Fare Management for High Performance— a strategic approach to ...

Fare Management for High Performance—
a strategic approach to benefit all stakeholders

For transport authorities
worldwide the dual challenges
of urbanization and environmental
sustainability loom ever larger.

For the first time in human history
more than half the world’s people
live in cities. As the conduit to services
and employment for the vast mass
of these populations, urban transport
systems are critical to economic
growth and social inclusion. Yet
maintaining mobility in rapidly
growing and steadily decentralizing
urban environments is becoming more
and more difficult—especially as
governments come under mounting
pressure to reduce vehicle emissions.
These challenges assume still greater
urgency in uncertain economic times.
A global downturn can change travel
patterns, of course, and constrained
credit conditions could temporarily
delay investments. But while the
impetus to sustainability may also
temporarily weaken, investments in
land transport are by definition longterm.
And the drivers of long-term
change—technological, environmental
and customer—are just too strong.
Moreover, as in the private sector,
economic adversity provides a strong
incentive for transport authorities and
operators to boost competitiveness
and achieve high performance through
improved cost management and better
customer service.
The providers of land transport cannot
hope to meet long-term objectives by
just doing “more of the same”. Passengers
simply won’t stand for it. Now used to
swifter, more personalized service in so
many aspects of their daily lives, they are
demanding the same sort of premium
treatment from transport providers. New
levels of convenience and connectivity
to help them make the best use of their
time are at the top of travelers’ agendas.
But although transport operators
probably touch more people on a daily
basis than any other urban entity, few
really know their customers or how to
connect with them—not least because
most fare collection systems are still
anonymous and cash-based.
Electronic fare collection, by contrast,
facilitates mutually beneficial
connectivity. Equipped with “smart”
(electronic) media, passengers and
drivers enjoy swifter, simpler, safer
travel. While automated account
management provides operators with
the detailed, granular view of traveler
activity, trends and mobility behavior
that can enable service improvements,
increase customer satisfaction, drive
revenues—and build high performance
in today’s turbulent markets.
That’s not all.
Automated, integrated and interoperable
fare collection—the Accenture Fare
Management Solution—promises to
revolutionize both public transport and
private road use for travelers, operators
and transport authorities.
A truly interoperable electronic payment
capability—both multi-modal and multi-
operator—can provide an extended
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service platform that travelers can use
for broader applications throughout
their daily journey. Such a capability
can facilitate parking, fuel purchase
and other retail activities. It can
enable effective access control in
congested or protected zones. And
it can have wider public service
applications as well. Indeed, once
accepted, such a capability can
actually help change public attitudes,
encouraging more sustainable
transport, as well as providing a tool
for easing traffic congestion.
The obstacles
For all their desirability, successful fare
management systems are enormously
difficult to build—not least because
transforming to a more automated
world requires the collaboration of
multiple stakeholders, each of which
will have their own particular concerns.
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Travelers, for example, may perceive
enabling technologies for automated
fare collection to be intrusive, and
consequently derail an operator’s
business case by traveling less or
choosing to stick with the anonymous
tickets that would otherwise be phased
out. Operators too may object to the
standardization and centralization of
fare collection, and their resistance
can scuttle the simplest of technical
solutions.
The fact that the technologies that
sustain such systems are constantly
changing further complicates the
picture. Contact-less bankcards,
mobile and wireless data devices
and global positioning system (GPS)
technologies are all now touted
as enablers to the future for fare
management. Yet harnessing their
power without increasing the risks
that the resulting system will become
technologically obsolescent during its
lifespan can be a delicate balancing
act. Furthermore, since most transport
authorities are part of larger political
structures, there’s no guarantee that
funding for fare management projects
will remain constant.
Accenture’s response—
a strategic approach
Accenture understands these challenges
better than most. As specialists in
delivering innovation that works—in
this case, true interoperability—we
have real-world knowledge and
experience of the business processes,
software and technology infrastructure
solutions, both mature and evolving,
that can help companies achieve high
performance. We also have broad and
deep capabilities as systems integrators.
We have worked in close collaboration
with transport authorities from the
Ceskoslovenska obchodni banka, a. s. (CSOB), a universal bank
operating in the Czech Republic, contracted Accenture to develop
the revenue management solution for the Czech Republic national
HGV tolling scheme which went live in January 2007. Accenture
utilised its Fare Management Solution to develop the necessary
platform to clear and settle financial transactions generated from
the core electronic tolling system.
The Accenture system collects transactions from the toll distribution
and contact points across the country to clear and settle all pre-paid and
post-paid transactions. The system communicates with all fleet card
and payment card issuers to process the data. This solution provides
payment processing, clearing and settlement as well as compliance
processing. The solution calculates commissions for the distribution
and contact points and fee calculation for fleet cards issuers.

