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Smart City Benefits: How Smart Cities save Governments, Businesses and Citizens Money
Lily Maxwell18. April 201810 min read

How Smart Cities save Governments, Businesses and Citizens Money

Around the world, cities are growing. Already, roughly 180,000 people move into cities every day. By 2015, the UN estimates that there will be 22 metropolitan areas with populations of more than 10 million people. Growing urban populations mean more costs for cities - from increasing energy use to overstrained public services - but they also provide a stimulus for innovation. After all, we can’t infinitely expand outwards and upwards. Instead, we need to find ways to be more "efficiently urban". In other words, we need to be smarter with how we use our resources, time and capital.

Smart city initiatives are crucial here: they transform the problems provoked by rapid urbanization into opportunities and, through this, help everyone save money. Indeed, Intel suggested in March 2018 that smart city technologies could give back 125 hours to citizens every year. If time is money, then that amounts to a significant sum: US$5 trillion annually, to be exact. It is important to note, however, that successful smart city initiatives place improving citizens’ quality of life above money-saving, with the latter often being an indirect outcome.

In this article, we will look at some of the smart city initiatives that are reducing costs for enterprises, governments and citizens, allowing us all to invest more in the things that matter - from social welfare initiatives (if you’re a city council) to your daughter’s birthday party (if you’re not).

Governments and City Councils

City councils, who are often strapped for cash, can benefit massively from investing in smart city technologies - seeing both immediate and long-term cost-savings. Investing in a citizen-centric, long-term smart city strategy can therefore allow city leaders to increase their budgets for other crucial areas of work that are often underfunded - such as healthcare or community projects. This is particularly pertinent in an era of widespread austerity and spending cuts, where being efficient with public resources is essential. While accessing smart city funding can still be difficult, the figures demonstrate that investing in this area seriously pays off in the long run.

Public Services

From transport to healthcare to urban security, smart city initiatives and technologies render public services more efficient. This improves citizens’ quality of life, strengthens a city’s resilience and saves everyone time and money. As there are so many areas where smart city innovation can cut city costs, we will take a brief look at just one: urban mobility.

Urban mobility can be made greener, more time and more cost-efficient through smart city technologies. IoT-enabled city mobility management systems, for instance, make public transport routes both more efficient and better adapted to citizens' needs by gathering data to identify the most frequently used routes. This helps transport operators cut both energy and manpower costs. Integrated Transport Plans (ITPs) also help with this, encouraging intra- and inter-departmental cooperation for a more cohesive public transport system. This leads to more efficient use of public transport by citizens, as they have greater access to information, for example through multi-modal transport apps, which allow them to pick the best possible routes and save energy and money on taking any unnecessary detours.

Smart city IoT solutions, like mobility management systems, offer not only comprehensive monitoring of a city’s roads but also predictive analytics and insights, also providing city councils with the capacity to significantly reduce traffic and congestion. This not only diminishes air pollution levels and improves citizens’ physical and mental health, but also saves public funds. Councils can use these solutions to, for instance, introduce variable toll pricing and congestion charges (as in Sweden), install smart meters and in turn demand-response pricing for parking, and catch parking fraudsters more easily (through, for example, using sensors and cameras to identify the worst spots in the city).

This is only one example: smart technologies can also be leveraged to maximize efficiency and cut costs in the fields of urban security, administrative procedures, city maintenance, education and much more.

Resource Usage

Smart city technology can give a new lease of life to ageing physical infrastructure through IoT-enabled monitoring and management systems. These allow city leaders to maintain all of the infrastructures in their city via one remote, centralized system, using sensors to identify issues such as leaks in water pipes, or the capacity of the city’s bins. This dramatically reduces costs - in this example for maintenance and waste collection services - and can be applied to almost every area of physical urban maintenance. Smart grids allow governments to better prepare for power outages and even use electric vehicles as power sources in times of shortage. This facilitates the switch to renewable energies, which in the near future are very likely to outcompete the price of fossil fuels. Indeed, a smart approach to resource usage saved the city of Barcelona more than 75 million euros through its adoption of IoT-driven smart water, lighting, and more in 2014. These technologies come at a fraction of the cost of a new highway or water facility, because they capitalize on existing infrastructure, using smart ideas to make the most of what we already have.

Moreover, by combining technology with education and economic incentives, smart initiatives can produce behavioural change. For instance, in Malta, planners are currently constructing a system of smart meters in conjunction with IBM, which will cover both energy and water supplies and allow people to monitor their usage. This should theoretically lead to behavioural change as people suddenly become aware of how much energy and water they use, and seek to save costs by being more energy-efficient. Charlotte in South Carolina has demonstrated the results of this kind of system: the city’s partnership with Duke Energy and Verizon, which leveraged data collection, learning opportunities and community education, has saved the council $10 million since 2011 by reducing the city’s power usage by nearly 10 per cent.

Revenue Generation

City councils can go beyond simply cutting costs and create new sources of revenue through smart city initiatives. This can be simple - using IoT solutions to more effectively implement road tolling systems and cut down parking fraud - or more economically inventive - leveraging the city council’s ownership of data and urban infrastructure to find new ways of raising public funds.

