Smart cities can lead to a higher quality of daily urban life, but only if all stakeholders work together. By Juergen Reers and Pierre-Olivier Desmurs
Cities are wrecked by the ongoing burden of traffic congestion and carbon emissions, and smart cities are perceived as a vital strategy to cope with these challenges. Three forces are shaping the future of transportation: mobility service providers, public transit operators, and municipalities. All three stakeholders can benefit from the concept of a smart city.
These three forces behind the evolution toward smart cities need to collaborate in a way that allows them to maximise the value of their services. The sweet spot of this convergence will create the best possible mobility experience for the customer. Authorities, for instance, can streamline how they operate their cities and make them more efficient, saving money and generating new public revenues. This is critical since cities all over the world are growing and the demand for urban mobility, as well as customer requirements, are evolving rapidly.
The current customer is keen on getting from A to B in a seamless, affordable, and convenient manner, and rapid urban developments, as well as more sustainable mobility solutions, are required to satisfy these needs whilst mitigating the possible negative social, monetary, and environmental effects. So, which hurdles do mobility service providers and public transit operators face, and what do the solutions look like?
According to two recent Accenture surveys, ‘Unlock the value of mobility services: Turning business models into profits’ and ‘On track to shared success’, Accenture has identified the main challenges and defined possible actions that can achieve the goal of turning cities into smart cities.
No one is making a dime yet
Mobility services have the potential to create huge economical value. The mobility services market in China, the US, and Germany has grown to more than US$140bn over the last decade, and this number will more than triple by 2030. Besides the financial advantage, mobility services can become key in tackling two of the most pressing issues of urban life: carbon emissions and overcrowded cities.
Even though these achievements and numbers are impressive, no player has yet managed to return a profit. So, what are the levers that can turn a mobility service into a profitable business? Looking at the overall market for mobility services and their strategies, Accenture has identified three critical steps that should be taken.
Establish new rules for a new game
A balanced market is vital to build and operate mobility services at a profitable level. Such a market should accommodate services that capture value across all four dimensions—value to the individual, society, environment, and economy—while keeping in mind that these services are affordable for each individual. Municipalities play a critical part, and by establishing regulations such as pricing for parking space or tolls, they become a key enabler for mobility services.
Optimise mobility across the fleet
Uptime and efficiency are key factors on which profitability relies. To maximise both, operators should combine the power of their fleets into a single platform. Think about SIXT, which understood the relevance of optimising its fleet. The car rental company has pooled its entire mobility offering portfolio into one seamless platform, which offers SIXT’s own services as well as access to an ecosystem of approximately more than 1,500 partners.
Pivot from core products wisely and in an evolutionary manner
Instead of splitting customers into typical car owners and on-demand users, it is strategically more advantageous to adapt to the changing customer demands. Mobility players should build and maintain a close customer-relationship that reflects existing services, while public transport providers need to focus on innovating their services. A carmaker, for instance, could prioritise subscription models in a first step and follow later on with a vehicle-on-demand and afterwards with a mobility-on-demand offering. This strategy is all about guiding a customer on a journey towards the new mobility world.
How can public transit operators and authorities survive and thrive?
Contrary to mobility service providers, the hurdles public transit authorities need to deal with are more of an operational nature. These are bureaucratic and cumbersome processes, a lack of investment capacity and the complexity of working with business partners. To tackle these issues and keep on track, Accenture has identified several key steps that should be taken.
Innovate with purpose
Cultivating and living responsibility is about far more than just being environmentally friendly—people are keen on working for companies and using services which demonstrate purpose. It requires infusing the entire organisation with purpose, from every word the company uses to its products and actions, both internally and externally. Collaboration is key to achieve this goal, as is choosing the right partner. More than 90% of the senior executives surveyed by Accenture agree or strongly agree that transit operators need to collaborate with new mobility service providers as partners, not competitors.
Act as an urban mobility mapper.
An underestimated asset is the entire infrastructure such as roads, parking spaces and mobility hubs, and how they can be made more profitable and sustainable.
One answer is to open up operations beyond their own infrastructures to deliver the kind of end-to-end journey that customers want. Where there’s a mandate, authorities and operators can serve as an urban mobility control tower, working with local government and other partners to optimise transit services across the city. The mapping approach can be also a vital way to increase the utilisation of unused infrastructure such as empty parking spaces, prevent traffic jams, or identify needs.
For example, Los Angeles developed an open source data framework for micromobility partners’ vehicle usage data. The data is used to shape policy decisions and infrastructure improvements, for example by pinpointing areas for protected bike lanes and dockless vehicle access for low-income residents.
Shape technology to benefit workers as well as commuters
From data security to safety, technology holds much promise for workers and commuters. But how can it be used to build trust and satisfaction while generating insights?
Based on Accenture’s research, 80% of public transit senior executives surveyed agree that operators must be responsible data stewards to build rider trust and satisfaction. And about 83% agree that public transit operators need to open their systems. In the post-COVID landscape, for instance, route optimisation and capacity management technology will play a key role in helping customer-facing employees and passengers manage the risk of infection.
Asset maintenance technology can also improve worker safety. As governments look for ‘shovel-ready’ infrastructure projects to compensate for lost revenue and stimulate growth post-COVID, transit digitisation can deliver on public and worker safety by offering more automated services and fewer physical touchpoints.
Drive operational agility
Of the senior executives surveyed, 51% of agree that operators need more agile operations. Central to this will be platform-enabled digital operations and open data sharing with customers at the centre. By digitising operations, operators and authorities can make wins in the digital customer experience, fare management, and smart ticketing.
Legacy infrastructure and assets, however, make managing operations centrally difficult and rigid. To be more agile, operators and agencies can adopt a common digital backbone within the company but empower field teams with the tools and know-how to take the initiative and manage the unexpected in stations, lines and segments. More wins can be had by sharing customer data with different operators in the same network to build a common understanding of passenger activity.
It is about a seamless transportation experience that makes multi-modal-services more attractive than owning a car
All these hurdles and the steps that should be taken could be perceived as a massive undertaking—but it will be worth it. The concept of the smart city holds various advantages in store. On the consumer side, it is about a seamless and effortless transportation experience, which makes the use of multi-modal-services more attractive than owning a car.
And looking at these benefits through the lenses of an authority, they will lead to more resources and a higher degree of efficiency in various aspects such as cost savings as well as new public revenues, less pollution, and reduced congestion. In a nutshell—smart cities can lead to a higher quality of daily urban life.
Juergen Reers is a managing director and leads Accenture’s Mobility X practice globally. He is based in Munich, Germany. Pierre-Olivier Desmurs is a managing director and Accenture’s global public transportation lead. He is based in Paris, France.
