First of all, what is a smart city? “A smart city gathers data from smart devices and sensors embedded in its roadways, power grids, buildings and other assets,” describes Jon DeKeles of the Smart Cities Council. “It shares that data via a smart communications system that is typically a combination of wired and wireless. It then uses smart software to create valuable information and digitally enhanced services.” The Council’s goal is to “create smart, sustainable cities with high-quality living and high-quality jobs,” he writes.

And depending on whom you ask, the smart city may go beyond even that. “A smart city happens when three specific networks interact: the communications grid, the energy system and the so-called “logistics internet”–which can track people and things through transport and supply systems,” writes Paul Mason in The Guardian. “In a smart city, you need data to flow freely across sectors that, in the commercial world, would normally be separate. The energy system needs to know what the transport system is doing.”

What makes this important? Because, increasingly, the world’s people are living in cities and the world’s economy is driven by them. “More than half of the world’s population currently lives in or around a city,” writes Gregory Mone in Communications of the ACM. “By the year 2050, the United Nations projects another 2.5 billion people could be moving to metropolises.” In the future, cities are expected to account for nearly 90 percent of global population growth, 80 percent of wealth creation, and 60 percent of total energy consumption, according to MIT’s City Science program. Similarly, about 80 percent of global GDP is generated in cities–“driven by a mixture of urbanization, geographic sprawl and concentrated zones of innovation,” Mason writes.

At the same time, cities are often the biggest source of environmental issues, so efforts to reduce their impact can have big payoffs. “Investing in public and low emission transport, building efficiency, and waste management in cities could generate savings with a current value of US$17 trillion by 2050,” according to the Global Commission on the Economy and Climate.

Solving the environmental challenges are a big reason why countries such as China and India, with large, growing populations and economies, have been the quickest to embrace the smart city concept. Since 2013, 193 cities or city districts in China have developed plans to set up a smart city pilot, while in 2015, the Indian government announced that it would invest in 100 smart cities, according to Tom Saunders and Peter Baeck in their report, Rethinking Smart Cities From the Ground Up. The U.S. has also launched a $160 million smart city initiative.

Originally, smart cities were intended to be built from the ground up, sort of like SimCity in real life. But proponents soon discovered that didn’t work. “Many of the champions of these early smart cities were IT companies who knew a lot about advanced networking technologies and data analytics but little about how cities work, which is why they focused on building new cities from scratch rather than engaging with the issues actual cities face,” Saunders and Baeck write. “However, critics showed how impractical it would be to apply technology developed for utopian visions to real–world cities.”

Some of the issues smart cities have to deal with aren’t all that different from the ones any company has to deal with, such as knowing what technologies to invest in, Saunders and Baeck write. For example, while a network of sensors embedded in roads and sidewalks could provide useful information, it could be more useful to first figure out what sort of problems the sensors could help solve. Moreover, upkeep and maintenance could make the project cost more than it saves, they explain.

Similarly, smart cities struggle with silos and integrating information from different sources—just like companies—and there’s more to it than just integrating technology. “London, for example, has 33 boroughs that all generate their own data but share little of it with each other,” Saunders and Baeck write. “While data integration can bring huge benefits, it requires significant changes in culture, as well as city staff who understand how to interpret findings. However, in the smart city, data integration often becomes more about multi–million pound city control rooms rather than addressing difficult issues around skills and culture.”

And, of course, there’s the security issue to deal with. What happens if your smart city goes down, gets hacked, or has a bug? “Cloud-computing outages could turn smart cities into zombies,” warns Anthony Townsend in Places Journal.

Ultimately, smart cities have some of the same challenges that any company does, such as making sure to fit new technology into workflows and using systems that can communicate with each other, Saunders and Baeck write. “Cities must become more like technology companies—developing technology roadmaps, partnerships and key deliverables that advance the quality of life for their citizens,” writes Dan Ault, senior management analyst for the city of Elgin, Ill.

Moreover, the most critical component of any smart city—and one that often gets neglected—is its people, writes Dustin Haisler, Chief Innovation Officer for e.Republic. “People are the smartest aspect of any city and are capable of far more than simply living in it.”

Most of all, experts agree, cities need to make sure they get their opinions of their “users”—the citizens. After all, that’s just smart.