ORCHESTRATING A MOBILITY ECOSYSTEM · take an active role in regulating the mix of public and...

ORCHESTRATING A MOBILITY ECOSYSTEMHow can public transit authorities pivot to a multimodal future?

As transportation ecosystems become more complex, public transit authorities responsible for bus, rail and metro services worldwide are under intense pressure to make the numbers add up while meeting fast-rising Amazon-era customer expectations. Digital entrants are disrupting traditional business models with new transit services that offer customers greater choice and convenience.

So how should governments and public transit authorities respond? How can they embrace change, optimize use of public funds and improve the mobility experience for all citizens in a multimodal future? It’s time to depart from conventional wisdom and explore new approaches.

2 ORCHESTRATING A MOBILITY ECOSYSTEM

Transit in transitionDecoding disruption

Disruption is an inescapable and growing challenge for all industries. Our most recent analysis of 10,000 organizations revealed that 71 percent are in the throes of, or on the brink of, significant disruption. And public transit is no exception. Based on current risk and future susceptibility, the Accenture Disruptability Index ranks

levels of current disruption and susceptibility to future disruption across all industries. As seen in Figure 1, the transportation services industry is currently indexed at the Volatility stage, making it one of the sectors most exposed to imminent disruptive change.

However, the good news is that disruption is not completely unpredictable—and the better it’s understood, the more manageable it becomes. By being prepared, authorities can harness disruption and turn it to their advantage as a positive force for change, repositioning themselves to seize new opportunities. So, let’s first look more closely at how disruption is impacting public transit.

Comms & Media

High-Tech

Software & Platforms Banking

Capital Markets

Insurance

Health

Automotive

CG&S

IE and Machinery

Infrastructure & Transportation Services

Life Sciences

Retail

Travel

Chemicals

Energy

Natural ResourcesUtilities

18 industry sectors

11% of companies

2018 WEIGHTED AVERAGE

18% of companiesVIABILITY

Industry Sector Matrix—2018 Results

33% of companiesVOLATILITY

38% of companiesVULNERABILITYDURABILITY

LOW

HIG

HC

UR

REN

T LE

VEL

OF

DIS

RU

PTIO

N

LOW HIGHSUSCEPTIBILITY TO FUTURE DISRUPTION

2018

WEI

GH

TED

AVE

RAG

EFIGURE 1: ACCENTURE DISRUPTABILITY INDEX SECTOR MATRIX

Source: Accenture1


The rapid rise of ride-sharing

Globally, customer expectations are changing fast. Whether it’s how we shop, do business or spend our leisure time, we expect more personalized service in every aspect of our lives. We’re all used to the convenience of on-demand services via a voice command or at our fingertips—at home, work and on the go. And we expect the same seamlessness in managing our day-to-day travel requirements.

Disruption in public transit is clearly evidenced by the meteoric rise of ride-sharing services like Uber, Lyft and Didi. They offer more choice and flexibility in how to get from A to B and customers are showing their support with frequent app usage and positive reviews. With many customers clearly willing to pay for a personalized

door-to door-experience, it’s expected that new alternatives will continue to expand and evolve in ways that will both compete with, and complement, traditional public transit.

The success of the ride-sharing economy is impacting customer behavior and competing with traditional transit services. By 2023 worldwide revenue in the ride-sharing segment is expected to exceed $318 billion2. Privately owned digital disruptors are leveraging the sharing economy and connectedness of customers to offer new platforms that don’t need big infrastructure investment and can scale quickly. They are also highly responsive, constantly launching more compelling offers. Think Uber expanding from high-end limousine services to more economical Uber-X and Uber Pool.

Today’s passengers will continue to expect more. And it’s changing how everyone from urban planners to automotive manufacturers are reimagining the customer experience. Accenture recently partnered with Volkswagen to understand different customer mindsets about the future of mobility on the basis that, “If you want to transport people, you have to know what moves them.” 4

Car-sharing, from the likes of Zipcar, Car2Go and VW’s Moia, is on the cusp of being a significant disrupter as automotive manufacturers look to shift their business models from promoting car ownership to car rental and borrowing models. For shorter distances, micro-mobility options such as bike-sharing and e-scooter services are emerging as attractive alternatives. Like ride-sharing and car-sharing, these present potentially competitive

alternatives to public transit or can be added to the mix as complementary options that provide “first/last mile” transportation.

Despite the rise of new mobility alternatives, nearly 80 percent of commuters still see public transit as the backbone of a mobility landscape comprising a mix of current and future technologies, according a study by the American Public Transportation Association (APTA)5. However, unless public transit authorities keep pace, customer satisfaction and trust will fall. Passengers will turn to providers who harness innovation to better anticipate and meet their needs. In public transit, this could drive down revenues as more affluent passengers switch to ride-sharing and other, more convenient alternatives.

