Smart cities growth expected to be near $20 billion by 2020


A new report out from Navigant  Research  shows that spend on smart city initiatives is expected to be approximately $20 billion by 2020. That uptick is reflective of the increasing demands on cities to improve service delivery and respond to growing populations. Most of the world’s citizens now live in cities, marking a crucial time for municipal officials.

Navigant put together a leaderboard of smart city solution providers, and so far, IBM is leading that pack. IBM was one of the first companies to this space, and CivSource reported last week on Microsoft’s latest volley. Other providers include most of Big IT – Cisco, Siemens, Oracle, GE and the like.


“There is a necessity to move to a smarter cities approach, because the old models are broken,” Rich Michos, Smarter Cities, IBM tells CivSource. “We think it’s an exciting time for cities because leaders are no longer afraid of technology, they expect technology to help them solve problems including problems that may not have been possible to solve before.”

The report defines a smart city as a city that successfully incorporates technology into most aspects of its infrastructure and citizen well-being. Navigant Research estimates that the global market will grow from $6.1 billion annually in 2012 to more than $20 billion in 2020, a compound annual growth rate (CAGR) of 16.2%. This represents a cumulative investment of over $117 billion in smart city technologies between 2012 and 2020.

Michos notes that this growth can be explained by better use of municipal data. “The solution begins and ends with analytics – cities have a lot of valuable information that is spread out and being able to bring that together can save money and help cities retool their services to reflect how residents actually live.”

Leaderboard stats in the report take on typical markers including market share, reach, initiatives, and overall go to market strategy. A number of cities are making their support for technology and smart city initiatives well-known through new offices like Philadelphia’s office of New Urban Mechanics, a follow on from similar work in Boston.

“There is a lot of excitement around cities because leaders can actually get things done, and people interested in making change can actually generate an impact, which attracts talent and new ideas,” Michos says.