Transportation’s Future Currency is Cashless

In brief:

  • Emerging trends—amplified and accelerated by the pandemic—are redefining transportation and infrastructure.
  • Industry players can’t navigate today’s trends and capture future opportunities with a focus on back-office technologies alone. The antidote is a focus across the end-to-end, integrated operating model.
  • Transportation leaders can get started reimagining their operating model by (1) focusing on organizational strategy, (2) applying service-design techniques, and (3) managing change with intention. 

Emerging customer, mobility, and sustainability trends—amplified and accelerated by the pandemic—are redefining transportation and infrastructure. These disruptive trends are shaking the industry’s deepest roots, including the norms for collecting payments, attracting new customers, and delivering experiences.

To meet elevated customer expectations, imagine a tollway launches a fully automated, digital experience, supported by a mobile application. It makes service more convenient and accessible to customers. It also eliminates cash collection, manual processing, and face-to-face interaction with toll collectors. In this example, back-office platforms for customer service, billing, claims management, and inter-tollway data-sharing would all need to be reimagined. And for these new systems to serve their intended purpose, the tollway should consider employee reskilling and upskilling needs, customer experience implications, and integration across technologies.

This example makes it clear: transportation players can’t navigate today’s trends and capture future opportunities with a focus on back-office technologies alone. The antidote? A focus across the end-to-end, integrated operating model. The operating model articulates how people, structure, processes, governance, and technology and data come together to make change happen.

In this blog, we’ll explore three areas of opportunity across your operating model that can maximize value along the transformation journey.

New challenges call for an integrated perspective

Disruptive trends create opportunities to address customer, operational, and workforce needs in novel ways. Capturing these opportunities will require a look across the end-to-end operating model.

Customers: Pandemic recovery depends on a reimagined experience.

The transportation industry is struggling to recover pre-pandemic customer volumes. According to the American Public Transportation Association (APTA), national public transportation ridership was 181.4 million during the week of March 1 – March 7, 2020. By the early pandemic in the U.S. (week of April 5 – April 11, 2020), ridership plummeted to 38.6 million.

While this figure has since risen to 98.6 million (for the week of July 18 – 24, 2021), the data paints a clear picture: the pandemic has transformed the transportation industry. A healthy recovery will depend, in part, on new ways to attract and retain customers through convenient, flexible, and contactless experiences. Vice President of Customer Experience and Reservations at American Airlines, Julie Rath, underscores the importance of experience in the industry’s recovery: “We’re ready to welcome customers back onboard with thoughtful, touchless technology that puts more control in their hands and makes their journeys more comfortable.”

Operational: Mobility and interoperability unlock new experiences.

Mobility enhancements can accelerate the industry’s recovery efforts with streamlined, end-to-end customer services. In early 2021, the U.S. Department of Transportation granted over $38M in funds through a new program coined Complete Trip – ITS 4US Deployment Program. A public and private-sector collaboration, the program’s objective is to “enable communities to showcase innovative business partnerships, technologies, and practices that promote independent mobility for all.”

Groups such as the Open Mobility Foundation (OMF) are developing standards and guidelines for open-source mobility technologies in an effort to create consistency and foster collaboration across transportation ecosystem stakeholders (e.g., municipalities, companies, policy experts, and the public) in promoting end-to-end mobility. These mobility solutions can include cashless payments or contactless experiences, which meet cleanliness standards, simplify the customer experience, create new sources of data, and reduce operating costs.

Other forms of system interoperability also enhance customer experiences. In tolling, for example, Florida’s SunPass and the Northeast’s E-ZPass are integrated, so drivers can navigate interregional travel conveniently.

Workforce: Reskilling and upskilling will make or break the industry’s future course.

As we’ve explored through the trends so far, reimagined customer experiences are possible with advanced operational capabilities. However, what will determine whether this future is probable? A reskilled and upskilled workforce. With a goldmine of customer data now available via automated and contactless solutions, employees can use it to operate more efficiently and enable more seamless interactions. However, they must possess the skills to use that data effectively and securely.

For instance, a December 2020 report from the U.S. Government Accountability office (GAO) identified four essential skills for U.S. Department of Transportation (DOT) employees in governing the safety of automated solutions: regulatory acumen, engineering, data analysis, and cybersecurity. While there’s consensus that these competencies are important, the same report indicates that the U.S. DOT hasn’t yet adequately evaluated whether its workforce possesses these skills.

John Samuelsen, President of the Transport Workers Union of America, highlights the importance of a proactively skilled workforce: "I think the government and the trade union movement and other stakeholders, the manufacturers of the technology, should be developing a system that's always looking 20 years to the future, to ensure the nation's workforce isn't ambushed by technology going forward.”

The integrated operating model will blueprint transportation’s future route

Facing these future trends, transportation leaders may have an idea of where they want to go and the value they want to achieve. The tough part? Articulating how every element of the organization, including the back office, should work together to maximize value and achieve that future state.

You’ll need to visualize how people, structure, processes, governance, and technology and data come together to make change happen. Below, we’ll explore three of the most critical operating model opportunities for the transportation industry.

1. Fine-tune your organizational strategy to close skill gaps. Outline the specific roles, skillsets, and team configurations needed to support your operating model. We find that many transportation players rush to implement change in their operating model, while failing to consider the implications for roles, skills, and career paths; in other words, they fail to consider their organizational strategy. Rather, your organizational strategy is an integral foundation for your operating model. It functions as a proving ground for the value of future investments.

For instance, if you implement a new cashless payment platform, it’s essential that finance employees have the skills to use and maintain the software. Or, say, you digitize a key process. Are employees equipped to leverage the process’s data to improve customer interactions?

Address any of these gaps via reskilling and upskilling existing employees or devising a talent acquisition strategy that brings new people into the organization. Grounded in a clear view of the role employees will play (and any people or skill gaps you’ll need to fill), you can then design solutions across the other areas of your operating model.

2. Zero in on processes with service design. Process is a fundamental piece of your operating model, forging a link between customer interactions and the service provider’s capabilities. Therefore, front- and back-office processes must be orchestrated and aligned with intention. That’s where service design comes in.

If you’ve doubled down on customer-facing processes (e.g., cashless payments or a new mobile application), you’ll also need to consider back-end implications. For example, a digitized, touchless experience with added customer self-service may create opportunities to streamline contact center and finance processes in the back-office.

Service design is a tool that can help you visualize how front- and back-office processes—along with people, structures, governance, technology, and data—connect across your operating model. Because it relies on empathetic practices—i.e., seeking to understand the desires, challenges, and motivations of the people for whom you’re designing—service design ensures that your operating model maximizes value and impact for both the business and customers.

3. Manage the change impact. Even the best operating model won’t deliver value if leadership fails to orchestrate all the necessary change components. Design an enterprise PMO or other structure to oversee change in a consistent and centralized fashion. Tap into insights on change saturation to inform the timing, scope, and sequence of change activity.

Define the necessary behaviors, roles, and skills in support of your operating model and organizational structure. You’ll also need to consider the communication, training, and engagement techniques that will best enable these behaviors.

Engage employees at all levels of the organization to help design the change; in turn, they’ll be more likely to embrace the future state. Our data proves it: 93 percent of business leaders say that involving employees in the design of change solutions leads to greater adoption.

Putting it all together

A brighter future for the transportation industry starts with an integrated operating model. By approaching this essential function with an emphasis on organizational structure, service design, and change management, you’ll be equipped to address customer, operational, and workforce imperatives, while maximizing value along the route.

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