A smart city is a place where traditional networks and services are made more efficient with the use of digital solutions for the benefit of its inhabitants and business.


A smart city goes beyond the use of digital technologies for better resource use and less emissions. It means smarter urban transport networks, upgraded water supply and waste disposal facilities, and more efficient ways to light and heat buildings. It also means a more interactive and responsive city administration, safer public spaces and meeting the needs of an ageing population.

- European Comission


With this starting point, let's go deeper and understand all the aspects that define and influence smart cities.



Smart cities’ components

Think of a smart city as a huge computer in operation – each component plays a critical role in the overall performance. So, what are the vital organs of smart cities?

  • Critical infrastructure
    It includes buildings, roads, water treatment and distribution, transportation and mobility solutions, healthcare, education, public safety, and so on. In a smart city, all these pieces are connected and become more efficient thanks to Internet of Things (IoT) and Artificial Intelligence (AI) solutions.

  • Data analytics and governance
    Data analytics makes it possible to analyse large volumes of data from various sources, such as traffic, energy use, and consumption patterns. This analysis is crucial for informed decision-making aimed at improving the efficiency of urban services and citizens' quality of life. Data governance, on the other hand, is essential for guaranteeing data integrity, privacy, and security. It establishes standards and policies for data management, ensuring that it is used responsibly and ethically.

  • Environmental efficiency
    Technology plays a key part in ensuring sustainable living and energy efficiency across a city, which contributes to a better quality of life.

  • Broadband and communication networks
    The backbone of every smart city is a good internet connection. That’s how data is collected and transferred in the first place, enabling all the other components to work smoothly.

  • Citizens
    Citizens’ engagement with local governments is key to achieve positive change and innovation.


The technology behind it

The intersection of AI and IoT devices is what’s driving the true innovation behind smart cities, leading to increased efficiency, as well as time and money savings, among other advantages.

  • IoT devices
    A complex and collaborative network of interconnected devices and objects that can communicate and exchange data related to traffic, transportation, air quality, energy, and so on. The number of IoT devices is expected to keep growing and surpass 75 billion by 2025.

  • Artificial Intelligence
    While IoT devices collect data, AI algorithms are responsible for managing and analysing that same data – meaning they are the foundation of data analytics and informed decision-making.

Guilherme Zuccolotto, act digital’s Head of Data and AI, explains this symbiotic relationship a bit better. “The integration of AI and data is fundamental to the effective functioning of smart cities. This involves collecting data in real-time, using IoT sensors and cameras, followed by predictive analysis using sophisticated Machine Learning [ML] algorithms”, he explains. The result is clear: “This analysis supports decision-making in areas such as traffic, security and resource management. The interdependence between AI and data forms the backbone for operational efficiency and real-time decision-making”, he concludes.



How are smart cities transforming urban lives?

Looking beyond the technical aspects of a smart city, the benefits it brings for those who live in it are pretty clear. Here are a few examples:


  • IoT sensors installed on traffic lights can monitor traffic flow, detect congestions and accidents. An AI analysis of this data can help traffic lights adapt to the current situation.
  • IoT sensors installed in parking spaces lead drivers directly to available spots, reducing congestion.


  • Wearable devices are able to remotely monitor patients’ vital signs.
  • AI algorithms can perform predictive analysis of outbreaks.
  • IoT sensors monitoring air quality can help public health officials improve citizens’ overall health.


  • Street security cameras in public spaces monitor potential threats and suspicious activities. This data can be transmitted to local authorities, helping them to act quickly.


  • Buildings equipped with temperature and lighting sensors can optimise energy consumption and adapt to the environment.
  • Streetlights with IoT sensors can automatically turn on or off, according to the level of natural light around.

Waste and water management

  • Smart waste bins with IoT sensors can notify the responsible entities about the level of waste in the bins, optimising collection schedules and routes.
  • IoT sensors in water distribution systems can monitor water quality and detect leaks.



