14th May 2018

Driving digital is key to public sector transport commercialisation

By Matt Goodstadt, Managing Director, Transport, Civica

Change is coming in public sector transport. Many organisations are viewing increasing demand and tighter financial restrictions as an opportunity to innovate. This is crucial as efficient transport systems have a critical socio-economic role in the UK. Fundamentally, vehicles must be available to empty residents’ bins, ensure social and health care workers can reach the elderly or vulnerable patients they care for and ambulances continue to run. We cannot afford for this to stop.

However, time is running out for public sector transport leaders who need to fill a widening funding gap. While many transport providers have already implemented cost cutting measures, organisations need to implement digital transformation as part of their wider strategy to cut costs and to drive commercialisation. Pursuing a digital strategy has helped many local authorities do just this - also helping them to better serve citizens and streamline processes. 

In fact, nearly half of the public-sector transport managers in our recent Civica survey agree that technology is vital in creating a successful commercialisation model. However, many transport providers simply do not have the right technology to enable commercialisation. This is not about forcing the public to pay ever greater charges for services, rather seeking out new revenue streams which link to areas of corporate strategy and public need. 

Transforming transport through tech 

Commercialisation isn’t a straight forward process; whether it’s developing the right skills, or simply knowing how to broker successful partnerships which make real financial sense, strategies need to be bespoke to individual organisation needs.

Technology is the key to this. For example, implementing a digital transport management system can provide transport operators with a holistic view of their entire fleet. Through use of technology, operators can typically make savings of 3% by understanding where fuel efficiencies can be made. Further savings can be made through early planning for when vehicles need to be off the road for maintenance and by reducing over-maintenance of vehicles. 

More advanced digital systems both boost productivity and, crucially, enable management to analyse business performance and make further improvements. Cornwall Council is just one example of a public sector organisation which has created a successful commercial model. In 2011 Cornwall Council set up Cormac Solutions Ltd, which became the first all highways-related Teckal company in the UK. Since its inception, Cormac has increased its business trading by £31m between 2012 and 2015 and delivered a significant dividend back to the council to reinvest in service delivery. The continued success of Cormac paved the way for the creation of Corserv, the parent company for all the Council’s Teckal companies.

As a significant income driver, the Council is working hard to rationalise and integrate its systems. Fleet management software is enabling the business to analyse productivity, budget and capacity data. The management can then make more informed decisions and manage workshops and the workforce more effectively – providing greater accountability and ensuring the business makes the correct decisions.

The success of Corserv has led it to set up a joint venture with Nottinghamshire County Council – Via East Midlands – which provides highways and fleet management services, and generated a turnover of £40m in the first nine months of operation.

Tech adoption alone isn’t enough

Finding the right strategy to deliver genuine and reliable returns while supporting community priorities is a task that few public-sector transport leaders have found easy. Technology adoption isn’t the only challenge that public-sector transport managers face when implementing a successful commercialisation model – skills are also an issue.

With the majority of public sector executives (73%) reporting they have no or only some commercial experience, the public sector needs to upskill to deliver successful commercial models. Public sector transport organisations need to change their culture to commercialise. Education on the benefits of commercialisation is key. This is crucial, as 54% of survey respondents accept that employee buy-in and support for change will be crucial to any transformational plan. All commercial actions must be transparent and show deliverable outcomes. 

Public sector leaders are juggling a wide range of transformational activities. There’s no doubt that public-sector transport organisations are rising to the challenge of reduced budgets. However, with no sign of financial and service demand pressures abating – commercialisation is essential, as is building teams with the required skills. 

There’s still a long way to go and much more can be gained from generating new income. If organisations upskill to meet the challenge, frontline services will stand a much better chance of being preserved and improved. Those which show the most commitment and flexibility to their commercial strategy will no doubt be the ones who see the best results.