Czech Republic to Canada, successfully
building automated fare collection
systems for both the eTicketing
that sustains fare management in
public transport or mass transit, and
for road charging.
Our extensive experience has taught
us that success hinges on much more
than technology alone. The key to
achieving high performance through
fare management systems is to take
a holistic approach.
And that approach starts, crucially, with
the development of a strategic road
map; it incorporates the principle of
developing relevant platform services;
and it seeks to generate competitive
advantage when addressing the need
for sustainability.
A holistic view
Technology, of course, is a key enabler of any fare management system. And
innovative use of new technology, if deployed and integrated with care, can
offer travelers more choices and greater flexibility by providing the means to
perform processes in more efficient and creative ways. Technology, however,
is just one aspect of long-term strategy. Processes and people are just as
important to successful delivery—and can be major stumbling blocks if
not tackled systematically as part of the strategic road map to becoming a
high-performance business.
Successful system design should address all of the following:
• Customer requirements—what do citizens actually value?
• The business case—what are we trying to achieve?
• Multiple stakeholders and governance—can we meet everyone’s needs
and ensure compliance?
• Technology—can we integrate diverse components and accommodate
rapid change?
• The environment—does the approach promote sustainability?
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Figure 1: Taking a holistic approach
Building a strategic road map
Designing a strategic road map is a fundamental
first step—but one that too many organizations
ignore, usually in the interests of trying to
accelerate the process.
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Key Tasks
Key Deliverables
Understand
business
context
Define
value
levers
• Conduct Public Service
Value/Shareholder
Value Analysis
• Review current conditions
review and processes
• Outcome/Shareholder
Value model
• Current conditions review
and baseline
Analyze
requirements
Develop
options
• Assess technology and
solution landscape
• Develop requirements and
use cases
• Perform option analysis and
develop solution set
• Undertake feasibility check
• Develop business case(s)
• Outline technology roadmap
• Technology assessments
• Solution ‘long list’
• Business case for
short-listed solutions
• Technology Roadmap
Define and
confirm
approach
Develop
implementation
plans and
frameworks
• Develop solution architecture
• Build organization models
• Determine commercial and
financial models
• Develop governance approach
and model
• Finalize Strategic Roadmap
• Strategic Roadmap and
supporting materials
Define Value Explore Options Develop Strategy