Examples of smart cities

The 2023 Smart City Index analysed a total of 141 cities, surveying around 20,000 citizens around the world. Here’s the top 10:

  • Zurich (Switzerland)
  • Oslo (Norway)
  • Canberra (Australia)
  • Copenhagen (Denmark)
  • Lausanne (Switzerland)
  • London (United Kingdom)
  • Singapore (Republic of Singapore)
  • Helsinki (Finland)
  • Geneva (Switzerland)
  • Stockholm (Sweden)


Challenges and concerns

Like everything else in life, smart cities’ technologies also pose quite a few challenges – mostly related to data management, cybersecurity, infrastructure, and ethics.


Data challenges

According to act digital’s Chief Data Officer (CDO), Everton Gago, these are the main challenges related to data management:

  • Data heterogeneity
    “Data often comes from different sources and in different formats, requiring significant efforts to integrate and standardise it.” 

  • Data accuracy
    “Ensuring data quality and minimising biases in data sets are also critical aspects.”

  • Scalability and storage issues
    “These are especially challenging as the volume of data increases.”

Luckily, there are several strategies and tools to help address these potential issues. Everton Gago highlights the following:

  • Implementation of rigorous data standards.
  • Use of data cleaning and data validation tools, to guarantee data accuracy and consistency.
  • Adoption of Big Data solutions and Cloud Computing technologies, which facilitate the storage and analysis of large volumes of data.
  • Ongoing training of data teams to keep their skills up to date.


AI-related challenges

Guilherme Zuccolotto points out a few constraints related to the implementation of AI in smart cities:

Infrastructure requirements
“Technical issues may arise, like the availability of environments. The infrastructure needed to support these technologies must be robust and reliable.”

Privacy, security, and financial constraints
“These issues may arise due to the massive collection of data. The cost associated with implementation is a concern, and public adoption can be affected by resistance to constant surveillance and fear of job replacement.”
As CDO, Everton Gago also has a say in privacy matters: “It is crucial to implement robust and transparent privacy policies, as well as to adopt state-of-the-art data encryption technologies. Applying data anonymisation techniques can help protect individuals' identities. In addition, compliance with data protection regulations, such as the GDPR, is key”, he argues.

Ethical concerns
"To ensure the ethical and responsible use of AI in smart cities, various measures and strategies must be implemented. These include:

  • Transparent disclosure of the algorithms and data sources used.
  • Strict protection of citizens’ privacy, making use of techniques such as anonymisation and encryption.
  • Active public participation in technology-related decisions, which contributes to the definition of ethical guidelines and acceptable limits, promoting a more inclusive approach.
  • Establishment of specific regulations and laws to guide the ethical use of these technologies.
  • Carrying out regular ethical audits and social impact assessments, allowing for the identification and correction of possible algorithmic biases, as well as adjustments to ensure fairness.”


Cybersecurity challenges

Cybercriminals may access smart cities’ data through misconfigured firewalls, weak credentials, IoT hacking, phishing, among many other tactics. Some of the most common outcomes are:

  • Data theft
    As Guilherme Zuccolotto already mentioned, massive data collection within smart cities increases the risk of it being breached, misused, and even lost irrevocably.

  • Device hijacking
    If a cyberattacker gains access to a connected device, he/she could quietly assume control over it, deploy ransomware, compromise other devices on the network, and much more.

  • Man-in-the-Middle (MITM) attack
    In this type of cyberattack, a hacker intercepts communication between two parties/systems, which gives him/her the power to discreetly pass on false and potentially damaging information.

Alter Solutions can help prevent and address threats like these through services like Cybersecurity Management, Cyberdefence, and Audit & Pentesting.



What does the future look like for smart cities?

Regarding future trends, Everton Gago emphasises the increasing integration of IoT with AI, as well as the adoption of sustainable energy technologies. Guilherme Zuccolotto agrees, expecting particular advances in conversational AI and in sustainable solutions seeking to address environmental challenges – “like enabling an electric grid for private and public transport”, he exemplifies.

As for future challenges, act digital’s Chief Data Officer predicts “issues of scalability of technological infrastructures, the need to develop new data governance models, the constant adaptation to changes in privacy and data security regulations, and the challenge of guaranteeing technological inclusion and accessibility for all citizens”. The Head of Data and AI also highlights “emerging ethical challenges and concerns about legal liability”. Plus, he concludes, “the global integration of technologies between cities and countries will also pose interoperability and collaboration challenges, as well as regulations and different operating standards.”

Share this article