Smart city sensors, for instance, generate a vast amount of data on citizens’ needs and behaviour. While there are certain limitations - legal, ethical and political - on what governments can share with businesses, they can monetize the data at least in some capacity, allowing them to generate value for their constituents. Cities such as Milton Keynes, for example, are putting up paywalls to access their data, charging private-sector organizations who want to use it. Sponsorship opportunities can also be maximized to gain extra council funding in exchange for greater local visibility for companies. Advertising revenues can be garnered from smart street kiosks or screens that give citizens information about the local area; moreover, public WiFi can be self-funded through, for example, advertising-sponsored access.

Dr. Alexander Gelsin, Managing Partner, bee smart city GmbH

“City governments can benefit massively from investing in smart city technologies - seeing both immediate and long-term cost savings as well as increased revenues that allow them to increase their budgets in other crucial areas of work - such as social welfare”
, states Dr. Alexander Gelsin, Managing Partner at bee smart city.



Smart cities are more connected cities, as much virtually as physically. More efficient transport costs save businesses a lot of money in terms of travel and logistics, but smart city technologies, such as 5G mobile networks, are also increasingly improving companies’ digital operations and allowing them to work with a more varied international network. Companies can now hold business meetings or connect online with clients anytime, anywhere; this allows businesses to geographically expand their client networks without actually going anywhere, with the aid of technologies that transcend physical distance. In the long-term, this not only means more business, and therefore more money, but also huge cost-savings on expenses such as travel.

Smart cities are also often tech hubs where businesses can more easily network and build their professional contact base, facilitating economic growth. Connections can be made more easily, through, for example, start-up co-working spaces subsidized through private-public partnerships. The StartupVillage in Antwerp is a good example of this. The ‘digital nomad’ trend, rooted in the connected lifestyle that the smart city affords, reflects how smart city technologies are changing the nature of work, allowing freelancers and even businesses to do their work remotely and connect with clients across the world for no cost at all.

Operational costs

Public service innovation in smart cities, through for instance retrofitting buildings to optimize energy usage or making public transport more efficient, can be combined with business-specific use of technologies to cut operational costs. Smart buildings save businesses huge costs - smart windows alone can save up to 26 per cent on cooling and 67 per cent on lighting costs. Business logistics costs can also be reduced in cities that more readily adopt smart city innovations - such as autonomous ground and air-based robots. Startups like Starship (autonomous robots) and Uber (autonomous trucks), who have already started delivering goods across Europe with autonomous vehicles, are offering businesses working in certain sectors a new way to cut the expensive cost of logistics and delivery.

Thomas Müller, Managing Partner, bee smart city GmbH
“The successful implementation of smart city solutions facilitates economic development and prosperity. In today's knowledge-based economy, connectivity and digital solutions are key enablers for efficiency and profitability, new and innovative economic activity, and - ultimately - a sustained competitive edge
, states Thomas Müller, Managing Partner at bee smart city.


Better public services

Better public services - whether in terms of public transport or tax collection - save citizens money. Greener modes of transport, such as app-enabled bike-sharing schemes, are inherently cheaper than owning a car, for example. The costs of public transport vary from city to city, but those with smart public transport management systems, smart grids, and increasing use of renewable energies tend to have lower public transportation fares, again making it a cheaper option than owning the traditional family car. For those who still need access to private vehicle usage, car-sharing apps such as BlablaCar, Zipcar and Journify, are reducing the number of cars on the road while also allowing urbanites to only pay to use cars when they need to.

Digitizing government procedures - such as registering to vote or submitting a tax return - gives citizens direct access to key administrative services which saves them having to pay for a lawyer, or another form of middleman, to help them "figure out the system".

The changing economy

Greater connectivity between people facilitated by new technologies, such as social media, is gradually bringing us back to a more circular economy, where goods and services are inevitably cheaper - or even free! Apps and platforms that allow the exchange of goods and services - such as Olio and Depop in the UK, Wallapop in Barcelona, and Jaspr in Berlin - for instance, are becoming more and more prevalent in cities across the globe. These apps demonstrate how smart city technology can provoke behavioural changes; in many cities in Europe, they have totally changed how people shop, making exchanging goods and services or buying second-hand as normal as buying new. Citizens also stand to benefit from things like increasing automation: when all deliveries are carried out by autonomous robots, neither the business nor the customer will pay, saving everyone money.


True cost-savings will ultimately be produced by smart city strategies where, ironically, saving money is not the central driving force. Smart city visions that are holistic, pluralistic and citizen-centric, focusing on improving services and solving pressing urban issues, will be the most effective and cost-efficient in the long run. They will prevent future issues from emerging by improving both physical services and infrastructure as well as strengthening social cohesion and a city’s sense of community.

Bart Gorynski, Managing Partner, bee smart city GmbH
“Cities should see investment in smart city initiatives, whether technologically-enabled or not, as an investment first and foremost in the people, and the future, of the city. The economic benefits, as demonstrated, are multiple - but they should be the outcome, not the motivation, of a smart city vision"
, Bart Gorynski, Managing Partner at bee smart city concludes.

Citizen-centric smart cities are inherently more cost-efficient

If you would like to find out more about the cost-saving smart city solutions mentioned in this article, and discover a wealth of other best practice smart city initiatives, sign up for the world's largest smart city network and community, and connect with thousands of members and potential partners.



Lily Maxwell

Lily is a freelance writer, translator and content-creator, specialised in smart cities and urbanism. After studying at the University of Cambridge, she moved to Barcelona and is now based between Spain and England, working with several different urban-focused European organisations. She speaks French, Spanish and English, and aims to tackle German and Italian next!