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This problem is not unique to the railroad industry. We’ve encountered this in other industries that are further into their digital transformations, such as telecommunications service providers and smart cities around the world. The cascading technology trap is more difficult to overcome than other challenges such as regulatory, financing, and ecosystem partnerships. Organizations and ecosystems get caught off-guard in vicious cycles of technical debt, while the demands on their capability maturity surge. The Trap is activated by at least six triggers that are unavoidable given the nature of the digital transformation and the traditional nature of the organizations undertaking the transformation.
How can railroads leverage the rapidly 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.
Factors That Trigger The Trap
Strategies for Addressing The Trap’s Triggers
Approaches that enable railroads and the transportation ecosystem to avoid The Trap fall in two categories:
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:
With each wave of Digital Transformation, the baseline for capability maturity level of the organization, re-sets per the new transformation requirements. An organization has the following four levers to improve internally to face the disruption necessary to successfully navigate the transformation and avoid The Trap:
As with any transformational endeavor, consistent and accountable involvement of the full leadership team, including C-suite, senior executives and executive sponsorship, are essential. They manage and hold accountability for the explicit links to strategy, business objectives and risk appetite. They are integral in driving the evolution of the culture for the next generation of railroading.
To inoculate an organization against the most likely Trap triggers, we suggest considering the following strategies “good-better-best” roadmaps for action. A “good” roadmap would enact at least one strategy for a perceived trigger, and a “best” roadmap would use all applicable best-in-class strategies. (See Table 1.) In addition, consider a railroad’s articulated strategy and business objectives, size, location, governance structure and economic conditions.
Table 1: Map of the technology trap triggers vs. effectiveness of the counter strategies for the railroading industry.
Let’s look at a transformation example for deploying a next generation communication system at a railroad.
Deploying Next-Generation Rail Communication Systems
The deployment of Future Rail Mobile Communication System (FRMCS) is a good example to highlight The Trap. The International Union of Railways (UIC) is coordinating activities among primarily European railway associations and the ETSI and 3GPP standard bodies to develop standards for FRMCS which is based on 5G technology. This makes for a major step function in technology from GSM-R, which is based on 2G technology. Europe mandates GSM-R while North America uses a number of systems depending on application, including VHF and UHF narrow-band voice solutions. China, Australia and Korea have implemented LTE-based solutions. (See Figure 1.)
Figure 1: Converged connectivity network framework and some use cases for the railroading industry.
Vendors are planning on obsoleting GSM-R by 2030, a technology that was developed in the mid-1990s. In the intervening period of 35 years, 3 generations of wireless technologies came to market at a rate of 1 every 10 years.
The rise of Cloud technologies and business models made a defining impact on 5G technology. Let’s illustrate the impact on the operator by using network virtualization as an example. Even though all the triggers apply, we’ll focus on a subset here and on the proof-of-concept phase.
New technologies are forcing multiple paradigm shifts. Railroad communication systems are monolithic in nature where dedicated hardware solutions perform specific functions. In contrast, virtualization allows software-based network functions to run on standardized hardware. This fundamentally changes the paradigm for the planning, deploying, operating and maintaining communications network.
For example, virtualization changes the network architecture allowing for scalability and elasticity in resource provisioning. The result is a different equation between performance and cost economics. In practical means, the operator needs to decide where and how to run the various communication network elements, on private, public and hybrid Clouds.
Managing a host of software functions requires a new approach to operational and business support systems to manage the virtual network infrastructure and orchestrate the software functions that comprise and end-to-end service. Automation is core to such activities.
Virtualization changes the nature of the relationship between the vendor and the operator such as those related to the division of responsibilities and business models which can shift from CAPEX to OPEX-based models.
Virtualization enables faster roll out of services as it reduces the entire planning and deployment cycle.
Virtualization requires a cultural shift by the operator from a hardware-centric to a software-centric mentality. Operations of the network will change in terms of organizational design and skills, methods and procedures and associated training and technologies underpinning the transformation.
Dealing with the internal corporate chasm. Moving from a proof of concept of network virtualization in a given market vs. retooling all regions from a people, process, and technology standpoint is a chasm of scale that few can accomplish in required timeframes, per requirements, and on budget.
How can the railroads resolve these key issues in our case study? For the proof-of-concept phase, here is how we connect the dots in our case study, because of this railroad’s particular characteristics (strategy, objectives, size, geography etc.):
Looking at internal strategies to deal with virtualization, the railroad needs to recruit engineers with software expertise to interact with vendors and system integrators and plan new processes for network deployment, maintenance and optimization. Network applications require new processes that span the entire chain from procurement through test and verification to deployment. This also leads to new operating models that impact the organization along both internal and external dimensions. Moreover, proper application programming interfaces need to enable the integration of future applications (futureproofing).
As for external strategies, the railroad will have to look at new models and partners, for instance, related to hosting and data center services. Moreover, for certain advanced applications, rail companies may have to work with start-ups developing advanced technology such as computer vision technology.
We’ve encountered these triggers and applied these strategies in other industries that are further into their digital transformations, such as telecommunications service providers and smart cities around the world. One word of caution, though, is that playbooks from one industry or organization may not effectively fit another one. This is where some playbooks must be tailored, while others require validation for re-use.
Become a Proactive Organization
New-entrant competitors add to the urgency as they are further ahead in digitalization capabilities, and often, don’t have to undertake a large-scale transformation. They started life as a butterfly, so they don’t have to evolve, from egg to larva to pupa, to beautiful Monarch.
Sonia Bot, chief executive of The BOT Consulting Group Inc., has played key roles in the inception and delivery of several strategic businesses and transformations in technology, media, and telecommunications companies worldwide. By utilizing methodologies in entrepreneurship, business precision, Lean Six Sigma, systems and process engineering, and organizational behavior she’s enabled organizations to deliver breakthrough results along with providing them a foundation to continue to excel. She was instrumental in PTC implementation on CN’s U.S. lines. Her approaches on the evolution of railroading and transportation are game changers that drive innovation and competitive advantage for adopters in a changing industry. She holds engineering degrees from the University of Waterloo (BMath) and the University of Toronto (MASc) and is a certified Lean Six Sigma Master Black Belt. Sonia can be reached at email@example.com.
Frank Rayal is founding partner at Xona Partners, a boutique management and technology advisory firm with a global footprint closely tied to leading innovations hubs. He helps companies generate new revenues by developing new technologies, markets and strategic partnerships. Frank advises private equity investors on technology M&As including those for telecom and Cloud infrastructure assets. He was a co-founder of BLiNQ Networks, and had held senior management roles at technology vendors Redline, Metawave , and Ericsson. Frank has a MASc in Electrical Engineering and MBA from the University of Toronto. He is a senior member of IEEE, and a member of Professional Engineers Ontario. Frank can be reached at firstname.lastname@example.org.
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