PwC: Roger, what’s your Digital IQ at AT?
Roger: I would say about five out of 10, and I expect that to go up to about seven or eight within the next two years or so. We can do that by rolling out the methodology behind digital – namely customer-centricity – across the whole business. That’s the plan for the next couple of years, and at the moment, we’re a little behind our competitors in some ways, but ahead in others.
When I say competitors, I tend to think of transport agencies in other major cities. We regularly learn from other agencies abroad, and they learn from us. For instance, we’ve looked at traffic light control systems overseas and seen that we’re probably a little ahead. At the same time, we’re probably a little bit behind the curve in terms of our ongoing optimisation. By picking the best of bits and pieces from around the world, you can create a really good whole, which will allow us to continuously raise our Digital IQ.
We need to do that because if you look in 10 years’ time, the transport system we know now will be completely different – our business will be completely different. And that change will be driven by digital.
PwC: So what changes do you expect to see in this time?
Roger: In some aspects, we have predictions of what our business and transport in general could look like in 10 years’ time; but in others, we will have to evolve quickly.
When we think about the autonomous vehicle, for instance, in 10 years’ time, you’ll still need a train to carry large numbers of people, and you’ll need buses at peak times. However, at non-peak times, you might have an on-demand service, you might have no buses running after 8 o’clock at night, and we might see subsidised autonomous vehicles working on routes to pick you up. Just thinking about autonomous vehicles, you come up with a completely different way of operating public transport.
These vehicles might not even be ran by the Transport Agency, but they’ll be part of an ecosystem that operates as a whole.
PwC: What technologies are you investing in specifically?
Roger: If you get to the stage where you have autonomous vehicles, you need a lot of technology. But there are other emerging technologies we’re working with right now.
We’ve invested a lot more into building customer-facing applications, and using the customer as the driver of the requirements, not the business. All the old mobile apps were built by the business for the customer; the new ones are built by the customers for customers.
We’ve put artificial intelligence into our back-end operations, and we’re also using it in the front end to come up with predictions on things like traffic and weather. With AI, we’re trying to link traffic flows and what the weather’s doing to foresee possible disruption of the transport network. Then, if the prediction does occur, we want to have AI manage and suggest solutions to that. We’re also looking at investing in robots for the call centre.
Customers might not know we’ve done things in the back end that will have a direct impact to them on the front end. But whether they know about it or not, there’s no point investing in this technology if it’s not going to have an impact on the customer experience.
In the true digital world, we’ve invested a lot into digital media and content management systems, too. What we’re trying to do is learn from the systems using the data we have and analyse information to spot demographic patterns, so we can tailor our content to particular passenger journeys.
PwC: How sophisticated is AT with data and analytics?
Roger: We’re probably at about three out of 10 at the moment. We have lots of data and lots of information, and really good tools to analyse it. What we don’t have are the people in place to analyse all that data – the human side of things. We have a wealth of information, but we’re not sucking the value out of it quite yet. We do a lot of reporting, but that doesn’t give you the insights you need to change a company.
Generally, I think there’s also a shortage of business drive to really take advantage of data and analytics at the moment in New Zealand. Many executives don’t want to hear uncomfortable truths – the wrong answers to their questions.
At Auckland Transport, we’ve let the business drive data and analytics for a while, but building a data team to drive it is an option we’re considering. The advantage is that a data team can be impartial, and provide answers.
“What we’ve done at Auckland Transport is we’ve taken the customer focus and put in a digital initiative, which is facilitated by IT but doesn’t necessarily solve the legacy IT system issues that still exist. So, while we’re running a bi-modal approach, we’re caretaking digital.”
PwC: OK, so what does digital transformation mean to Auckland Transport?
Roger: Digital transformation is the change in the way we do business; the methodology of how you conduct business. Generally what we’re finding is that technology is the leader and the business is the follower, which is contrary to the way we’ve worked in the past. It’s most applicable to technology in the early stages, but actually it’s a framework that any business could use on a wide scale.
Digital is all about the customer, so it’s also a change in focus from the traditional IT approaches – which is probably why it’s driven more by IT. Instead of finding out what the business requirements are and then trying to develop the solution around that, we actually find out what the customer problem is and then work out what we need to solve that problem.
So digital is tipping business on its head a little bit, which is why it’s probably fallen more into the IT space, because IT has traditionally done the problem solving.
PwC: What is the main driver for investing in digital?
Roger: Better customer experience is always top of mind for us and that’s a big part of what drives our digital investments, but it can also help to reduce costs. Digital should address some of the legacy issues and improve some of the business processes at the back end that make a difference at the front for the customer. At the same time, that reduces cost, which can again benefit the customer in the long run.
PwC: So where does innovation comes from at Auckland Transport?
Roger: We have an employee whose job is to look at new and exciting things. But as well as that, there are new and exciting things coming out of various parts of the business.
The way we approach it is that anyone from any part of the business can bring an idea to the table. We’ll then put it through the ideas pipeline, assess if it makes sense from a customer perspective and see whether it aligns with our strategy. If it does, it goes on the table.
PwC: What do you think has led to the recent introduction of ‘chief digital officer’ to the business vocabulary?
Roger: I have a view different to many. I believe that the growth of the chief digital officer (CDO) is generally the result of the failure of the chief information officer (CIO) or IT department to adapt to change. If the IT department doesn’t adapt and change to a digital approach and lead the way, the only way to break that is to put in a CDO. What some New Zealand companies have done is that they’ve changed the titles of their IT people to digital, but nothing has actually changed under the covers.
In organisations where the IT department is not changing, you need a digital team, which is when you get a bi-modal practice. You have a CIO managing the old stuff, a CDO managing digital, and that’s then embedded in the business where the customer focus is.
What we’ve done at Auckland Transport is we’ve taken the customer focus and put in a digital initiative, which is facilitated by IT but doesn’t necessarily solve the legacy IT system issues that still exist. So, while we’re running a bi-modal approach, we’re caretaking digital.
I think if the chief information officer and/or chief technology officer do their jobs, you don’t really need a CDO. As my boss said to me when I asked if I should change my title to CDO: “you can be called what you want, as long as you do the job”.
PwC New Zealand’s 2017 Digital IQ Survey reveals that when it comes to their digital investments, only 6% of Kiwi companies are thinking about creating better customer experiences while 76% are focused on growing their revenues.