Issue 8: January 2014

SMART TICKETING AND SMART CITIES

By David Storrie, Senior Manager - People and Organisational Change, Ernst and Young

By 2020, the Smart Cities industry will be worth $400 billion globally – with a substantial share of $40 billion expected for the UK.  Manchester’s ‘Get Me There’ Card, the West Midland ‘Swift’ Card, and the Strathclyde Partnership ‘Smart Card’ are just a few examples of smart multi-modal, multi-product, and multi-operator ticketing schemes that are being introduced at this moment.

Increase in cities with a smart ticketing scheme compared to 5 years ago:

It is no secret that smart ticketing will contribute to improving the ease of using public transportation. Furthermore, this is just the beginning – in the near future it is anticipated that all major UK cities will allow passengers to travel using not just a smart card, but also contactless bank cards, smartphones, even wearable devices. The integration of more and more operators will lead to new technologies being developed, reaching beyond public transportation to creating a smarter environment, smarter governance, smarter economy, and smarter living – all in all, smarter cities.

 

Scottish context

Transport Scotland's vision is “That all journeys on Scotland’s bus, rail, ferry, subway and tram networks can be accessed using some form of smart ticketing or payment”. Strathclyde Partnership for transport is implementing a smart ticketing scheme on the Glasgow underground with a view to using this as a platform for wider implementation. All buses in Scotland are ITSO (Integrated Transport Smartcard Organisation)-enabled allowing concessionary travellers to use National Entitlement cards and smart cards. On all major railway routes infrastructure is in place to enable the use of smart cards. There is also a move to create an integrated fulfilment service that will allow interoperability and could accelerate the adoption by commercial schemes and operators.
Beyond transport ticketing schemes there is an emerging “the internet of things”.
  
Scottish Enterprise has a vision that “By 2020, Scotland will be the global location of choice for the demonstration of Smart Mobility products, services and business models. It will be an exemplar of their adoption and a leading international provider of Smart Mobility technology and engineering products, services and know-how.”

There will be around 50 billion moving, smart devices by 2020. A smart ticketing scheme will enable moving and fixed-point ‘things’ to communicate without interaction. This will empower consumers to receive information, make purchases and trigger events all in real time. It has been demonstrated that once customers adopt a smart card then this tends to open up additional uses of smart applications.
 

What are the benefits of Smart Ticketing?

The main question is: Who really benefits from a Smart Ticketing scheme? At EY, through our Benchmarking studies we have identified some potential benefits for customers, operators, and society overall.

For customers, a ‘smart’ card will mean transactions are easier and faster due to the speed at which products are loaded and read. Boarding is also quicker, as a smart card eradicates the search for cash when purchasing a ticket. Access to new ticket types, such as flexible season tickets outside of the standard weekly/monthly/yearly pattern allows customers to better match their travel requirements to their flexible working preferences. This comes alongside a wider choice on how to pay for travel and manage services via credit/debit card, on a Smartphone, or on the web. Lastly, smartcards provide greater customer security and fraud protection, as lost or stolen cards can be blocked immediately with any remaining balance refunded.

There will be around 50 billion moving, smart devices by 2020. A smart ticketing scheme will enable moving and fixed-point ‘things’ to communicate without interaction. This will empower consumers to receive information, make purchases and trigger events all in real time.

For operators, we identified clear improvements in costs and efficiency. Eradication of paper tickets means lower sales and administration costs, whilst less cash handling reduces theft. The digital nature of the tickets allows better provision of services through real-time information delivery. Pricing strategies can be optimised to reduce congestion at peak hours and move closer towards ideal public transportation – ‘right place, right time, right cost’.  Location-based services (LBS) offer opportunities for partnering with retailers to offer relevant products and services to the passenger and tapping into estimated consumer revenue of £6.2bn by 2015*. LBS and smart connectivity can also be leveraged for marketing purposes due to the positive influence they have on user loyalty.

If both customers and operators benefit, society benefits overall.  Ease and convenience of use for passengers alongside more flexible ticket purchasing is likely to lead to a modal shift towards public transport. This is a key step in both increasing social inclusion and reducing traffic congestion and therefore carbon emissions. In London, we have seen an increase in distances travelled on public transport by 45% between 2000 and 2010, partly induced by the introduction of the Oyster Card in 2003.  On average, Smartcards have increased patronage by 20% in the UK.