The shift in the mobility ecosystem is expanding ride-sharing platforms and often taking more affluent riders off public transit.3

Uber Lyft DiDi GrabScope 600 cities in 65

countries300+ cities in North America

400+ cities worldwide

Southeast Asia

Users 75 million 23 million 550 million 36 million

Rides per day 15 million 1 million 30 million 4 million

Revenue $7.5 billion (2017) $1 billion+ (2017) $27 billion+ (est) $1 billion


Changing travel patterns

These trends coincide with public transit authorities in North America seeing declining ridership, particularly in large metropolitan cities.6 By the end of 2018, for-hire ridership in the US was expected to surpass ridership on local buses. This continuing trend would further widen the gap, considering bus ridership has fallen since 2012 while for-hire ridership has increased.

Passenger transportation patterns are also becoming more complex. With the rise of the 24/7 economy, remote working and flexible hours, public transportation is becoming more personalized and less regular, diminishing the appeal of standard weekly tickets or monthly passes.

This can nudge passengers to pay-as-you-go fares or easy-to-use options with the flexibility to pay only for what they need.

While specific trends vary across geographies—with declining transit ridership far more pronounced in North America—local governments and public transit authorities everywhere need to pay attention to the changing passenger transportation landscape. The future of public transit will depend on its ability to stay relevant and integrate with a growing range of alternative mobility options to provide customers with seamless commuting experiences.

“If you want to transport people, you have to know what moves them.”


Shifting government focusMapping the future of mobility

Faced with these challenges, how can public transit authorities plan for what’s ahead when the market is changing so fast? Because most public transit services operate at a deficit, the loss of more affluent customers to private ride-sharing is a financial blow. When confronting declining revenues, many transit authorities resort to reducing routes or running fewer trips, further disadvantaging less affluent customers.

Regional governments have so far taken different approaches to address the threat posed by alternative mobility services. In Vancouver, Canada, for example, the government has banned ride-sharing services, making it the largest city in North America with no ride-sharing services and one of the few major cities in North America that is seeing increased transit ridership.7 However, in late 2018, the government caved in to

customers’ demands for alternative mobility services and introduced legislation to come into effect in Fall 2019 that would allow ride-sharing services to operate.

With the mobility market morphing rapidly, it’s creating new opportunities for governments and transit authorities to improve choice and rethink access to services. As the benefits to society of new transit options become clearer, economic and social value will lie in the efficient management of an end-to-end mobility system, enabled by a new regulatory approach with the flexibility to best support local needs. With this in mind, there is potential mileage for public transit authorities to start collaborating with automotive manufacturers, technology companies, academia and other private sector partners to explore innovation possibilities around passenger rail and transit.

Governments have a duty to facilitate transportation options that best serve their constituents according to defined policy goals, from promoting regional economic growth and minimizing environmental impacts to improving livability and social equality. Local governments also have the best view of economic and mobility needs across their entire region. As such, they can flex their regulatory muscle to harness an expanded ecosystem of public and private operators to help achieve these goals.

By creating the right regulatory framework, governments can encourage specific behaviors and business practices to realize their policy objectives in smarter ways.

Public transit is only one part of a customer’s door- to-door holistic travel experience. Looking ahead, governments and public transit authorities don’t need to be the physical provider for a customer’s entire end-to-end journey.

By broadening their focus beyond transit to playing a regulatory and orchestrator role, they can work in tandem with private operators and other partners to create a mobility ecosystem that serves passenger needs more holistically. This would also give governments greater scope to tackle the big issues, like targeting underserved populations, reducing congestion, ensuring emissions compliance and providing sufficient mobility options for first/last mile services in isolated areas.

Regulation: obstacle or opportunity?


A golden opportunity

It is imperative that governments and transit authorities take an active role in regulating the mix of public and private mobility providers. If left to private operators to orchestrate new mobility models unhindered, there is a high likelihood that profit-driven platforms will emerge where private operators directly compete with public transit rather than complementing it. Instead of easing social pressures, they would likely be intensified. By contrast, a new regulatory mindset creates a golden opportunity for transit authorities to break down barriers to investment in public infrastructure like expanding bus networks in tandem with private providers, unlocking ties to fixed routes and moving to more demand-driven services in a joined-up way that promotes choice and quality provision.

But it will take a new approach to regulation, using it to orchestrate various players and set the right framework to promote desired behaviors and citizen-friendly outcomes. Governments must play a critical role in regulating new ecosystem-based approaches as part of their commitment to improve the transportation landscape for constituents—enhancing livability, decreasing congestion, providing transit access to low density areas, and supporting equitable access. This shift in responsibility could, for example, take the shape of incentivizing private mobility providers to operate socially inclusive services.