As a result, those responsible for
taking key decisions often have
insufficient evidence to validate their
choices. And in projects like these,
which involve so many stakeholders,
this omission can prove fatal. As Jeroen
Kok, CEO of Trans Link Systems (TLS),
the company that was established to
bring a nationwide eTicketing system
to the Netherlands, observes: “These
projects don’t fail on the technology;
they fail on decision making.”
Define value
It’s critically important to define not
only why the organization might want
to undertake the journey to develop
more advanced fare management
capabilities, but also what the final
destination might look like for all
stakeholders in the initiative. Because
most public transportation systems
are not fully commercial, self-funding
ventures, new structures should
incorporate an evaluation framework
that reflects public service value, as
well as the shareholder value methods
more appropriate for private entities.
The key here is to determine what the
scheme’s end users value most highly,
as well as what will deliver optimum
value for the organization.
When the Finnish Ministry of Transport
and Communications was considering
a charging system that would reduce
road use at peak periods—congestion
charging—in Helsinki, Accenture worked
with them to develop an evaluation
framework that incorporated and
balanced the desired outcomes of all
stakeholder groups. Similarly, in Italy,
we worked with Trenitalia, the national
rail company, to evaluate not just the
potential economic benefits of an
integrated fare management initiative,
but also the broader public costs
and benefits—passenger safety and
satisfaction, as well as the impact on
Trenitalia’s accessibility goals.
Explore options
If an organization is to establish a
compelling business case to secure
stakeholder buy-in before proceeding
with a fare management transformation,
it’s vital to take a long-term view of
what available solutions can achieve,
as well as likely future developments
and requirements. Technologies, after
all, are constantly changing.
This 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 wellpositioned
to manage developments
in fare media technology and security,
as well as constantly evolving
customer demands.
In 2006, for example, Accenture spent
five months conducting a global
market and vendor benchmarking and
analysis exercise for Societe Nationale
Chemins de Fer Francais (SNCF), the
French national rail operator, which
was reviewing eTicketing technologies.
The exercise confirmed the volatility
of the market and, by helping the
client understand the full range of
options, reduced the risk of adopting
technologies that could rapidly
become redundant.
Develop strategy
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. Introducing multi-operator
smartcard ticketing without adequate
revisions to fare and tariff structures
between operators, for example, could
confuse customers as well as alienating
operators.
If organizations want to avoid these
threats to their business, they must
take actions beyond merely selecting
a strategy and instead move to fully
enable that strategy by developing the
detailed implementation plans and
operational frameworks to support
success. Strong governance models are
crucial. In fact, they are an ongoing
necessity, from the early stages of
bringing together different viewpoints
and coming up with a workable longterm
strategy, all the way through
delivery to the actual operation.
The Trans Link Systems (TLS) project,
for example, 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 TLS was careful to get
its governance structure right 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
all relevant decision makers.
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Figure 2: Common service platforms underpinning our Fare Management Solution
Back Office
Infrastructure
Platform services
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Business Intelligence
and Reporting
Customer Relationship Management
Payments Processing and Financial Management
Transaction Management
Network and Infrastructure Management
Asset Management
The technologies that can help satisfy today’s travelers’
as they clamor for speed and convenience are constantly
evolving, but capturing the opportunity they present is
not straightforward—largely because the business case
and commercial structures that could accommodate
these technologies have yet to crystallize.
Integration

