National Digital Transformation and Smarter Cities: Eight Forces That Will Shape the Future

Safder Nazir

SVP – Public Sector, Middle East & Central Asia

The world's economy is at a tipping point as digital technologies continue to be embedded into both working and personal lives at an unprecedented rate. By 2023, digitally transformed enterprises will account for more than half of global Gross Domestic Product (GDP). Two overarching factors will drive this trend: the proliferation of digital devices and the rising prominence of the millennial and zoomer (Generation Z) user base. These digital-savvy generations account for 75% of the population in the Middle East today. By 2025, the number of connected devices globally is predicted to reach 100 billion, more than 12 times the number of people in this world.

These shifts have significant implications for the evolution of Smart Cities towards Cognitive Cities and the future of national digital transformation. This article highlights eight significant forces that will shape the future of urban living.

The Rise of the Sharing Economy Is Changing the Way a City Functions

Millennials and zoomers — and their affinity for all things digital — have given rise to a new economic model: the sharing economy. This economy is characterized by online ecosystems or platforms, including ride-hailing services, vacation rentals, and crowd financing. And while this new economic model is changing the way people consume products and access services, it is also reshaping employment models and industry ecosystems. The sharing economy is expected to flourish in the coming decade. According to multinational professional services network PwC, the revenue share of players in some key sectors of the sharing economy is expected to reach 50% by 2025, up from 5% in 2013.

The rise of the sharing economy has significant implications for national digital transformation and Smart City evolution. While the sharing economy raises several data regulation, privacy, and security challenges, it also provides opportunities to solve escalating issues such as traffic congestion, excess capacity, and unemployment. Governments pursuing national digital transformation should address the opportunities the sharing economy presents through regulation and policymaking. In addition, they should focus on building digital telecommunications and Information Technology (IT) infrastructure to support the economy's evolution.

The Production and Supply Chain Landscape Will Be Dramatically Changed by Industry 4.0

In pursuit of improved national productivity and greater economic strength, Middle Eastern governments have long focused on bolstering the competitiveness of their manufacturing sectors. Industry 4.0-led digital transformation of manufacturing consequently takes a prominent place in national development plans across the region. The regional manufacturing industry is expected to undergo significant transformation in the coming years as these plans unfold.

The transformation will affect the entire manufacturing value chain, from design and production to delivery and customer service. Industry 4.0 is going to change what a future factory will look like: augmented workers on the shop floor will be equipped with the latest digital tools; digital twins of the supply chain will provide real-time intelligence; and augmented products will provide a seamless customer experience, for example. Huawei's Global Industry Vision for 2025 (GIV@2025) predicts that there will be 103 robots for every 10,000 manufacturing employees by 2025. In other words, it will be commonplace for industrial robots and people to work side-by-side in the future factory environment. Technologies such as robotics, intelligent connectivity, industry cloud, the Industrial Internet of Things (IIoT), and Artificial Intelligence (AI) will be the cornerstones of this transformation.

AI to Penetrate Every Aspect of Life and Change the Way a City Functions

Future cities will feature 'intelligent societies' powered by AI and enabled by billions of smart devices and zettabytes of generated data. Huawei forecasts that there will be 40 billion AI-enabled personal smart devices by 2025, of which 90% will have intelligent personal assistants. This prediction has significant implications for the way people live and work, as smart devices will help individuals make better decisions as well as off-load simple, tediously repetitive tasks.

Digital transformation powered by AI, big data analytics, cloud, and connectivity will allow governments and businesses to develop a new standard for value creation. Technologies such as AI and Machine Learning (ML) turn data into action and action into value. They enable autonomous operations, resilient decision making, and optimization, all of which are key focus areas for a digitally-enabled organization today. While AI presents significant opportunities for Smart Cities and national digital transformation, it also raises ethical issues and increases the potential for misuse, unwarranted security, and invasions of privacy.

Digital Identities Will Allow People and Things to Thrive in the New Smart City Paradigm

The year 2020 has changed the landscape of enterprise infrastructure, with the COVID-19 pandemic forcing workers, customers, and business processes to adapt to a new operating model in which remote access, untrusted networks, and data security were more profound than ever before. To provide seamless citizen and employee experiences, future cities require new models for managing digital trust. The role of digital identities — for both people and things— will thus become pervasive and underpin many aspects of city transformation. By identifying and authenticating people, software, hardware components, and digital services, new capabilities can be rapidly and securely introduced and integrated into ecosystems. This identity-centric approach is one of the most effective ingredients of digital transformation. The interactions between digital identities at scale go far beyond simple user authentication. They build the foundations for strengthening trusted networks, managing risk, safeguarding privacy, enabling security policies, and detecting incidents.

