As municipalities face increasing pressure to bring economic growth and improve local services – typically with lower budgets – cloud computing is helping cities reduce capital expenses and achieve greater efficiencies.
New platforms for communication, data sharing and application development – particularly cloud computing and data analytics – will play a key role in this IT transformation, according to a new report from Pike Research (News - Alert), a part of Navigant’s Energy Practice.
By 2017, cities will spend almost $4.8 billion on so-called smart government technology, according to the report. Annual investment in smart government technologies in North America alone will surpass $1 billion in 2017, and annual investment in cloud services for smart cities will reach nearly $1.4 billion worldwide by 2017.
“Cloud-based computing, in particular, offers new options for cities that reduces capital expenditure, provides access to new skills, and reduces time-to-deployment of new solutions,” Eric Woods, research director at Pike Research, said in a statement. “Cloud-based systems also enable cities to take advantage of the huge amounts of operational data they collect to improve efficiency and develop new services.”
Government investment in cloud services was $255 million in 2011 and is estimated to reach just under $1.4 billion by 2017. In addition, the smart government data analytics software market is projected to grow from a $306 million market in 2011 to reach over $1 billion in 2017.
The combined software and services market for smart government data analytics is estimated to be worth $3.75 billion by 2017.
In addition to reducing costs, IT decision makers in cities are also looking at investment in technology as a means of stimulating economic growth.
Some strategies, according to Pike Research, include making the city a center of cleantech development and innovation (e.g., Denver, Copenhagen and Amsterdam); creating new types of digital commerce and development (e.g., New York and Manchester); being at the leading edge of technology adoption (e.g., Barcelona and Friedrichshafen); becoming an exporter of technology (e.g., Seoul); or retaining or establishing a position as a regional trading hub (e.g., Singapore and Songdo).
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Edited by Braden Becker