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Smart cities: The cities of the future

Learn how governments are tapping into smart city technology to improve quality of life, drive economic growth, and deliver flexible, resilient, and secure infrastructure.

What is a smart city?

A smart city is an urban area that uses an array of digital technologies to enrich residents’ lives, improve infrastructure, modernize government services, enhance accessibility, drive sustainability, and accelerate economic development. Smart cities are the cities of the future.

Governments in many of these smart cities tap into a combination of Internet of Things (IoT), cloud computing, artificial intelligence (AI), augmented reality (AR), edge, blockchain, and other cutting-edge smart city solutions to:

  • Protect and connect with residents and businesses.
  • Improve accessibility for all people in the community. 
  • Support businesses and fuel economic growth.
  • Share information with the public.
  • Streamline government operations.
  • Deliver user-friendly community services.
  • Provide reliable, intelligent infrastructure.
  • Drive environmental sustainability.
  • Promote cross-agency collaboration.
  • Upgrade public transportation. 
  • Manage city resources to avoid waste.
  • Collect and analyze open data to get valuable insights.

Using the latest digital solutions, governments in smart cities gain a comprehensive view of all city operations, infrastructure, and services. This allows city managers to predict potential issues, quickly overcome challenges, and improve outcomes. It all comes together to elevate experiences for the urban area’s residents, visitors, and businesses—and build a brighter future for the city.

What’s driving smarter cities?


Urban centers across the world are embracing advanced smart technologies—investing in AI, cloud computing, IoT, and other digital solutions—as they work to pursue smart city initiatives. But what’s driving this global trend?

As urban populations continue to grow, cities are facing greater demands and more complex challenges than ever before. Additionally, in today’s increasingly digital world, people have come to expect fast, user-friendly experiences and information at their fingertips. In this environment, city managers and administrators are under intense pressure to provide quick, effective, and cost-efficient services to residents and businesses.

In addition to these demands, municipalities still have a responsibility to keep residents safe, deliver critical services, improve quality of life, and support economic growth. Perhaps most importantly, city governments must continue to support the infrastructure that makes their city run—water, electricity, roadways and bridges, traffic lights, public transportation, and more.

To meet the ever-increasing needs of residents and businesses, cities across the globe are accelerating digital transformation to provide connected, secure, and reliable services. As a result, these smart cities are quickly becoming the most desirable places to live and work--they’re the cities of the future.

Boundless benefits: Building smarter cities for better lives

Residents, businesses, and government agencies in smart cities enjoy a range of valuable benefits—from enhanced safety and more accessible public transportation to lower carbon emissions and stronger economic growth.


Smart cities use innovative smart technologies to:

  • Improve quality of life

    Because smart cities use a variety of technologies to deliver connected smart city solutions for residents, these municipalities are great places to live and work. These urban areas offer shorter commutes, easy-to-access transportation systems, safer streets, green spaces, cleaner air, enhanced resident services, and plentiful economic opportunities. It all adds up to a higher quality of life for the smart city’s population.

  • Optimize operations

    Technology doesn’t just improve the lives of residents—it also allows government agencies to streamline operations. Government agencies in smart cities have access to modern digital infrastructure that allows them to share open data, tap into real-time insights, and promote cross-agency collaboration. This enables government organizations to increase productivity, empower employees, and enhance citizen services.

  • Deliver better services

    With ongoing advancements in modern technology, the community has come to expect simple, secure, and accessible services. Smart cities deliver reliable, trusted, and user-friendly services that put people at the center of experiences—all while securing sensitive public information. The residents in these smarter cities enjoy modern utilities, intelligent transportation, and trusted digital experiences.

  • Fuel economic growth

    Urban areas have always been critical hubs for trade and commerce. Today, smart cities are accelerating economic growth by investing in intelligent technologies. Businesses are drawn to these modern municipalities because they deliver better communication networks, enhanced mobility, reliable infrastructure, easy-to-use services, and larger pools of potential customers and employees. Plus, smart cities provide access to valuable customer data and insights, allowing businesses to make more informed, strategic decisions.

Smart city technology solutions

When governments embark on a smart city project, they often invest in a combination of intelligent digital solutions. These smart city technologies are designed to work together to connect the community, enhance the lives of city residents, drive sustainability efforts, improve infrastructure, and support economic growth.

Here are a few examples of innovative smart city solutions:

Cloud computing

Cloud computing is the delivery of computing services—including servers, storage, networking, databases, software, analytics, and intelligence—over the internet, as opposed to a local server or personal computer.

