These stakeholders can collect and share important data through digital platforms and interactive mobile apps, playing a key role in the smart city ecosystem.3

Today, smart city solutions are often touted as helping urban areas address challenges related to population growth. The United Nations predicts that by 2050, two-thirds of the world’s population will live in cities.

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Smart city technologies

New technologies that improve efficiency and sustainability in the private sector are also powering smart city networks:

Information and communication technology (ICT)

Information and communication technology includes an array of data-related technologies. The U.S. Department of Commerce’s National Institute of Standards and Technology defines ICT as encompassing the capture, storage, retrieval, processing, display, representation, presentation, organization, management, security, transfer and interchange of data and information.

Internet of Things (IoT)

The Internet of Things (IoT) refers to a network of physical devices, vehicles, appliances and other physical objects that are embedded with sensors, software and network connectivity that allows them to collect and share data. These connected devices—also known as “smart objects”—can range from simple “smart home” and “smart building” devices like smart thermostats, to wearables like smartwatches, to technology embedded in transportation systems. Wifi, or wireless connectivity, supports IoT functionality, with public wifi often considered key to IoT-powered city services.


Automation is the use of technology to perform tasks with minimal human input. In smart city projects, automation helps cities become more responsive to the real-time data that’s transmitted by connected devices in the Internet of Things. Through automation, for instance, streetlights can be turned on and off depending on feedback from sensors that detect light and motion. Such systems automatically switch off streetlights when they’re not needed, promoting energy efficiency and the sustainability of city operations.

Artificial intelligence (AI)

Artificial intelligence combines computer science and robust data sets to enable problem-solving. Smart city projects use AI and machine learning-based solutions to manage infrastructure efficiently and sustainably. For example, AI algorithms can optimize waste collection routes, reducing carbon emissions by city garbage trucks. AI can also help law enforcement improve public safety by analyzing data from security cameras and connected devices to detect crime.

Smart transportation

Smart transportation is a cornerstone of smart city planning. The Internet of Things, artificial intelligence and other technologies like geolocation allow local governments and private sector partners to collect real-time data. This data helps to improve public transportation as well as ease traffic congestion, reducing carbon emissions and improving quality of life for city residents and commuters alike.

Smart city technologies used in smart transportation systems can help officials predict which city vehicles are at risk of a breakdown and proactively order repairs. These technologies power smart parking systems that assess parking availability and keep motorists informed. They facilitate an efficient, AI-powered approach to traffic management, using real-time traffic data to determine the timing of signal changes at intersections. Smart transportation systems also support the use of electric vehicles and autonomous vehicles, further contributing to reductions in carbon emissions and improving traffic flows.

Smart energy

Smart city technology like AI can help energy providers manage smart grids, which are electricity networks equipped with sensors and software. Advanced software and analytics tools can analyze data provided through connected devices to identify patterns in energy consumption and forecast future energy use, helping providers proactively avoid outages and meet customer needs. Smart energy can also support the integration of renewable energy sources and energy-efficient technologies, helping to mitigate climate change. 

Smart energy technology can also reduce carbon dioxide emissions, waste and resources consumed in oil and gas operations. Examples include:

  • Applying predictive asset optimization with AI and IoT to extend the lifespan of assets and reduce the resources required to maintain and monitor them.
  • Optimizing upstream and midstream operations with a focus on systemic asset performance. This approach helps to better time migration to digital systems and investigate underperforming, overconsuming equipment.
  • Using technologies for environmental monitoring to reduce energy consumption, improve health, safety and environment (HSE) concerns.


Smart infrastructure

Smart infrastructure encompasses both smart transportation and smart energy. It also includes smart approaches to utilities such as water as well as the maintenance of structures and equipment that support transportation, such as cables and decks. As with other smart technologies, data collected with sensors and connected devices helps decision makers spot and proactively address potential problems. In this case, the data helps to identify and tackle problems concerning infrastructure assets before they escalate while also improving efficiency and quality of life for local residents.

Smart city projects around the world

What urban area qualifies as a smart city and which cities are the “smartest” can vary depending on what source you consult. Cities in Europe, the Americas and Asia regularly jockey for position on various rankings. What is clear, however, is that local governments around the world are embracing a variety of smart city solutions. It includes famous centers of global commerce like New York City and Singapore, to regional powerhouses like Chattanooga, Tennessee and Zhejiang Province, China.

In Zhejiang, as with many other places in China, charging stations for electric vehicles are becoming ubiquitous. The province reportedly has more than one million charging stations. In Chattanooga, smart city projects include a collaboration with various organizations to monitor air quality through sensor networks. The project supports city air quality initiatives and provides valuable information to healthcare professionals.

But smart city innovations don’t take place in a vacuum. Urban planners, nonprofit organizations and corporations regularly come together to present ideas and solutions at global events. A key event for such exchanges is the Barcelona-based Smart City Expo World Congress, which has a stated goal to “collectivize urban innovation across the globe.”

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1Putting People First: Smart Cities and Communities” (link resides outside ibm.com). U.S. Department of Transportation, 9 June 2021.

2Uncovering the Early History of ‘Big Data’ and the ‘Smart City’ in Los Angeles” (link resides outside ibm.com). Valliantos, Mark. Boom California, 16 June 2005.

3Smart cities: Digital solutions for a more livable future” (link resides outside ibm.com). McKinsey Global Institute, 5 June 2018.