DIGITAL TRANSFORMATION
changing and competing offerings from Cloud providers, telecommunications giants, 5G equipment manufacturers, system integrators and legacy infrastructure vendors by using the lessons learned from other industries to successfully avoid The Trap? A set of internal and external strategies can be deployed based on factors such as a railroad’s or transportation ecosystem player’s articulated strategy and business objectives, size, location, governance structure and economic conditions. The case study of a broadband communications technology deployment illustrates both the triggers and the strategies to avoid The Trap. railwayage.com
FACTORS THAT TRIGGER THE TRAP Companies have trouble in moving from proof of concepts of digital transformation to full transformation, or they deploy, but miss market windows, requirements, schedule or cost targets due to the following six factors which act as Trap triggers: 1. Pace of innovation is faster than what industries can absorb: The velocity of technology evolution exceeds the ability of railroads (and others, such as system integrators and regulators) to assimilate knowledge, make decisions, plan, design and deploy at scale. By the time evaluations are done or investment commitments are made, there is already a next generation available. This can create strong competition between multiple technologies and draw into question lifecycles of investments. 2. New technologies are forcing multiple paradigm shifts: A move toward virtualization and software defined networks, renders current processes, structures, solutions, business models and financial accounting no longer sufficient or applicable. 3. Standards and regulations have not evolved at the same pace as the technological advances: For risk-averse organizations, it is difficult to bet on which technologies will win. Several technologies end up competing in similar applications, making it tougher to bet on standards and set regulations in the short- and near-term horizons. 4. Disconnected handoffs between technology providers and adopters: The companies that are driving technology innovation, primarily the technology giants such as Amazon, Google and Microsoft, have fundamentally different models of developing and deploying software (such as DevOps) that make it difficult for others to absorb and adopt, with railroads seeing an even greater challenge in doing so. 5. Dealing with the internal corporate chasm: Scaling-up, that is, moving from an explore (Research & Innovation) to an exploit (Develop/Integrate & Deploy) operating model, is a tricky endeavor. Each side of the chasm (explore, exploit) has differing strategic intents, competencies, structures, cultures, skills, risks, rewards, etc. Often, companies are missing the right processes, mechanisms, skills and experience for executing this transition. 6. Increasing complexity of technology is fuelling high tech talent wars: Skillsets
and experience required for implementing the digital transformations are sophisticated and come at a high cost. Technology giants, in particular the Cloud players, are more successful in attracting the top tech talent than railroads. The bulk of the technical knowledge and know-how rests with these giants, while others starve. STRATEGIES FOR ADDRESSING THE TRAP’S TRIGGERS Approaches that enable railroads and the transportation ecosystem to avoid The Trap fall in two categories: a. Leveraging external players b. Developing internal capability maturity Four strategies that leverage external players either directly or indirectly, are based on a railroad participating with external sources to help bring aboard the new technology: 1. Start-ups as catalysts: Fast-moving innovation can come from start-ups, such as those developing AI solutions for rail infrastructure monitoring, or intermodal management; a fast-growing list of opportunities. They are probably the best at integrating rapidly evolving technologies and deploying them economically. The inherent risk of working with start-ups must be mitigated through a well-balanced model of ensuring that the selected ventures have a good likelihood of survival. This can include defining a start-up-friendly deal-flow and procurement process. Railroads need to ensure that they accommodate to the start-up’s cadence, which is fast and lean, so as not to stifle them. 2. Joint ventures or links with leading technology players: Traditionally railroads source their solutions from specialized vendors, often locking themselves into those solutions. Modern technology is complex, with paradigm shifts in hardware and software. System integration becomes an even more critical activity. So now one also needs to bridge into globally leading technology players that have a fair control over technologies central to railroading and transportation. These players are leaders in their technologies who aim at disrupting the status quo in adjacent markets. Primary approaches include providing incentives to these players to dedicate resources to railroads and enacting favorable regulations for them, for example, related to wireless frequencies, data privacy, drones, etc. The advantage of this model is that it ensures that the latest technologies are April 2021 // Railway Age 37