Because this technology offers a lower price tag and easier access, cloud solutions have become increasingly popular for consumers, businesses, and governments. Plus, organizations typically only pay for the cloud services they use. This helps businesses and city governments control operating costs and scale cloud solutions as they grow.

Many city agencies are migrating their applications, workforce systems, and other critical government information from local storage to the cloud to accelerate innovation, increase efficiency, and cut costs. This allows governments to be more agile and resilient while helping to protect sensitive personal data. Cloud solutions also allow city staff and residents to securely access information remotely—which is essential for the continuity of government services.

Cloud computing has become an essential smart city technology because these solutions allow governments to:

  • Reduce costs since they don’t have to invest in hardware and software, set up and run on-site data centers, or manage the infrastructure.
  • Scale as they grow and deliver the right amount of IT resources when and where they’re needed.
  • Ensure better performance through a worldwide network of fast, efficient, and secure datacenters.
  • Improve security and protection of city data, apps, and infrastructure.
  • Work faster and access vast amounts of computing resources within minutes.
  • Boost productivity of city managers, employees, and IT teams.
  • Maintain business continuity with easy data backup and disaster recovery.

Artificial intelligence (AI)

Artificial intelligence (AI) is the capability of a computer system to mimic human-like cognitive functions, such as analyzing data, learning from new information, and solving problems. Using math and logic, the computer system simulates human reasoning to make informed decisions.

An artificially intelligent computer system can make predictions or take actions based on patterns in existing data. AI can learn from its mistakes to increase accuracy in the future. A mature AI system can process new information quickly and accurately, making it useful for complex scenarios, including self-driving cars, image recognition programs, and virtual assistants.

City governments are tapping into AI in coordination with other solutions like IoT, edge, and blockchain. AI enables these smart cities to improve interaction with the community, rapidly distribute information to the public, conserve energy and water, and power everything from smart buildings to smart streetlights to smart traffic.

For example, many smart cities now use AI chatbots to offer residents quick and accurate answers and information online. Additionally, some governments have invested in AI sensors to collect and analyze transportation data and streamline traffic flow. These predictive technologies are changing the way cities run and enhancing quality of life for urban residents.

Internet of Things (IoT)

The Internet of Things (IoT) is an assortment of equipment, products, and devices that are connected to the cloud and designed to collect and securely transmit data. IoT allows organizations to quickly gather and use data to make fast, informed decisions. This technology for smart cities offers timely and relevant insights, allowing organizations across all industries to operate more efficiently and improve customer experiences.

Smarter cities around the world are using IoT sensors to instantly capture and understand data. The insights provided by IoT give city managers a deeper understanding of what’s happening across their communities in near real time. This smart city technology also allows governments to connect intelligent infrastructure, monitor processes remotely, perform real-time tracking, and improve operations across the city.

Smart city governments are increasingly using IoT for two important tasks—remote monitoring and predictive maintenance.

Remote monitoring allows administrators to monitor assets, such as vehicles and heavy machinery, either continuously or at regular intervals. This allows city managers to track the asset’s location, performance, and condition. The insights city governments gain from this smart city technology can help them:

  • Decrease fuel, maintenance, and service costs.
  • Refine city government processes.
  • Provide a better experience for the population.
  • Reduce wear and tear on vehicles and machinery.
  • Increase the number of service appointments per day.
  • Route vehicles more efficiently.
  • Improve resident security and city employee safety.

Predictive maintenance incorporates machine learning software to analyze data, predict outcomes, and automate operations. This technology allows city managers to identify and overcome issues before they become a major problem. Predictive maintenance helps smart city administrators:

  • Pinpoint mechanical or operational issues that are leading to failure or slowdowns.
  • Determine which spare parts to maintain in inventory for repair issues.
  • Predict and prevent equipment failures before they occur.

Governments that invest in IoT can use this smart city solution to deliver greater value to the public, connect with people in a more personalized way, reduce materials and labor waste, and boost operational efficiency.

Blockchain technology

Blockchain is a decentralized, digital database with information that can be used and shared simultaneously within a large, publicly accessible network. Organizations and governments are investing in this innovative technology to create more efficient supply chains, simplify complex processes, reduce fraud, and quickly verify transactions.

Blockchain allows network participants to share data reliably and transparently without a centralized administrator. This feature is particularly helpful for city governments. That’s because cities typically include a large number of stakeholders who need to securely exchange information to maintain operations, make critical decisions, and streamline services.

