Successful smart cities require partnerships between governments, the private sector, and communities to help improve urban living and make cities easier to do business in. What are the advantages and challenges of smart city technology according to citizens in Australia? And how can businesses leverage them to their advantage? Read more to find out.

Smart cities

Smart cities typically revolve around the integration of digital technology, data analytics, and intelligent infrastructure to address the challenges and demands of urban living. Some cities have been embracing smart city initiatives with the rollout of 5G networks, touchscreen car parks and public recharging stations. Internet of Things (IoT) software plays a crucial role in enabling various aspects of smart cities as it allows everyday devices and sensors to connect to the internet whilst collecting and analysing data.  

Businesses can play a significant role in contributing to the development of a smart city by leveraging their resources, expertise, and innovative solutions. But how can small to medium-sized enterprises (SMEs) do their part in the growth of smart cities in Australia?

Capterra's latest study surveyed 1,022 Australian residents who live in cities. We look at which smart services are available and the advantages and possible challenges of living in a smart city, according to survey respondents. The analysis and insights in this article are crafted to encourage SMEs to consider contributing to smart city development if they aren’t already. The full survey methodology is at the end of the article.

What are smart cities?

Smart cities utilise information and communication technologies (ICT) to operate more efficiently, provide better quality government services, and safeguard citizen welfare. Through the use of smart city technology and data analysis, smart cities aim to promote sustainable economic growth and improve the quality of life for residents.

Over half of Aussies are familiar with the concept of smart cities

In 2016, the Australian government released a 'Smart Cities Plan' with a grants program worth $50 million. It was dedicated to better infrastructure planning using smart technology and real-time data. In addition, Australia recently bagged the IDC Smart City Transportation Infrastructure award. But do Australian residents know what a smart city means?  

The awareness of smart cities is reflected in Capterra's research as a combined total of more than half of respondents (54%) have some knowledge about the initiative —31% say they ‘knew exactly what is meant by smart cities’, and 23% said they ‘knew the concept but not the name’.

Bar chart showing whether Australians know what smart cities are

As the government’s 'Smart Cities Plan' is open to cities of all sizes, how have they adopted such smart city initiatives? Sydney —for example— has focused on city development with projects like the 'Smart Green Apartments Program' to encourage energy-efficient and sustainable business-building practices. Melbourne is investing money to support entrepreneurial startups and coworking spaces. The city is also home to a number of startup sectors such as biotech, fintech, AI, and advanced manufacturing.

Smart payments and mobility are the most available smart city services

Different areas in Australia may prioritise specific smart city services based on their own local urban challenges and priorities. The following are the smart services currently most available overall in the country, according to respondents: 

Smart payment and finances

Smart payments and financial services —such as digital or contactless payments— were the most selected smart services currently available where survey-takers live (72%). Additionally, 63% of respondents aware of these smart payment services in their area have already used or are currently using them. 

When respondents were asked if they use any type of smartphone app related to smart city services, ‘payment and finance apps’ was the most selected answer (56%). Financial mobile apps can play a vital role in aiding smart services as seen with digital wallets (or mobile wallets) that can make online purchase transactions more convenient and efficient for customers.

Smart mobility

Smart city mobility services are designed to improve transport options and promote sustainable urban mobility. Smart mobility services —such as recharging stations for electric cars, zero emissions public transport, and sharing bicycles and motorbikes— were the second most selected smart service available where survey takers currently live (71%). Additionally, 42% of those aware of smart mobility services are using or have used them in the past.

When it comes to small businesses, ticketing software can help companies implement mobility solutions for employees. Businesses can utilise such platforms to offer employee benefits, such as subsidies or discounts on public transport tickets or passes, and incentivise workers to use more sustainable commuting options. 

Smart city security 

Smart city security is crucial in enhancing citizen safety by using security systems like surveillance cameras that can help deter criminal activity. Smart city security —such as video monitoring of streets and within public transport systems— was among the most available smart services where respondents live (68%). 

Additionally, 36% of survey takers who are aware of such services currently use or have used these services in their area. There are various smart security technologies businesses can adopt alongside their security practices like cybersecurity tools that can safeguard assets, operations, and sensitive data.

5G, AI, and IoT are the technologies driving smart cities

Smart cities rely on a diverse range of technologies and systems that enable smart services and digital tools to be utilised by residents and businesses. We asked survey takers which technologies they already have in their city to aid smart city development.

Chart showing which technologies related to smart cities already exist in Australia

We will now discuss the top three most commonly available smart city technologies linked to smart city development in more detail:

1. 5G (56%): This technology can link millions of devices, such as sensors to monitor traffic, buildings, cameras, and traffic lights, to the internet. 5G networks provide higher data speeds compared to previous generations of mobile networks (3G, 4G, etc.). 5G’s reliable internet connection can facilitate remote working, enabling employees to collaborate in real-time whatever their location. 

2. AI (42%): AI tech is another type of technology that's widely available in Australian smart cities. Such cities can use artificial intelligence (AI) technology across all smart services. For example, AI tools, such as virtual assistants can aid residents in booking services such as doctor’s appointments. 

3. IoT (40%): IoT tech is essential for the deployment of sensors and devices that collect data for smart city operations, such as traffic monitoring, smart parking, and environmental monitoring. IoT tools can help companies use real-time data from various assets and operations to aid in making informed business decisions promptly. IoT-enabled tracking devices can monitor the location, status, and utilisation of assets such as vehicles, equipment, or inventory. 

