State of smart cities: Priorities and procurement plans

Each month we publish an inside look at some of the biggest smart projects that are in the planning or procurement phases. Looking at actual projects is one of the best ways to get a true sense of what’s going on in cities. Deltek, which produces that report for us, has produced a more comprehensive report looking at current trends in smart cities and counties. There are some fascinating insights. First, smart cities aren’t just big cities. The report finds that a number of medium-sized cities are working at a level beyond their size. Also, cities aren’t the only level of government getting smarter. Counties are making significant progress too. Read on for a deeper look and download the full report. — Kevin Ebi

By Paul Irby and Chris Cotner, Deltek

GovWin+Onvia’s latest report on Smart Cities and Counties takes a comprehensive approach to understanding products and services being purchased, general trends, and which governments are rising to the top based on our industry-leading market intelligence database of bids, RFPs and awards (including items bought using co-op contracts or below-threshold informal purchases).

By examining the entire state, local and education (SLED) government market, GovWin+Onvia has tracked over three million purchases from every kind and type of agency over the last 3 years. Out of that total, we identified over 70,000 purchases falling into one of 300 “Smart Cities” related products or services bought by either a city or county, grouped into five major categories. These were selected based on a combination of the “technology enabler” and “areas of responsibility for spending” priority areas defined by the Smart Cities Council, and excluded utilities and education to focus on core government functions provided universally at the city or county level.

Several key findings emerged from our analysis, which shed light on market characteristics and trends to help vendors develop their go-to-market strategies. 

1. Smart and big data resources are the largest segment
Smart & Big Data includes both smart/big data solutions and the back-end computing systems needed, and made up a total of 30% of all purchases. Smart Citizen Engagement (i.e. items like apps and web design) was the smallest segment. Smart Transportation (including ITS as well as mass transit) and Smart Emergency Response (i.e. EMS, disasters, etc.) were both around 19-20%.

2. Cities and counties are mostly comparable in size as markets
Cities and counties as a whole had a similar volume of total purchases in three of the five areas. It isn’t easy for most vendors to recognize this in their strategic planning. However, cities generally dominated in smart purchases that were infrastructure or capital improvement related. For example, cities made around 9,600 smart transportation related purchases, compared to just 4,800 by counties. For connected facilities, the gap was 9,000 for cities vs. 5,400 for counties.


3. Smart purchases growing much faster than normal
Combined, cities and counties are growing in volume of smart purchases by an average of 7.0% per year. This is more than three times the rate of the broader SLED market (2.1%). In comparison, the benchmark growth rate for all IT/telecom products and services was 4.3% per year. At a time of fairly slow growth for government purchasing in general, these types of investments and solutions offer an attractive and growing market vector for vendors that may be experiencing slowing in other SLED contracting area

4. Larger governments tend to buy more, but some mid-sized governments are similarly ranked
While it is relatively easier for an individual city to become highly ranked in one of our five main categories through targeted investments, it is tougher for this to happen across all five “smart” categories. However, some mid-sized governments were much higher ranked by overall smart purchasing than their population size might predict.

Although some cities ranked highly due to their enormous populations like New York and Los Angeles, and the economic and political weight of our nation’s capital boosted D.C. in the rankings, some of the relatively smaller cities ranked in the top 10 were clearly punching above their weight class. For example, Columbus was 15th ranked by population but was much more competitive in smart purchases, ranking 5th. Similarly, Memphis was 22nd ranked in size, yet was ranked seventh in smart purchases.    

These are just a sample of the many findings available in our newest report on Smart Cities and Counties, which is available for free download from GovWin+Onvia.