So what insight have we gained from other countries and schemes across the world? 

Globally there have been various smart ticketing success stories. Examples include San Francisco’s ‘Clipper’ Card, which automatically deducts the right fare including transfers and discounts, is accepted on various transportation models, and can hold multiple passes, ride books, and tickets. The Hong Kong ‘Octopus’ card has proven effective through its usability for not only virtually all public transport systems in Hong Kong, but also selected retailers and restaurants. Next to this, an integrated Android App that makes use of Near Field Communication (NFC) allows customers to view various details about the card on their smartphone.

We have drawn up some key insights from other schemes and have created a list of ten potential Success Factors that could influence the delivery of successful smart ticketing schemes.

If both customers and operators benefit, society benefits overall. Ease and convenience of use for passengers alongside more flexible ticket purchasing is likely to lead to a modal shift towards public transport. This is a key step in both increasing social inclusion and reducing traffic congestion...

In setting out the general strategy for the transformation programme, two crucial goals must be set: (1) Building value into every aspect of the service, and (2) Ensuring usability and customer focus. Core service levels must be set and maintained as a minimum. The network must run like ‘clockwork’, providing a seamless customer experience. In terms of project financing, it is important to (3) Identify and test all potential sources of funding throughout the lifecycle of the programme. Capital should be sought from Treasury, DfT, and alternative funding mechanisms, as we are seeing increased funding becoming available. The ambition of the scheme should be aligned to the commercial model early on. By (4) Setting clear vision, business and technology requirements, change required during implementation is minimised. Nevertheless, a successful programme in the long-term must be future proof for changes in technology, customer demands and stakeholder needs.

As a prerequisite to project kick-off, it is vital to (5) Get and keep political and commercial agreement from the outset. Strong engagement with bus and rail operators is required early on. An effective stakeholder management system should be in place to ensure positive relationships with governing bodies and industry-wide contacts. Similarly, (6) Building strong and effective relationships with proven technology provider(s) is key because of the long-term commitment nature of the programme. System infrastructure is likely to develop further within 2-3 years of implementation, and it will be expected by customers to adopt these changes.

Before commencing implementation, (7) Install effective programme governance and management. It is absolutely crucial to establish and utilise robust control measures to warrant business readiness during the really busy phases. The actual roll-out process should then (8) Follow a staged implementation approach, broken down into manageable delivery phases without a big bang. Given this, it is important to (9) Realise the benefits to monetise investments. Clear customer satisfaction measures should be built into staffs’ scorecards, which may come from the vast amount of customer data available through the scheme.

Lastly, we feel that (10) A Smart Ticketing transformation programme could be used as a catalyst for change within the organisation. Harnessing the investment commitment, there is little reason not to use this opportunity to undertake a customer-led transformation that will also improve employee experience, that will result in a business culture of ‘customer first.’

So what could accelerate adoption?

There is an increased appetite for the adoption of Smart Ticketing within the transport industry and in local and national government. What we have learned both from our Global Benchmarking study and from practical experience in supporting TfGM’s getmethere scheme in Greater Manchester demonstrates that adoption requires a catalyst to create momentum. The catalyst for increased adoption could be for a city to show the way and implement a truly multi-modal scheme that brings together the interests of the travelling public, government and commercial operators. Our benchmarking shows that customers engage far more with schemes that work across the entire network and particularly so when led by cities at the heart of that network. Who will be the Smart City to lead the way?

 

David Storrie is Senior Manager - People and Organisational Change with Ernst and Young

* Pyramid Research's "Location Based Services Market Research 2011-2015", May 2011

By David Storrie, Senior Manager - People and Organisational Change, Ernst and Young

Issue 8: January 2014

Issue 8: January 2014

SMART CITIES: SMART SERVICES: SMART WORKING

Smart Cities: Smart Services: Smart Working Editorial

In focusing on 'Smart Cities' let's start with a few teaser questions (answers at the foot of this column)...

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