Digitalisation in cities may not be possible in developing economy. Because of weaknesses in public institutions that will plan, develop and implement digital systems. To achieve sustainability in digitalisation for cities in developing economy requires investment in digital technology and backing by strong institutions.
Your question is really very vast. In very simple terms, we can observe that "digital transformation" is a deeply ambivalent process. there is no 'natural' correlation with the normative orientations we usually associate with "sustainability.
-- If we look at the ecological dimension of sustainability, we see that digital transformation is inducing many new forms of energy consumption and also, quite aside from the wastes and side-effects of the various energy production processes, is impulsing the production of myriad gadgets such as smartphones, batteries, data centres, screens, etc., that require specific material inputs (e.g., rare earths) who extraction, transformation and subsequent disposal can be strongly perturbing to human health and to other Biosphere processes at various scales.
If we look at the social dimension of sustainability, we see first of all that digital technologies can be vectors of new forms of violence, including cyber-criminality, cyber-terrorism, surveillance [Big Brother], and profound manipulation of the "data" that feeds -- through the 5 senses -- cognitive experience of each of us and of us as cultural and social beings. So, what array of "indicators" might be proposed, in order to characterise (i) the ways in and extent to which a city is becoming "smart" (= digitalised?), and also (ii) the ways in which the experiences of well-being and community are being modified "adversely" or favorable? Personally, I would favor tghe application of a framework like that proposed by Max-Neef, with several different dimensions of human needs/capacities for characterising wealth, deprivation and vulnerability. But a detailed response to your question would need to work through some "case studies" that that would be a fully-fledged research programme.