Introducing an electronic ticketing
scheme where contact-less bankcards
are the primary media, for example,
means applying complex, variable
fare structures to a transaction model
designed more for the supermarket
checkout than for mass transit
services. Moving an electronic toll
scheme from microwave transponders
to GPS based on-board units will
also create a significant change in
the way roadside transactions are
mediated and processed.
What’s more, while such technologies
hold tremendous potential, they
cannot help transport authorities
avoid the big issues that underlie any
fare management initiative: Customer
convenience, accessibility and social
inclusion, operator revenue assurance
and trust.
Accenture understands these challenges
well, and the Fare Management
Solution addresses them with a set
of service platforms that underpin all
our fare management applications.
The systems and services we have
implemented incorporate the open
architecture and common standards
that can integrate a multitude of
suppliers and devices—as well as the
scalability to accommodate more
of them as technologies evolve and
operational requirements change.
Our approach offers end-to-end
completeness within a central
system. Its common platform of preintegrated
functions (see figure 2) is
modular so it can accommodate both
evolving technologies and changes in
operational requirements; they don’t
have to be continually rebuilt. It
comprises a centralized system with
a common platform and standards
based on a service oriented open
architecture that enables any number
of decentralized single operators or
other providers to plug in seamlessly,
realizing both interoperability and
low total cost of ownership (TCO).
(For a detailed explanation of
how these platform services relate
to eTicketing and road charging,
please see inserts)
Thanks to the modularity of the
solution’s common platform,
decentralized, single operators can
shape it around their existing legacy
systems to address the following key
business functions:
• Fare collection and media
management: The solution
accommodates the complex
management of fare-event data
generated by transport network
systems where volumes may easily
exceed 100 million a month.
• Clearing and settlement: The
solution can consolidate the fare
events across multiple journeys
into one single event and control
the disbursement of revenues
between multiple operators.
• Order/inventory: The solution
supports the management of
electronic fare media, enabling high
levels of self-service and end-to-end
device lifecycle management.
• Customer service: The solution can
handle millions of active accounts,
encompasses campaign management
and can service a wide range of
channels.
• Financial and reporting: The
solution supports the millions of
invoices and thousands of payments
involved in regional and national
fare collection operations.
• Security and maintenance: The
solution helps reduce integration
risks and boosts operational
efficiencies.
In fact, the solution can support any
number or type of operators and
providers, not just those that are
transport-oriented. And thanks to
its open architecture, providers from
industries as diverse as parking and
retailing can migrate to the multimodal
environment that the solution
creates without having to reconfigure
their existing equipment or rethink
entire operations.
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Sustainability
Transport authorities and operators are coming
under mounting pressure to deliver a sustainable
transport system—a tough proposition given
short-term pressures on cost, capacity and winning
the next franchise, pressures that intensify in an
economic downturn.
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The good news is that well-designed
fare management systems can make
a significant contribution to tackling
both short-term challenges and the
longer-term goal of sustainability,
thanks largely to the sophisticated
customer relationship management
that they enable.
By making public transport more
convenient to use, such systems
capture more users, reducing the
carbon footprint of each passenger
kilometer. This is generally better
for the environment—a key goal for
practically all the transport authorities
and operators Accenture works with.
Public transport has a head start in
regard to sustainability—but many
passenger vehicle manufacturers
are now starting to invest heavily
in cleaner vehicles, reducing the
competitive advantage that public
transport operators hold. The
Accenture Fare Management Solution
can help as the vast quantity of data
about passenger journeys that both
eTicketing and road-user charging
technologies generate-who's traveling,
where, how and when-facilitates more
accurate benchmarking of passenger
and service emissions which can in
turn improve service planning and
traffic flow management. Both of
these can help to significantly
cut emissions, especially in highly
populated urban areas.
More advanced fare management
can also help to achieve better
yield management by influencing
demand, as well as capacity. After
all, connectivity is a two-way street
and feeding information back to
travelers as well as soliciting it
from can offer the environmentally
conscious the option of traveling offpeak,
by public transport than by car.
Some operators have set up “carbon
clubs” rewarding greener travel choices
in a similar way to loyalty cards in the
retail industry. Others have established
websites that provide data about
the carbon footprint of every travel
choice. And some are making use of
technologies that tell drivers when they
are driving inefficiently.
In Genoa, Italy, Accenture—through
the Italian Accenture Foundation—has
worked with the municipal authorities
and others to design a system of socalled
mobility credits that enlists user
self-interest to promote environmental
protection while preserving people’s
basic freedom to move. Instead of
restricting or prohibiting access as most
road charging systems do, the scheme
actually expands freedom of choice. It
awards every citizen an equal number
of mobility credits annually, which they
can use (or not) to travel freely within
the city limits. The rate at which the
credits are used up depends on the
mode of transport chosen, the time of
day or other elective parameters. Using
private cars in peak periods obviously
consume more credits than at quieter
times.
Of course, different users will also have
different transport needs. The system
allows say, a pensioner with a surfeit
of credits to sell the surplus to users
with higher needs—or to exchange
the surplus credits for other services.
Similarly, those who need more credits
can buy them from the municipality.
The market in credits that could emerge
when the application is mature is
expected to be analogous to the carbon
trading system between nations that
arose after the Kyoto protocol on
climate change.
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How the Accenture Fare Management
Solution creates value
The Accenture Fare Management Solution takes a strategic and holistic
approach to the challenges of fare management in today’s tough markets.
It starts by designing a strategic road map that takes account of the views
and interests of the multiple stakeholders whose buy-in is essential to
the success of any fare management system. It offers the flexibility to
accommodate diverse additional users and players with a set of service
platforms that incorporate open architecture, common standards and
scalability. And because it helps improve the trade-off between capacity
and demand, it can lead to better yield management—the key to sustainable
transport provision, both public and private.
For more information, please contact:
Europe
Mark Elliott
mark.elliott@accenture.com
+44 207 8440447
North America
Michael Boushka
michael.e.boushka@accenture.com
+1 913 3191119
Asia
Won-Joon Lee
won-joon.lee@accenture.com
+82 2 3777 8833

About Accenture
Accenture is a global management
consulting, technology services and
outsourcing company. Combining
unparalleled experience, comprehensive
capabilities across all industries and
business functions, and extensive
research on the world’s most successful
companies, Accenture collaborates
with clients to help them become
high-performance businesses and
governments. With more than 186,000
people serving clients in over 120
countries, the company generated net
revenues of US$23.39 billion for the
fiscal year ended Aug. 31, 2008. Its
home page is www.accenture.com.
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