Tips for businesses: As 5G has low latency and high bandwidth capabilities, it supports the integration and management of IoT devices. SMEs can utilise IoT tech with data management software and collect information on supply chain processes to identify problems in logistics and operations. Moreover, AI-powered tools can help SMEs automate repetitive tasks, such as data entry and customer queries by using chatbots to help employees save time and focus on other complex tasks.

Increased sustainability and security top the list of smart city advantages

Smart cities have numerous advantages that can help improve the quality of life for residents and enhance the efficiency of urban systems. According to respondents, increased sustainability is the biggest advantage of smart cities (39%). Increased security (30%) and health technology (29%) were also among the top advantages of living in a smart city.

Chart showing which technologies related to smart cities already exist in Australia

Smart cities can facilitate the implementation of a range of technologies, policies, and practices that can aid in reducing harmful environmental impacts. This could include measures like developing and expanding public transport systems to reduce the number of vehicles on the road, which can help decrease pollution. Businesses can also promote carsharing to help reduce the environmental impact of commuting.

Sustainability remains at the forefront of building smart cities, as residents were also asked which aspects they consider to be the most important when developing a smart city. 41% of respondents said technologies used in smart cities should help to make the cities more environmentally friendly and reduce waste.

Tips for businesses: The 2023 climate change survey found that recycling materials used in production processes or offices (53%) was one of the most popular measures companies can take to minimise the impact of climate change. Recycling software can help organisations measure and manage waste inventory by monitoring assets such as refuse bins and containers.

Data protection and increased surveillance are the biggest challenges

Whilst smart cities can enhance urban living, they come with several challenges that need to be addressed for successful implementation. Lack of data protection —e.g., risk of a data breach or uncontrolled use of personal data— was the most selected challenge to smart city development, according to a majority of respondents (69%). Smart cities can be potentially vulnerable to cyber threats, and protecting critical infrastructure and sensitive data should be prioritised.

A chart highlighting the biggest challenges of developing smart cities

Increased surveillance (e.g., unauthorised monitoring) was the second biggest challenge to smart city development for half of the survey-takers (50%). Whilst it could also be considered an advantage of a smart city, surveillance may raise concerns related to personal autonomy. Companies and city planners should be transparent with employees and residents about how these technologies are used.

Surveillance technology still plays a crucial role in enhancing public safety and preventing incidents like theft, vandalism, and violence. Despite the concerns about surveillance use, a combined total of 77% of survey takers trust technology with their safety (55% trust technology but think human intervention is still very important, and 22% completely trust technology with their safety).

Tips for businesses: A lack of policies and regulations regarding data privacy was the most selected answer when survey takers were asked what was the main barrier to the development of smart cities (55%). Smart companies can use compliance management tools to ensure they comply with data privacy regulations and provide employee training on data privacy and phishing awareness.

How companies can contribute to smart city development

The outlook on the future of smart cities in Australia seems favourable amongst residents as a combined total of 86% of survey takers either somewhat or strongly agree that: ‘With the implementation of a smart city strategy, there will be a better quality of life’. 

In addition, 75% of respondents who live in an area with smart city services currently available (from a list of options we provided), said they are interested in living in a 'smarter city model' with even more services. Sydney-siders were most interested (80%) compared to respondents in other cities like Brisbane (68%), perhaps because Sydney is one of the largest cities with a dense urban population.

Regardless of location, all smart cities can provide efficient public services and a cleaner and safer environment for citizens. For SMEs, smart cities could be a platform to collaborate and develop new avenues for growth and gain a potential competitive advantage. 

Businesses can play a role in advancing smart city initiatives by:

1. Adopting technology: companies can utilise IoT devices, sensors, and data analytics tools that enable cities to collect and analyse data for better decision-making.

2. Exploring partnerships and collaborations: companies, local governments, and research institutions should work together to pool their resources and expertise to implement smart city solutions. As such, small businesses should explore opportunities for joint projects and collaborate with such institutions.

3. Investing in infrastructure: businesses can invest in critical infrastructure such as high-speed broadband networks and 5G to support smart city services whilst improving their own connectivity within the workplace environment. 

4. Participating in urban planning and design: companies involved in architecture and construction can contribute to designing smart city infrastructure with sustainable building plans, green spaces, and efficient transport systems. 

5. Conducting waste management and recycling: businesses can offer waste management solutions that optimise collection routes, reduce landfill waste, and encourage employees to adopt recycling and launch waste reduction initiatives.

While towns in Australia need to adopt the latest technologies to help them grow into smart cities, it's vital for local governments to partner with and listen to what citizens and businesses want. Sustainability and security measures are some of the key areas of interest for Aussies, and local companies can do their part by implementing initiatives that support these types of smart services.

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Data for Capterra's Smart Cities survey was collected in August 2023. Results comprise responses from 1,022 participants. The criteria to be selected for this study are as follows: 

  • Australian resident 
  • Over 18 years of age
  • Reside in a small, large, or medium-sized city with at least 50,000 residents
  • Is aware of what the concept of a smart city entails after being shown this definition: “A smart city is a place where traditional networks and services are made more efficient with the use of digital and telecommunication technologies. This technology allows the sharing of information to improve the quality of citizen welfare, the quality of government services, and business opportunities.”