To grow ridership and keep pace with customer demands, public transit authorities need to think creatively beyond traditional structures and embrace mobility-as-a-service (MaaS) models. Integrating multimodal mobility services from multiple partners on a shared platform will enable governments to facilitate more seamless experiences across regional transportation ecosystems. There’s no single blueprint or one-size-fits-all approach. Across the world, government and transit authorities will take different approaches to orchestrating MaaS depending on their current transit landscape and regulatory appetite. Some will choose to own and tightly control the MaaS platform while others will take a more light-touch approach, playing the role of regulator while allowing the market to develop MaaS platforms.

Juniper research suggests that the provision of responsive, on-demand services enabled by MaaS could lead to more efficient use of road vehicles.

Consequently, peak traffic levels could be reduced, lowering congestion and air pollution, while also saving customers time.8 The research also suggests that adoption of MaaS platforms will replace 2.3 billion+ urban private car journeys annually by 2023, compared to 17.6 million globally in 2018. By 2030, revenues from mobility services could soar to almost €1.2 trillion. To make this a reality, it is imperative that governments play a key orchestration role to ensure that private operators complement rather than compete with public transit.

The transition of government responsibility from a public agency to a regulator of private operators to drive efficiency isn’t new. Aviation authorities did this when they sold off state-owned airlines and reset the regulatory framework. This allowed governments to maintain control of the industry and uphold safety standards within their borders, while permitting private operators to determine how to run their services most efficiently and effectively.

Embracing mobility-as-a-service


Pivot from operator to orchestratorAs transit authorities shift their focus and responsibilities from public transit to the full multimodal mix and emerge as regulatory leaders, they can direct the platform as it evolves to connect new mobility offerings. A refreshed approach is required to embrace new partnerships and digital platforms—blending data and analytics, connected devices, connected sensors, network interfaces, cloud and user interfaces—to make access to on-demand mobility easier for people.

To capitalize on these new opportunities, public transit authorities need to be looking to make a wise pivot from managing and operating transportation services to orchestrating them. They could then focus on:

Continuously addressing riders’ end-to-end mobility needs via a single service

contact and app

Offering need-driven, personalized and optimized

combinations of available transportation

Offering and selling mobility services from multiple vendors/private sector

partners


look to the private sector for successful use of intelligent

technologies

say the private sector has helped them meet

their citizens’ demands

are considering using as-a-service models instead

of creating their own

CASE STUDY

Whim: The all-in-one mobility app With its award-winning Whim app, MaaS Global is setting out to make the biggest change in transport since cars became widely affordable. Whim gives its users access to all city transport services in one step, letting them journey where and when they want, choosing from public transport, taxis, bikes, cars, and other options. The Whim service began by transforming transport in Helsinki, Finland and has since expanded to Birmingham, UK and Antwerp, Belgium. It offers monthly transportation subscriptions and pay-as-you-go options for trip planning, ride-hailing and car-sharing—alongside the seamless booking, ticketing and payment common to every kind of mobile app—all on one single app with a single fee. Users get to pick the most efficient way to get between any two places, while the app learns their preferences, favorite locations, syncs with calendars and plans journeys in advance.10

Accenture research among public sector executives shows that, as the boundaries between public and private service offerings become blurred, there is an appetite for public service authorities to embrace intelligent technologies and reinvent service delivery:9

76% 68% 65%


Accelerate from A to Beyond Like most industry incumbents in our digitally disrupted world, public transit authorities must rethink how to stay relevant when market turbulence is the norm. Accenture research has identified five sets of capabilities that differentiate the type of “living business” that succeeds in these conditions. Typically, these businesses are nimbler and can adapt faster to changing customer needs. They are also three times more likely to achieve sustainable growth than their peers.

In a government context, these “living service” capabilities are key to innovation in public services. They will guide the transition from being solely a public transit authority to encompass broader responsibilities that guide the establishment of a regulatory framework for all mobility providers and shape the mobility ecosystem that gets people from A to B and beyond more effectively.

New capabilities to fast-track progress

2. Design for passengersPut customers at the center of delivery and design your services and products accordingly. Continuously adapt to meet ever-evolving customer expectations and stay relevant with personalized options for seamless passenger mobility, end-to-end.

4. Build passenger engagement Design a digital platform using analytics to enable data-driven intelligent marketing, sales and engagement and facilitate seamless mobility experiences. “Build it and they shall come” is no longer viable to achieve uptake of new services and policy goals.

