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Look to the future

Accenture advises agencies to embrace Open Payments and Open Architecture and offers steps to modernize fare management.

By Michael J. Wilson

Accenture provides integrated ticketing solutions for many transit agencies and municipalities.

With electronic fare management systems now commonplace in transit, many are asking, “Where do we go from here?”  In the past 15 years, transit agencies have invested in new fare management systems to enable their customers to carry reloadable contactless transit cards or reloadable magnetic stripe cards. Today many of these fare management cards are well known brands such as Breeze, Clipper Octopus, Oyster, OV-chipkaart and SmarTrip.

But 15 years is an eternity in technology. Fortunately, many of the card brands have already started embracing new approaches in fare management. Nonetheless, some authorities remain paralyzed by their earlier technology decisions. So what is next for fare management and how can a transit agency make the transition to modern, flexible platforms that allow them to keep ahead of customers’ preferences?

Today the big buzz in fare management is open payments, defined as a fare management system that allows transit riders to use an existing bank-issued contactless card in their wallet to tap onto transit. Many of us carry these cards and don’t realize it. Just look for the payWave, PayPass or ExpressPay symbol on your credit card.

Having open payments capability sounds as seductive as contactless transit cards did 15 years ago. However, the reality is that customers hold deep preferences for how they wish to pay for goods and services. For many cash is still is the preferred option. Regular transit riders may be used to having their own transit cards, while PayPal is increasing in popularity as a non-bank payment option. There is also the growing allure of a future where everything is mobile with options on smartphones to make payments using the handset. This means that transit companies need to plan for a future of multiple payment choices. Agencies need to consider how they can enable customer choice now and in the future.

It’s clear that agencies need to invest in fare management solutions designed for long-term flexibility and innovation. When we look at the technology implementations of the last 15 years, the usual approach has been to implement turnkey solutions. But as they attempt to embrace innovative payment approaches available today, agencies realize the shortcomings of turnkey solutions when they involve a single vendor providing an integrated set of fare management hardware and software. Turnkey is initially an attractive option as it simplifies vendor selection, delivery management, risk transfer and can lower upfront costs. Over the long-term, however, transit agencies are discovering that they have only one choice when buying technology upgrades or new equipment.

Fortunately the transit industry can take lessons from other industries, where modern systems built upon open architectures are able to achieve flexibility and adapt to change and growth. In this context, “open” is a position that’s hard to achieve without being non-committal to specific vendors. Authorities face a raft of confusing messages that equate open payments with open architectures, the underlying technology.

Open architecture specifically refers to hardware and software architectures that allow for independently adding, upgrading and swapping components to meet changing business needs. In today’s technology landscape, it usually means the use of a service-oriented architecture to integrate fare management and customer relations software, station and bus hardware and external systems — all potentially supplied by multiple vendors, each with their own data standards.

This is important because it allows software to be easily upgradeable and device suppliers become interchangeable and effectively commoditized. The result is a fare management system today that can be fully adapted to tomorrow’s needs.

So how can a transit agency make the transition from a closed payment scheme and a rigid closed architecture to customer choice and a flexible open architecture?

Fortunately, there are a number of options. For example, one region in North America has introduced new customer payment choice through open architecture and the integration of multiple device vendor options. Another region of local and state transit agencies has been examining a partnership that gives each agency the flexibility to establish its own fare management preferences. The partnership would still enable regional integration. Finally, another region is pursuing a procurement that will result in a new electronic payment program. It would establish a new account-based, open architecture, open payment solution enabling customer choice in payments and multi-vendor device integration.

The journey to customer choice and flexibility begins with an assessment to help the agency determine the state of the current technology and if incremental change is possible. Even agencies that require full replacement need a transition plan. With its current situation understood and the end state established, the agency has a variety of options to analyze for the best route to get there. From an agency perspective, a clear business case will determine the necessary quantitative and qualitative outcomes of this journey. The future needs of the customer should be the foremost goal.

One key driver of the business case might be the possibility of its devices and technology becoming obsolete. An agency facing significant expansion of its network may want to assess alternative sourcing and more modern solutions. In appealing to new and existing customers, an agency may additionally be facing technology obstacles that prevent the introduction of innovative fare products and payment approaches. Finally, it could be that their current fare vendor is not performing and can’t keep up with an agency’s needs. Achieving a common view of the business case is a critical step in securing internal alignment and support.

Transition options can vary. The agency could introduce a new layer to the customer account system or establish a competitive environment to introduce new equipment in all or some parts of the operation. Alternatively, expansion into a new region could create an opportunity to introduce a new fare management approach. New features may create a new opportunity, such as a mobile ticketing implementation. An agency could also replace new fare management components based on the end-of-life situation.

The key is to establish choices that benefit the customer as well as the agency’s goals. These choices lead to an overall plan that can provide clear direction. Planning can seem easy, however, while execution presents the greatest challenge. In Accenture’s experience, continuing momentum is achievable only if someone from the agency’s leadership team acts as the champion who drives consensus within all departments. This requires ongoing commitment and clarity in how decisions are made. Success will often mean supplementing traditional transit insiders with retail, payment and technology industry experts. It will also mean new contracting approaches that value supplier diversity and the use of commercially available software.

Getting to the next stage of fare management requires a unique journey for each transit agency, but the good news is that examples exist today that can guide everyone through the available approaches and choices. The key is to seize the opportunity to establish a clear vision and direction to get there, starting with a thorough understanding of open payments and open architecture. With the right planning and support, a transit agency can successfully make the transition to modern fare management solutions that will enable customer choice and flexibility, not only today but for the future. BR

Michael J. Wilson serves as head of Public Transportation Practice for Accenture in North America.

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Posted by on Jan 1 2013. Filed under Features. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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