High Performance Meets Intelligence: The Importance of Advanced Fare Management

Mass transit providers seeking to implement new fare management concepts like electronic fare collection systems should strive to make the most of the business intelligence they offer. Failing to do so can mean sacrificing high performance in an extremely competitive and challenging market.

Public transport operators — from bus and urban center shuttles to light-rail providers — are faced with enormous obstacles in today’s marketplace. Key among these challenges is satisfying customers. Passengers have become accustomed to swifter, more personalized service in many aspects of their daily lives and are demanding the treatment from transport providers. Yet, many mass transit companies are under severe financial stress due to decreased funding or pushback by ridership on increased fees, making it difficult to operate current services at a high level of performance, much less expand services.

Despite this challenge, organizations cannot afford to do more of the same and still hope to succeed in the changing business environment. They must develop the capabilities needed to capture customer insights and gain more interaction with travelers to better understand their needs. Customer insight and engagement will significantly increase the ability of providers to satisfy travelers by positively impacting ridership, operating costs and profits, the key elements of high performance in this industry. Electronic fare collection can help generate that insight.

What Advanced Fare Management Can Mean for Providers

There is an acute need to reduce costs throughout most transit organizations’ value chain as they contend with funding uncertainties. This is in addition to responding to riders’ demands. Developing more advanced fare management capabilities that use the information business intelligence provides helps companies improve operating efficiency and create a more intelligent infrastructure to sustain efficiency.

For example, companies employing sophisticated predictive analytics monitoring can support service improvement and cost by verifying collection and providing access to relevant, real-time data that transit organizations can act on. This technology can enable providers to continuously gather, interpret and correlate fleet performance data. This allows them to optimize maintenance and labor schedules, predict equipment failures and make more efficient use of fuel and other operations consumables — all lowering the cost of ownership. Although these fare collection and fleet intelligence capabilities can be used separately, their impact is magnified when used together tocontrol costs, improving the effectiveness of mass transit services.

The application of real-time information systems goes beyond managing cost. Using location-based tracking technology, these systems can provide passengers with relevant, accurate and up-to-date travel information. At the same time, these systems can generate intelligence on passenger flows, helping operators achieve greater efficiencies through improvements in areas such as scheduling, demand management and fleet utilization. Moreover, real-time systems can help improve safety as operators can immediately learn about and respond to issues in the field, as well as monitor network activity, to provide more preventative initiatives.

Business intelligence can beinvaluable from a customer service standpoint too, helping providers manage cost, while at the same time boosting ridership. New levels of convenience and connectivity to help travelers make the best use of their time should be a high priority. But ironically, while transport operators probably touch more people on a daily basis than any other urban entity, few may really know their customers or how to connect, engage or market to them. Going beyond the use of electronic fare collection as a more efficient payment scheme by analyzing customer data, providers can address this challenge.

Equipped with smart electronic media, passengers enjoy swifter, simpler, safer travel, while providing operators with the detailed, granular view of traveler activity, trends and mobility behavior to enable enhanced customer service. It also enables the development of marketing initiatives that target specific traveler needs and preferences.

This may include more convenient, customized routes for customers, on-board movie viewing or distribution of discount entertainment packages that are of particular interest to passengers. Moreover, the interoperable capabilities of an electronic payment system, linked to technologies, such as mobile, laptop, wireless data devices or global positioning systems — can extend the service experience to help travelers quickly locate their parked vehicles via GPS technology during or after travel, upload discount fare coupons to their hand-held devices or facilitate retail activity like fuel purchases.

Organizations that utilize the more traditional method of fare collection, where cash payments are gathered and counted at the end of the day, should seriously take into consideration adopting more advanced forms of fare collection like automated payment systems. Legacy systems, such as cash-based collection, at best, remain an anonymous activity that does not provide operators with customerinsights or the engagement needed to succeed in today’s market.

Companies that can expand the capabilities of their fare management systems to create exceptional customer service experiences from business intelligence will differentiate themselves from competitors that provide less customer-centric service. Customers will view the services of such providers as superior to that of the typical commuter experience, enabling potential for increased ridership. This will provide the opportunity for increased revenue generation, the ability to better manage operating costs and the opportunity for companies to grow profitability.

Accenture experience has shown those high performers to be the mass transit organizations that provide consistent, exceptional service to customers, satisfying the interests of all stakeholders involved, while managing costs and increasing revenues. Advanced fare management is increasingly being used by companies to accomplish this goal.