Smart cities use blockchain solutions to:

  • Easily and securely exchange data.
  • Encourage cross-agency collaboration.
  • Gain a single view across city supply chains.
  • Reduce fraud and verify financial transactions faster.
  • Create smarter and more efficient supply chains.
  • Simplify processes for reconciling data disputes in auditing and regulatory compliance.
  • Manage energy usage, urban development, and population growth.

Edge computing

Edge computing is the process of placing computing infrastructure closer to the actual data source. This reduces network latency (delays in data communication) and excessive bandwidth usage, while ensuring service continuity—even when cloud connections are intermittent.

Smart cities around the world are using edge computing combined with IoT, AI, and cloud solutions to ensure continuity of critical government services and infrastructure.

In coordination with other technologies, edge computing solutions enable city governments to:

  • Address latency or connectivity issues by processing data close to the source.
  • Process, sort, and analyze IoT or datacenter data so they can determine what to act on immediately and what to store in the cloud.
  • Analyze data for quick, actionable insights using AI and machine learning.
  • Transfer network data efficiently and easily between the cloud and the edge.
  • Run applications at remote locations for faster transactions and less bandwidth constraints.
  • Meet regulatory compliance by using machine learning models that help alert administrators to potentially sensitive data.

For example, London’s Heathrow Airport uses edge, AI, and machine learning combined with a 3D scanner to prevent illegal wildlife trafficking.

Augmented reality (AR)

Augmented reality (AR) is technology that creates a computer-generated image overlay onto a real-world setting, giving the user a composite view. Many organizations are using this interactive technology to train employees and provide workers with a clear view into areas they can’t easily reach or see.

With advanced AR solutions, users can accomplish a variety of tasks that would be far too difficult or dangerous without this smart technology. For example, some city workers use mobile devices that overlay an image of utilities and assets when looking underground. This enables workers to see where pipes are located under a street and determine their operating condition. King County in the Seattle area has been recognized for using a mixed reality device to train operators at a wastewater treatment plant.

Smart city governments also tap into AR to:

  • Simplify complex city planning and construction projects.
  • Receive expert advice and support while working at a remote location.
  • Empower employees to learn with hands-on, step-by-step instructions.
  • Help field workers quickly, efficiently, and safely complete jobs.
  • Streamline inspections and permitting processes.

Smart city infrastructure

From water and electricity to roadways and traffic lights to city services and communications networks, infrastructure is what keeps a city running smoothly. As urban populations grow and people increasingly demand digital services and modern conveniences, it’s more important than ever for cities to deliver flexible, resilient, and secure infrastructure.

By embracing cloud computing, IoT, AI, and other smart city solutions, governments can:

  • Provide intelligent critical infrastructure.
  • Deliver valued services that build trust.
  • Improve security of sensitive public information.
  • Modernize public utilities.
  • Enable connected, efficient, and sustainable transportation systems.
  • Deliver urban innovation and enhance resident services.
Scenes of a train driving through a city, a busy street crossing, and two workers in a field of wind turbines.

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Frequently asked questions

  • A smart city is an urban area that uses an array of digital technologies to enrich residents’ lives, improve infrastructure, modernize government services, enhance accessibility, drive sustainability, and accelerate economic development. Smart cities are the cities of the future.

  • A smart city uses cloud computing, AI, IoT, AR, edge, blockchain, and other intelligent technologies to improve infrastructure, elevate government services, enhance quality of life, and fuel economic growth.
    The world’s most successful smart cities are centered around data. These cities’ forward-thinking governments invest in and use advanced technologies to quickly collect and analyze data—whether it’s information for residents, city resources, infrastructure, transportation, or carbon emissions. The insights that governments gain from this data enable them to make informed decisions and take steps to streamline services, engage with residents, support business growth, and drive sustainability efforts.

  • As technologies evolve and digital solutions are available in every facet of life, people have come to expect convenient and accessible services from businesses—and now, they want the same level of service from city governments. However, residents also expect privacy and security. It can be a challenge for city governments to meet both of these demands. This is where modern datacenters can help.
    To provide effective community services, city governments must maintain vast amounts of data, including birth records, addresses, and income information. When governments move to a modern datacenter in the cloud, this gives them a flexible digital environment with improved security, protection, and compliance. Many smart cities have migrated to modern datacenters to consolidate data and deliver more secure and trusted public services.
    Additionally, many city governments are encouraging residents to transition to digital identities.