Future Cities to Have Digital Twins of Themselves, to Enable the Move Toward Cognitive Cities

Cities are under tremendous pressure to cater to the needs of digital natives. Triggered by the rapid buildup of sensory systems — the network of connected things — and fueled by data, major cities are going through a period of rapid cognitive city development. Municipal operations teams are creating data models that can visualize a city's complex operations in real-time, models which are otherwise known as digital twins. These data models are live digital blueprints of physical assets, processes, and ecosystems. What differentiates digital twins from traditional visualizations is their dynamism and real-time capabilities.

Digital twins will drastically improve city operations by improving response to emergencies, optimizing traffic flows, and ensuring efficient energy management. Global market research firm IDC predicts that 40% of cities will use digital space planning tools — such as digital twins— by 2022. These tools will be used to speed up the socioeconomic recovery from the COVID-19 pandemic and ensure the safe movement of people, goods, and services.

Urban Predictive Operations Will Enable City Operations to Be Predictive Rather than Reactive

Cities are increasingly focusing on resiliency as a critical aspect. Resiliency, here, refers to a city's ability to respond to a potentially disruptive event, such as a natural calamity or a pandemic, in a timely and efficient manner. Cities are consequently building 'urban predictive operations centers' to elevate their resiliency. These real-time intelligence centers combine data, technology, and human expertise shared across various departments, such as police and fire departments, road and transport authorities, hospitals, and national security agencies. They convert data into information that various city departments can use to respond quickly and efficiently to emergencies. Such centers harness the power of the Internet of Things (IoT), big data analytics, and intelligence to unearth patterns that are vital in situations such as the outbreak of disease.

Cities to Provide Personalized and Immersive Experiences to Citizens, Residents, and Visitors

This century, customer experience has become the driving force behind economic development and strategic planning, significantly impacting how cities function. The cities of the future will be defined by the engaging and effective citizen experiences they can provide. Extended Reality (XR) is a key technology enabler in this regard, bringing together physical and virtual worlds.

The year 2020 was pivotal in the short history of Augmented Reality (AR) and Virtual Reality (VR) technology, primarily due to its accelerated use to combat the COVID-19 pandemic. Lockdowns, social distancing measures, and similar restrictions on the movement of people and goods have changed how we collaborate, learn, play, and consume services. Many cities are experimenting with various XR technology use cases, particularly as XR can bypass restrictions and provide superior citizen experiences across multiple areas, including entertainment, tourism, travel, healthcare, education, city operations, and the future of work.

The Foundation of the Future Smart City Will Be Built on Digital Infrastructure

The infrastructure of the city of the future will need to support digital workforces, provide citizens with continuous personalized experiences, and enhance the digital economy. Three elements will be critical for such future-ready digital infrastructure: real-time functionality, scalability, and security. The various elements of a digital infrastructure need to work in tandem to ensure the smooth functioning of the future city:

• Connected things ranging from cameras, sensors, wearables, smartphones, and computers will act as the sensory networks of the city.

• Networks of intelligent elements need a secure cloud-native backbone that adheres to local and global data regulations. With its scalability, elasticity, and efficiency benefits, cloud is emerging as the preferred operating model for most workloads.

• The telecom network becomes the nervous system, and 5G — with its enhanced video capabilities, ultra-fast speeds, real-time data integration, low latencies, and support for high device densities — will become a key enabler. IDC predicts that one-third of all Smart City use cases will be influenced by 5G by 2024. Some 75% of large cities will use 5G to scale key services such as real-time and intelligent command and control centers, Vehicle-to-Everything (V2X) connectivity, and smart stadiums and districts.

• City functioning will depend on the smooth flow of data between the sensory network and the telecoms nervous system as well as the conversion of data into actionable insights through technologies such as AI and big data analytics.

Many urban zones in the Middle East are striving to build a futuristic city — a place defined by high-quality and sustainable living standards. Such cities need to serve the next generation digital citizen, who craves continuous personalized experiences, while catering to location-agnostic digital workforces and supporting innovative digital enterprises. Fueled by data and powered by AI, a new generation of Smart Cities will possess real-time awareness and the ability to predict and proactively respond to events.

Public sector organizations should understand these Smart City evolution trends and strive to enhance citizen experiences to get ahead in the digitalization era. Governments pursuing national digital transformation must create regulatory guidelines to manage the long-term changes in employment patterns, public safety, and digital trust arising from new and evolving business models. Technologies such as AI, big data analytics, IoT, cloud, and intelligent connectivity are critical components of this Smart City evolution. The realization of future-facing city visions will depend heavily on incorporating these technologies into city operations and building a robust digital infrastructure to support them.

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