1. Rewire cultureRethink government’s traditional role as a public transit provider tasked with running buses and trains on time. Rewire culture and priorities to take on a clear role as a regional mobility regulator with a customer-first mindset focused on the customer’s entire travel experience.

3. Co-innovate and scale with partnersBuild a thriving ecosystem of strategic partnerships to share data purposefully and efficiently. Collaborate beyond traditional boundaries—such as working with alternative mobility providers or digital platforms—to launch new services and scale innovation fast.

5. Target new growth opportunities Make step changes to core services and embrace disruptive trends, like the ride-sharing economy. Rethink your mobility operating model, shifting from authority/operator to orchestrator while enabling innovation in a transport ecosystem geared to passenger needs.


Faced with these challenges, how do you start mapping your transformation? Wherever your starting point, you’re not alone. Across the world Accenture helps reposition public services, harness digital technologies and build new ecosystem partnerships that affordably and efficiently drive innovation with customers at the center.

Whatever your priorities, we can infuse cross-market expertise with fresh thinking to help you embrace new opportunities, facilitate multimodal mobility and bring seamless passenger experiences to life. Here are a few thoughts to kickstart your journey.

• Reposition around customer-centricity, informed by data analytics and AI. Develop an organizational viewpoint on moving the customer to the center of your business. Foster a culture focused on customer relevance and re-orient organizational structures accordingly, such as appointing a chief customer experience officer or tasking a working group to ideate new approaches.

• Pilot partnerships with private providers and non-traditional transport modes, like private ride-sharing companies and automotive manufacturers, to address mobility gaps/challenges that haven’t been possible within traditional transit models.

• Consider how regulations can be adapted to encourage innovation, remove barriers to investment and allow non-traditional transit providers to play a more active role as part of a more comprehensive transport ecosystem.

Putting these principles into practice will allow governments and public transit authorities to reimagine systems where passengers are automatically presented with real-time choices personalized to their preferences. Priorities will include:

• Regulating and providing a platform for seamless multimodal transport integration• Tracking performance to ensure policy goals and operating standards are being met• Facilitating a mixed ecosystem of mobility providers and private sector partners• Responding to the diverse variety of customers’ service expectations• Appealing to a broader ridership, ensuring equality of access to mobility provision.

Next steps to navigate the new


Copyright © 2019 Accenture All rights reserved.

Are you ready to orchestrate change?Travel with a trusted transit partner

Contact the authorsAlden CuddiheyManaging Director, Mobility, Accenture [email protected]

Pierre-Olivier DesmursManaging Director, Mobility, Europe, Accenture [email protected]

Michael EnglishManaging Director, Mobility, North America, Accenture [email protected]

Scott T. ButlerManaging Director, Mobility, North America, Accenture [email protected]

Claudio BacalhauManaging Director, Mobility, AAPAC, Accenture [email protected]

Kate HuntlySenior Manager, Mobility, Accenture [email protected]

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About AccentureAccenture is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. Combining unmatched experience and specialized skills across more than 40 industries and all business functions — underpinned by the world’s largest delivery network — Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With 492,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at www.accenture.com.

References 1 Gauging Business Disruption with the Accenture Disruptability

Index, 2018 https://www.accenture.com/sg-en/insights/consulting/business-disruption-innovation#zoo

2 Ride Hailing Worldwide, Statista Market Forecast https://www.statista.com/outlook/368/100/ride-hailing/worldwide

3 Uber Revenue and Usage Statistics (2018) http://www.businessofapps.com/data/uber-statistics/#1

4 Fjord Future of Mobility study https://mobilitystudy.fjordnet.com

5 Study by the American Public Transportation Association (APTA) https://www.metro-magazine.com/mobility/news/732387/nearly-80-of-commuters-see-public-transit-as-backbone-of-mobility

6 National Transit Database; APTA 2017 Q4 Ridership report https://www.apta.com/resources/statistics/Documents/Ridership/2017-Q4-Ridership-APTA.pdf

7 British Columbia Government news report on ride-hailing https://news.gov.bc.ca/releases/2019TRAN0121-001409

8 Juniper research report on mobility-as-a-service https://www.juniperresearch.com/press/press-releases/mobility-as-a-service-to-replace-2-3-billion-priva

9 Accenture research, 2016 https://www.accenture.com/t00010101t000000__w__/gb-en/_acnmedia/pdf-29/accenture-public-service-intelligent-technologies-research–slideshare.pdf

10 Link to the Whim app https://whimapp.com/

Disclaimer: This document makes descriptive reference to trademarks that may be owned by others. The use of such trademarks herein is not an assertion of ownership of such trademarks by Accenture and is not intended to represent or imply the existence of an association between Accenture and the lawful owners of such trademarks.

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