The head of urban development at Siemens tells us why investors are growing more interested in smart cities (SIE)

Smart cities are no longer a futuristic fantasy. Large enterprise technology vendors and network operators like AT&T, IBM, Cisco are all lining up behind smart-city projects in one way or another.

Additionally, legacy industrial companies that have long helped cities build physical infrastructure are playing a central role in this developing market by connecting that infrastructure with sensors and software. During Siemens Finance Week, Business Insider Intelligence spoke with Martin Powell, head of urban development at Siemens, about the company's plans and the broader smart-city landscape.

Powell explained that large-scale smart-city projects are no longer cost-prohibitive. In the wake of the 2008 financial crisis, depressed tax revenue meant cities typically couldn’t fund smart-city initiatives alone. At the time, bringing in private investors proved difficult, Powell said, but now investors' appetite for these sorts of long-term investments is growing, as the economy has improved and some smart-city applications have matured. This is further evidenced by the increase in public-private smart-city partnerships last year.

Additionally, smart-grid projects are now outpacing those focused on smart transportation use cases, according to Powell. Smart-grid solutions that allow cities to monitor power and water usage, and predict infrastructure maintenance requirements, have clear cost-savings benefits, and, as a result, are often among the first smart-city applications to be built.

If a portion of the grid goes down, for instance, and millions of residents lose power, it can lead to millions of dollars in lost economic activity and government resources. The value of the investment becomes transparent to the tax-paying resident. Transportation applications like automated train signals or vehicle-to-infrastructure (V2I) communication technologies have more intrinsic value – transportation operating more safely, running more efficiently and saving residents time. However, installations can require shutdowns in public transportation services, typically require cooperation from private building owners, and the cost-savings is less visible, thus persuading city officials that they need to be built right away is more challenging, Powell shared.

Legacy industrial companies like Siemens are well positioned to leverage their large technology portfolios and diverse backgrounds to accelerate smart city adoption around the world. Siemens offers both hardware and software stacks for smart city projects, including various sensor suites and its cloud-based MindSphere platform, which allows city officials and private companies to write applications specially designed for smart-city management. MindSphere also allows them to store and analyze data on water and energy usage and the movement of vehicles, pedestrians, and trains. Moreover, Siemens can leverage its sizeable financial services arm to offer the necessary debt financing to step in when private investors cannot, and make these projects a reality.

Smart cities are cities that leverage internet of things (IoT) devices like sensors, smart lights, and smart meters to gather data that can be analyzed to gain new insights regarding their infrastructure, population, and public services.

The smart cities segment has enormous potential as a market for IoT solutions, but it is also an inherently slow-moving market. However, many cities are starting to address these challenges, and smart-city development around the world is accelerating.

Jonathan Camhi, research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on smart cities that: