The following is a report from the executive session (ES03) held at the recent 2014 ITS European Congress in Helsinki.

The business case for ITS varies internationally according to societal and institutional frameworks but it has proved consistently hard to calculate returns in terms of hard cash.  A societal or environmental benefit case for ITS is easier to make.  But there are examples from across the world of actual money being made by selling and using ITS.  What is the secret of these successes? Good procurement processes, sensible institutional and legal frameworks, realistic time scales, technical interoperability, institutional integration, or a good old-fashioned assessment of what the customer actually wants? This Executive Session looked at case studies which provide evidence of technical and financial success.

Moderator

Theo Quick, Director - Global Transport, Post & Logistics Industry Transport,
                                    Post & Logistics Group - CGI, United Kingdom

Speakers:

Jim Barbaresso, Vice President - Intelligent Transportation Systems, HNTB, United States
Richard Harris, Solutions Director - Xerox Services, United Kingdom
Wilfried Klassmann, CEO - CETECOM, Germany
Kimmo Ylisiurunen, CEO - Infotripla Oy, Finland
Josef Czako, Vice President - Kapsch TrafficCom AG, Austria

Notes:

The session began by discussing the size of the ITS market on a global and US scale. Market research has emphasised the exponential growth of the ITS industry; global spend is predicted to reach $30-$40Bn by 2020 and more than 40% of this spend will be in North America. Vehicle safety, traffic management and traveller information are the most common areas of investment. Opportunities to provide safer, reliable, convenient and efficient transport systems are increasing as a result of the continual growth of the market and include vehicle-based driving systems, infrastructure and generally taking advantage of the ability of technology advances to improve efficiency and effectiveness while driving down costs.

Among the biggest challenges, and acknowledged by all speakers, was building the business case model; the fact that companies still need to be clear that it was possible to define their business case in order to make money in this industry. The business case could be generated from saving lives, improved accessibility or connectivity, reduced emissions or/and congestion, enhanced efficiency or many more factors singly or in combination. Debate around this issue led nicely into the consideration of the key topics for policy makers.

The need for safer and smarter transport can provide enormous cost benefits and new opportunities for policy makers. The UK DfT has estimated the value of preventing a single road fatality at more than €2M and globally there are over 1.2M deaths every year. ITS services can reduce these costs and at the same time improve efficiency. An example was given of a single smart card in the Montreal area where careful design of technology and open interfaces has enabled use by 19 service operators, 3000 buses, 5 train lines, 4 metro lines generating over 1M contactless transactions a day processed through a single back office.

The road safety area illustrated the deployment of ITS services which help enforce applications based on a legal framework, for example, speed cameras, tolling and bus lanes. Legally-based applications need enforcement and without the necessary testing and certification of roadside equipment such services cannot be deemed safe or/and secure. Standards are also clearly essential to achieve benefits of scale and reduce costs.

There was a vigorous Q & A session involving all panellists and a number of members of the audience. Key points emerging were:

  • Although ITS is seen to be a large and growing trend there still seems to be the difficult issue of valuing safety, congestion and poor emissions management. Why do we still have these challenges if our spend in this area is increasing? The consensus from the panel was that the underpinning problems link to organisational and institutional issues such as lack of information and education, funding and effective business models.
  • The ITS industry is moving away from business-to-government and towards business to business and business to consumer. What is the future role of Government? It was agreed that while Governments are likely to outsource traffic management they will continue to set standards and determine certification, regulation and enforcement. The future is likely to be based around effective private/public partnerships and Governments should accept that theirs is essentially a more supervisory role.
  • We should document examples of new developments that have provided a ‘win–win’ situation for parties in ITS projects eg
    • The cities of Oulu and Tampere in Finland have the same objectives related to traffic systems and information services. There was an open discussion between these two cities so that they benefitted from using a common framework for their procurement processes.
    • Instead of generating new data from continued use of multiple versions of sensor data collectors we should generate dialogue with private enterprises to explore buying and then sharing data to save time as well as money, providing a ‘win-win situation.’

In closing the session the moderator asked: “are we doing enough with the business models, can we do more as a community or should we leave this as a free market?”  Panel opinions differed in emphasis but agreed that we need to improve our approach to explaining how to set about building business models to key ITS players, and we should focus more on alternative funding sources for ITS deployment.

The report on the Congress is available to all delegates and includes all a summary of the Congress and the key findings from each Executive Session and themes. A summary is available to everyone and can be found from the Congress website.

About this author

Picture of Theo Quick

Theo Quick

Director, transport, CGI in the UK

With wide-ranging experience of the transport industry across Europe and the U. S. , Theo currently leads CGI’s transport business in the UK. He sits on the UK’s Automotive Council Technology Group and the Intelligent Transport Systems World Congress and has been director of ITS ...

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