According to a recent “connected trains” survey by management and technology consultancy BearingPoint, the European rail industry sees digitalization opening a broad spectrum of opportunities in the industry. A digitalized and integrated rail system with connected trains is the future, but it will require collaboration and coordination to get there. The results of the survey were presented to executives and decision makers of railway operators and rolling stock suppliers during a BearingPoint roundtable on February 11 at the Train World museum in Brussels, Belgium.
Digitalization is a must for next evolutionary step
According to the survey, all participants see an increasing influence of digitalization but with different nuances according to business function or subindustry. Digitalization has already started in the railway sector, but it is still too soon to see penetration benefits. The survey, which covers ten European countries, delivers the following key messages:
- Digitalization is one of the last chances in this decade for the sector to compete in the race against other transport modes like low-cost airlines, long distance bus services and autonomous cars/trucks.
- The sector is aware of the benefits of digitalization: more than 85 percent of participants see relevance for digital use cases in the main rail business areas like passenger and cargo transport, infrastructure, and maintenance.
- The digitalization of Maintenance & Procurement plays a minor role today but could generate the most significant increase (+ 30 percent) in impact over the next five years compared to other parts of the rail value chain.
- Non-monetary benefits like service quality (90 percent) and contribution to strategy (78 percent) seem to be the main drivers of digitalization, more than cost reduction (74 percent) and revenue increase (60 percent), which is surprising considering the industry is under strong profitability pressures.
- Obstacles to success for digitalization in railways are the incorporation of new technologies in the existing assets (e.g., rolling stock, track) and operations (78 percent) as well as the availability of big data in a heterogeneous environment (77 percent).
- The ability to successfully implement new digital use cases is seen in the collaboration with external partners. This reflects the interrelations between stakeholders within the rail system.
Railway executives gave their opinions on digitalization in the railway industry
During the event, participants shared their views on digitalization in the railway industry. Experts discussed different issues and aspects.
Josef Doppelbauer addressed the obstacle of a very fragmented market:
"The key for digitalizing the railways in Europe is interoperability – therefore we need to promote standardization and coordinated innovation across the sector." Josef Doppelbauer, Executive Director of the European Railway Agency (ERA)
Christopher L. Crawford pointed to the business opportunity:
"The digitalization of the physical world presents business with opportunities which require investment in new capabilities to monetize this new reality."Christopher L. Crawford, Head of Innovation & Knowledge Management at Bombardier
Digital technology will enable new opportunities for efficiency and quality. But also investment aspects have to be taken into account ensuring fair beneficial conditions for all involved parties. Thus, Pierre-Etienne Gautier stated:
"Digitalization requires a federated approach covering all life cycle phases." Pierre-Etienne Gautier, Chief Innovation Officer of Systra
Concerning the benefits for train operations, Gerhard Kress said:
"Digitalized predictive maintenance triggered by sensors leads to measureable increase of train availability." Gerhard Kress, Director Mobility Data Services at Siemens
Regarding data-driven strategies in railways, Prof. Michael Benz added:
"Who owns the data, owns the business." Prof. Michael Benz, Head of SCM@ISM at International School of Management
Summarizing, François Lanquetot said:
"Survey feedback demonstrates the enthusiasm of the rail industry: Digitalization is here, and will keep expanding. But the economic rationale and most relevant approaches are still a matter of debate. Managing internal and external digital ecosystems will be the key to success." François Lanquetot, Partner at BearingPoint
About the survey
For BearingPoint’s survey “connected trains” (conducted in November and December 2015), 82 European representatives from railway undertakings, infrastructure managers, rolling stock suppliers, associations and others participated, enabling an overarching view of the industry. The survey focused on how the industry evaluates digitalization (currently and in five years), feasible use cases in all different business areas of the railway sector, and points out which obstacles exist for prospective implementation of digital use cases.
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