  • Also known as decentralized identity, a digital identity allows people and organizations to take ownership of their personal data. In a decentralized identity trust framework, identifiers such as usernames are replaced with IDs that are self-owned and independent, enabling data exchange by using blockchain and distributed ledger technology to protect privacy and provide more secure transactions. As people are increasingly linked to apps, devices, and services, they’re often subject to data breaches and privacy loss. Decentralized identity offers people and businesses greater privacy and control over their data.

  • In many cases, yes. Smart cities are using technology not only to accelerate economic growth but to drive environmental sustainability as well. Some city governments are using digital solutions to collect and analyze carbon emissions data, boost energy efficiency, promote sustainable water practices, decrease waste, and reduce their city’s carbon footprint.

  • If you want to accelerate digital transformation and pursue smart city initiatives, technology is key. The most successful smart cities invest in innovative digital solutions that enable them to collect and use data in near real time and act quickly on insights.
    Before investing in cloud computing, AI, IoT, and other specific technologies, you should first think about the outcomes you want to achieve by becoming a smart city. These goals could include:

    • Improving public safety. 
    • Driving economic growth.
    • Enhancing traffic mobility.
    • Reducing carbon emissions.
    • Lowering operational costs.
    • Increasing equipment life.
    • Conserving energy and water.

    Once you’ve set clear goals for your city, it’s easier to determine how data and digital solutions can help you reach those objectives.

  • Smart cities are great places to live and work. Because these urban areas use innovative technologies to improve infrastructure and services, smart cities offer safer streets, better mobility, shorter commutes, reduced emissions, streamlined resident services, and thriving businesses. These smart city benefits lead to an overall higher quality of life for the city’s population.

  • Information communication technology refers to the various ways that people can use technology to communicate with one another, including email, social media, phone calls, and text messages. ICT has revolutionized the way that we communicate with each other, making it easier and faster than ever before. The use of ICT in smart city projects will produce positive outcomes for both citizens and city stakeholders.
    ICT is the backbone of smart cities. Intelligent networks and wireless communication between people, objects, and machines improve operational efficiency, public information sharing, government services, and citizen welfare. For example, ICT helps reduce traffic congestion with stoplights that adjust in real-time to account for road conditions. Thanks to ICT, the cities of the future can also realize reduced costs and decreased resource consumption.
    Infrastructure that uses sensors and IoT devices enables real-time data processing that can be used to communicate important insights to urban citizens and governments alike. Without ICT, the smart city couldn’t exist.

  • While smart cities offer a variety of benefits for citizens and governments, there are a number of smart city challenges to consider as well. One of the challenges of building a smart city is that not all citizens have access to the same opportunities and resources. In every urban population, there are significant income and age disparities. Those who don’t have the means to own connected cars, for example, won’t be able to reap the same benefits as those who do. Similarly, older populations don’t use smartphones and devices as often as younger populations, making smart cities less beneficial for this demographic.
    Another key consideration is infrastructure. It can be difficult—and expensive—to integrate new technology into existing infrastructure. Similarly, building new infrastructure also requires extensive planning and funding. This leads to another smart city challenge: public cooperation and buy-in. Citizens must support major and costly changes to their cities for governments to move forward with plans, so it’s important that they understand the benefits. It’s also important that citizens know how to use smart city technology safely and effectively. These challenges can largely be addressed with community engagement and education programs.
    Other smart city challenges include privacy and security. As more urban centers digitalize their infrastructure, it can be difficult to strike a balance between convenience and privacy. Privacy concerns among the public are growing, so overcoming citizen hesitations and ensuring data privacy are crucial to smart city implementation and adoption. This also means extensive cybersecurity measures must be taken to ensure that both governments and citizens are protected from data breeches and other threats. Like all technology, smart cities are not invulnerable to hackers, so security precautions must be included in smart city planning.
    The key to meeting these smart city challenges head-on is to develop a comprehensive plan that takes into consideration the needs and priorities of all stakeholders.

  • Public-private partnerships can play a key role in advancing smart city initiatives. By bringing together the resources and expertise of both the public and private sectors, these partnerships can help cities develop and implement innovative solutions to achieve their smart city goals.
    For instance, partnerships between local businesses and governments can help fund smart city projects. Similarly, partnerships between academic institutions and city governments can help develop new technologies and applications for use in smart cities.o
    Ultimately, public-private partnerships are an important part of advancing smart city initiatives because they bring together different stakeholders with a common goal: to make cities more efficient, livable, and sustainable.

  • Explore Microsoft for Critical Infrastructure

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