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Open data in Smart Cities
Jon Glasco14. August 20238 min read

Open Data and Innovation: Vast Opportunities, Untapped Value

More than a decade ago, governments throughout the world made a radical policy shift from storing data in government silos to opening the data for reuse by entrepreneurs, citizens, and businesses. This was the beginning of a global open data movement — an era when government data is made available under an open license in a usable, machine-readable form with minimal restrictions for reuse. The impetus for this policy change was partly based on the belief that opening government data would enable creative solutions to urban problems and a surge in data-driven innovation in commercial sectors — ultimately yielding a wealth of socioeconomic benefits.

In this article, we explore opportunities for open data and innovation and how cities encounter obstacles in making open data usable by entrepreneurs and other innovators.

The purported value of open data as a source of innovation is not always in the data alone, but rather in the fusion of data with other sparks of creativity such as a novel idea, deep awareness of customer needs, or unique insight about an emerging technology.

At the 2018 World Economic Forum in Davos, Angela Merkel announced that “data will be the raw material of the 21st century”. In the same year, the economic value of open government data in the EU was estimated at 52 billion euros, with expectations to reach 194 billion euros by 2030. Therefore, we might conclude that open data represents a treasure trove of raw material for urban innovation. However, research suggests much of this potential value remains untapped.

Open data is [or should be] an enabler of innovation

In a bee smart city article, Lisa Smith said: “The major benefit of open data is its role as an enabler. It places key information into the hands of people who have the problems – the citizens of smart cities – and those with the ideas and technical knowledge required to solve them.” 

Smart cities encourage entrepreneurs to use open data for innovation in a wide range of commercial and public sector domains:

In the Open Data 500 project, the GovLab at New York University studies how U.S. companies use open government data as a business resource. In a roundtable event on open data, nearly 80 businesses confirmed they “depend on government data to guide business investments, develop new products and services, and foster innovation.”

In Europe’s Smarter Together project, Lyon, Munich, and Vienna developed data platforms to use in reaching climate neutrality and improving quality of life. The open datasets in these cities provide indicators of the usage of electric vehicles, electricity output from photovoltaic arrays (Lyon), residential thermal comfort and air quality (in Munich), and heat output from renewable energy (in Vienna).

The Open Data Impact Map (ODIM) is a publicly available database of organisations in major sectors of the global economy that rely on open government data  to develop new products and conduct research. In the energy and climate sector, for example, experts use open data to guide decisions on where and how to invest in new infrastructure. They also evaluate the impact of climate change and discover new solutions to climate threats and energy demand. More than 40% of organisations in this sector use open data for research and development of new products. Approximately 50% are small enterprises with 50 or fewer employees, while 20% are just 10 years old or younger.

Yet, it is not clear — judging from multiple studies and sources — how (or if) government programmes succeed in making data openly available and enabling entrepreneurs to use the data in innovative pursuits.

Is open government data really open and usable?

Data management experts claim a significant amount of government data that is supposedly open is not actually open, and — when the data is open — it is not always usable. In The Unexploitable Smartness of Open Data, researchers from the Polytechnic University of Milan describe their analysis of more than 1,700 datasets in 115 countries which revealed: “only 7% of government data is fully open, only 50% of datasets are machine-readable, and only 25% have an open license.”  

Open data portals in local governments are considered a sign of smart city progress and a catalyst for local economic development. However, university researchers in Canada discovered that “not all open data portals are full of opportunities; the richness, potential impact, usability and range of data can vary widely,” and a review of many government data portals revealed a “mixed bag of high-value, comprehensive, fragmented, quirky and mundane datasets.” 

Open data investments have failed to deliver on their potential, based on Open Data: Lost Opportunity or unrealized potential — a study that claims many organisations launch open data programmes without a clear vision of how the programmes contribute to innovation. The study’s authors write that “simply releasing data into the open, without a plan for how to create and capture value is likely to produce meagre results.” 

While cities strive to make data openly available, access to the data is often limited due to technical barriers or poor understanding about how to find, use and share the data — which may be fragmented  and spread across different agencies.

Windows of opportunity

In a seminal report on open data, McKinsey identified seven main sources of value from open data:

  • consumer finance
  • consumer products
  • education
  • electricity
  • health care
  • oil and gas
  • transportation

The report also stated that governments are in a unique position to serve “as a provider, catalyst, user, and policy maker to define an agenda for open data that fosters the growth of innovative businesses, products, and services.” Fortunately, the windows of opportunity are still open to unleash the innovative power of McKinsey’s sources of value.

What are the implications for smart cities?

An OECD report on innovation and open data usage says: “When looking across key well-being dimensions from housing to environment, health, and walkability, cities with higher innovation capacity and data use practices outperformed cities with lower capacity” — in terms of city and life satisfaction.

Commenting on open data evolution, experts from the Open Data Policy (ODP) Lab explain how the initial wave of open data “relied on freedom-of-information laws and used legislation to unlock data upon specific requests.”
A second wave (driven mainly by the Web 2.0 era) “sought to make data open by default,” but datasets were opened “without a clear understanding of how they could best be used.”
An emergent third wave — happening now — “adopts a more purpose-driven approach; it seeks not simply to open data for the sake of opening, but to focus on impactful reuse.”
What about a fourth wave of open data evolution — an even larger wave of innovation driven by artificial intelligence and collaborative data sharing? According to Joe Appleton, digital content strategist at bee smart city, knowing how to process ‘oceans of data’ and harvest new solutions “is one of the most important pillars in smart city development [and] modern AI platforms can process information from open and licensed data portals.” 

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Implementing AI technologies in smart cities

Smart cities have opportunities to implement AI technologies that perform data analytics and other complex, time-consuming data management functions. Urban journalist Laura Puttkamer writes that “relieving public servants of tedious work and providing better service to citizens seems to be a clear benefit of AI."
But harvesting open data for smart city innovation is often hindered by problems in collaborative data sharing across technical and organisational boundaries. “Fortunately, a new [data sharing] solution has emerged” in the form of data spaces, says Esther Fuldauer, community manager and technology writer at The Smart City Journal, reporting from the FIWARE Global Summit. She highlights that data spaces “revolutionise data sharing by replacing cumbersome one-to-one connections and enabling flexible collaborations among various partners.”

What is ChatGPT saying about open data in Smart cities? When asked a question on how urban innovators can use open data and data spaces, chatGPT replied: “With the help of data spaces, innovators can access and analyse open data to create smart applications, services, and products and address specific urban requirements. A collaborative data-sharing ecosystem helps smart cities to unlock the full potential of open data.” 

To improve the availability and reusability of open data, EU policymakers believe more government intervention is required. In a new regulation, the European Commission published a list of high-value datasets that public sector entities must make available for reuse by 2024 — including data categories such as earth observation and environment, meteorology, statistics, and mobility. In a press release, the Commission said “the increased availability of high-value data will boost entrepreneurship” and facilitate the creation of new companies and services that deliver societal, economic, and environmental benefits. Margrethe Vestager, executive vice president for Europe Fit for the Digital Age, claims the availability of high-value datasets “will benefit both the economy and society, for example by helping to combat climate change, reducing urban air pollution, and improving transport infrastructure .”
A data management challenge for smart cities is to ensure open data — especially high-value datasets — and data spaces are available and usable by entrepreneurs, businesses, and urban innovators.


Jon Glasco

Jon Glasco is a freelance consultant and writer focused on innovation in smart cities and smart urban mobility. He has experience in executive and consulting roles in the telecommunications, mobile operator, public transport, government and professional service sectors. Jon holds an MBA and Bachelor of Science in Electrical Engineering.