Cities will be a key arena as the Internet of Things (IoT) develops, says a new McKinsey Global Institute report, “The Internet of Things: Mapping the Value Beyond the Hype.” The IoT, which includes everyday physical objects such as actuators and sensors linked by networks to computing systems, is already being used in cities in transportation, public health and safety, resource management and service delivery. Go here for information on the report.

By 2025, the report’s authors estimate that IoT applications in cities could have an economic impact ranging from $930 billion to $1.66 trillion per year.

GPN asked Michael Chui, one of the authors of the report, for his views on the IoT in cities. Chui served as municipal chief information officer in Bloomington, Ind., for four years before joining McKinsey. Here are Chui’s views.

GPN: Do the McKinsey IoT authors have any advice for city officials on how to embrace the IoT?

Michael Chui: Number 1, most important, is to just develop a base level understanding of the technology and what it means. Just try to understand what the IoT is. It’s really a set of concepts.  I think the second thing to do is to understand that this technology has applicability across many different activities that a city or county might do. It spans everything from public safety through sanitation, water-wastewater, parks and recreation. It includes, the infrastructure, generally speaking, roads, bridges—the potential applications are many.

So this isn’t just something a mayor or city manager or county commissioner needs to understand. But rather, city officials need to bring their knowledge and education of these potential functions to all municipal department heads etc., and then try to prioritize where all of the opportunities are, because you can have many different opportunities here, and within many different departments. City officials need to make sure that they are investing in the areas of highest potential.

GPN: Who should city officials contact as they look for ways to incorporate the IoT within their operations?

MC: Many vendors are already taking IoT solutions to their municipal clients and customers. I think it’s less likely that officials in cities and counties will need to reach out to vendors to request IoT solutions. I think it’s more likely that they will need to make sure they are thoughtful about investing in the solutions that have the highest potential in order to improve whatever metric or goal that they are trying to achieve—whether it’s reducing response times, increasing the quality of drinking water or improving traffic management. I think the vendors are going to show up with IoT solutions. I think it’s important for cities to make sure that they are not just buying what’s in the vendor’s bag. Cities should be trying to determine the most valuable places where they can deploy the technology.

GPN: Are there any resources that can help cities get up to speed on the IoT?

MC: The most valuable resource is to have staffers with IoT knowledge who are in the decision-making process within key city departments and agencies. Also, you want whatever decision-making bodies, whether they are advisory boards or management councils, etc., to be well educated about IoT.

Also, it’s wise to take advantage of whatever academic resources that might be available in your community. These can include university engineering departments.

GPN: Do you have any other advice?

MC: One needs to be aware that within the IoT there are sets of important risks that need to be managed. Municipal leaders need to understand the risks around privacy and cybersecurity as they deploy these systems.

GPN: Thank you, Michael Chui, for your views.

In the video, McKinsey's Michael Chui discusses the latest research about the potential of the Internet of Things.


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