Digital and data-driven services have become an integral part of society, including the way cities function. Whether it’s validating a public transport ticket, making data-based decisions for granting subsidies, or operating a circular economy service, data is everywhere. However, beyond deployment of individual smart solutions, a broader question arises – what is the role of data and smart technologies in society at large, and how should urban stakeholders approach these?
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Smart technologies and data – yet another tool or infrastructure of future cities?
Published on 17.02.2025
Written by Sille Sepp, FinEst Centre for Smart Cities
Datafication of cities and emerging opportunities
The shift towards data-driven decision-making and development in key urban sectors such as mobility or environmental protection is driven by the increased accessibility of technologies like Internet of Things (IoT), artificial intelligence (AI) and cloud computing. These technologies enable collecting, processing and analysing vast amounts of data in real time, helping municipalities and businesses alike operate and solve complex challenges more effectively as well as reduce costs in the long run. For instance, with the help of computer vision technologies, one can assess road quality and signage automatically, reducing the need for costly manual inspections. In addition, AI-powered operation of traffic lights is no longer a novelty – many cities are using them to manage traffic flow, reduce congestion and lower emissions.
Furthermore, there are technologies and knowhow available in the market which enable cities to digitally represent both its physical environment as well as social interactions within, creating a digital twin of (at least part of) the city. Those representations can then be used to simulate various scenarios, such as optimising district heating systems or responding to environmental crises. One example of such digital twin products is Herbarium.ai, which uses 3D models to analyse the growth of different tree species and assess the impact of urban greenery on the surrounding environment. Their plan is to further extend the solution with underground root system models to support infrastructure planning and predict the resilience of urban trees in case of damages. It’s clear that new technologies and data-driven processes are making urban planning and public service delivery more efficient. But how should cities respond to these technological changes, and how should they manage them?
City as a complex ecosystem
It is worth emphasizing that cities are multi-layered ecosystems comprising of various stakeholders, technical and non-technical systems, as well as complex social, cultural, and economic relationships. Therefore, it would be naive to assume that isolated technological solutions could comprehensively replicate and manage the dynamics of a city. Instead of deploying individual smart technologies, cities and communities should take a strategic approach to (digital) development. This means combining best practices from enabling public-private partnerships, fostering innovation and responsible introduction of cutting-edge technologies. Public funds should be invested in developments that provide local administrations and communities with a foundation for scaling their activities in the future, while optimising long-term resource management and cost efficiency.
A crucial factor in leveraging data-driven innovations is ensuring access and reuse of data. However, this requires interoperability which can fostered by the use open standards (among other key aspects). For example, Barcelona and Rotterdam have required vendors to use open standards through procurement details, to avoid vendor lock-in and enable smoother integration of future solutions into a unified data sharing infrastructure. The European Union is also moving in this direction, by supporting cities, businesses, and communities in sharing data across borders and creating value from it.
Rethinking how we perceive data
To avoid (re-)creating a chaotic mix of digital applications that lack interoperability and hinder data sharing and reuse, we must rethink our approach to data. First, data is not merely a tool for individual organisations; it is an inexhaustible and non-rival asset which value emerges only through use. Enabling access to data (even if conditional or with a fee) can boost data economy. Second, data is directly or indirectly linked to people and their activities, which means that there must be a social agreement regarding its use. A recent but rare example of a public debate on data usage and exchange arose in discussions about whether—and under what conditions—Estonia should share its language and cultural data with the tech giant Meta for AI development. Third, data often carries broader societal value. Therefore, we must find ways to ensure that leveraging data benefits the society at large, not just the selected few. Beyond open data, there is increasing discussion about private companies sharing data for the common good, whether for environmental protection (e.g., ESG reporting) or public health (e.g., mobile network data in crisis situations).
Given these considerations, data and the technologies that enable its vast collection, processing and sharing, should be seen as essential infrastructure for a thriving living, working and business environment. Local governments play a key role in engaging stakeholders into creating a shared vision for the future as well as setting conditions that promote an open digital ecosystem. Afterall, the smartness of cities and communities does not lie in the number of technological solutions deployed at a given moment, but in their ability to create open, resilient and sustainable ecosystems.
The FinEst Centre for Smart Cities brings together researchers and practitioners to develop smart solutions for complex urban challenges. A key focus of our work is exploring innovative governance models and data management practices, which will also be the central theme of the Smart City Exchange Forum on March 13 at the Proto Invention Factory in Tallinn, Estonia.
The forum will gather key public sector partners, city leaders, researchers and entrepreneurs to discuss how data, AI and smart governance can support the development of sustainable and people-centric urban spaces.