Ensuring Sustainable High Performance

High-performance organizations define the value of new undertakings, explore options and develop a strategy for embarking on a new direction to sustain performance. Mass transit providers should consider this in order to successfully upgrade their fare management capabilities.

An essential part of being able to achieve this is taking the necessary steps to ensure the organization is on the right track. It is critically important that providers define what it will take to develop their particular advanced fare management capabilities, and what they are seeking to achieve. Because most public transportation systems are not fully commercial, self-funding ventures, they should incorporate an evaluation framework that reflects public service value, as well as the shareholder value methods more appropriate for private entities. The key is determining not only what schemes end users value most highly, but what will deliver the greatest value for the company.

If the provider is to establish a compelling business case to secure stakeholder buy-in before proceeding with a fare management transformation, it is vital to take a long-term view of what available solutions can be achieved, as well as likely future developments and requirements. For example, technologies that sustain electronic fare collection are constantly changing. Contact-less bankcards, mobile and wireless data services and GPS technologies are enablers for the future of mass transit; harnessing their capability while avoiding a system that quickly becomes obsolete is a key challenge, but not insurmountable.

The provider’s approach should encompass, people, processes and technology — and proceed in harmony with a solutions design for the business organization and operations. Critically, the design should include clearly defined specifications for both current and future fare management solutions so that organizations can move forward in the knowledge that they are well-positioned to manage developments in fare media technology and security, as well as constantly evolving customer demands.

Fare management systems are huge undertakings, with significant long-term implications for business processes, organizational structures and customer relationships. And, there are many issues to consider. Resistance to change is just one aspect of the challenge that fare management systems pose. Failure to review and update business models impacted by new technologies is another. But the results of introducing a multi-operator smartcard ticketing with the correct revisions to fare and tariff structures between operators would satisfy customers, as well as operators.

Organizations should select a strategy then develop detailed implementation plans and operational frameworks to support success, underpinned by strong governance models. They are a necessity, from the early stage of bringing together different viewpoints and coming up with a workable long-term strategy, through delivery to the operation.

For example, one company’s transport project was the Netherlands’ fifth serious attempt to introduce a nationwide electronic ticketing and payment system. Its predecessors all failed to reach agreement between the country’s nearly 20 different, and often turf-conscious, public transport operators. So, the company was careful to get its governance structure upfront. The company also helped ensure operator buy-in right through to the launch of what became the world’s first “single card access” to all forms of public transport by holding regular workshops and meetings for all the participating agencies, and sharing progress reports and key issues with relevant decision-makers.

To succeed, it will be critical that companies establish a reliable and robust platform. This includes gaining the trust of travelers and offering them flexibility in terms of payment choices. Critical also will be the need to manage the complexities of diverse fare structures between travel modes and those of governance between and among operators. Lastly, such systems must be open, flexible, modular, reliable and scalable, offering solutions that can adjust over time to continually shifting demand.

Optimizing the Full Potential of Fare Management is a Must

The creative and effective application of advanced fare management strategies will become more and more important to the performance of mass transit operators as they continue to contend with the enormous challenges that they face today and will continue to face in the future.

The public transport market will continually evolve and become more complex as traveler demands for more convenience, speed and personalized service grow. This challenge will be further complicated by more budget challenges and the increasing need to satisfy multiple stakeholders, as well as customers. And, technologies that support more sophisticated fare management systems and strategies based on the business intelligence that can be gained from them will continue to be in a state of constant change.

Providers that can use fare management strategies to their full potential will be able to effectively respond to the shifting and growing demands of customers, while controlling costs and delivering to all stakeholders involved the promise of advanced fare management. To keep pace with enabling technologies, companies will need to build within their planning process the flexibility to accommodate inevitable technology changes. And, sustaining exceptional customer satisfaction ultimately will translate into increased ridership that will help manage cost, grow revenue and aid profitability.

The future of mass transit is being driven by urban growth, putting public transportation at the center of the debate. The demands of the marketplace are creating a business environment where public transit providers will need to innovate more than ever. Utilizing all the value that the business intelligence generated from advanced fare management can provide will support such innovation and enable companies to lay the foundation for future success and stay on track toward achieving high performance.

Mark Elliott is a senior executive with Accenture, based in London.