Faster, safer and cleaner traffic – but how to make it profitable?
Mobility in the European Union must be efficient, safe and green, but how do you achieve this and earn money at the same time? ‘Business modelling has been the “hot potato” of SOCRATES2.0 since the start of the project, but we are starting to make progress with this now, says Jan Maarten van den Berg, business manager SOCRATES2.0 at the Dutch Directorate-General for Public Works and Water Management (Rijkswaterstaat).
The SOCRATES2.0 project consists of eleven public and private partners. The road authorities, service providers, intermediaries, and content providers work together to improve the road network in the European Union. In addition to the partners, road users play a very important role in the project, as they take part in the smart mobility pilots that take place in Amsterdam, Antwerp, Copenhagen and Munich.
The partners first had to make a plan on how to cooperate, explains business manager Jan Maarten van den Berg. ‘Different partners, including several companies, work together on this project. Each partner has certain roles and a specific reason or motivation for collaborating: more safety, a faster journey, improved services for road users or less CO2 output. They all bring something specific, a certain value, to the cooperation, and they all want to gain something.’
Three different cooperation models could be used for this public-private collaboration, he continues. At the first level, partners work together and agree on how to share data. At the second level, they combine the data from different companies to create enriched, better data. At the third level, the so-called ‘coordinated approach’ actions by road authorities and service providers, especially navigation services, are coordinated to delay and therefore decrease traffic jams. The paper can be found here.
‘In addition to the cooperation, we also needed to look at the business side,’ Van den Berg continues. The smart measures tested in the pilots to reroute traffic are generally beneficial to road authorities and road users, he explains. ‘There must be a clear win-win-win situation, not only for road authorities, but also for road users and service providers. Therefore, we’re now designing earnings models for the coordinated approach.’
He admits that the so-called business modelling is probably the most difficult part of the SOCRATES2.0 project. ‘It’s the hot potato we’ve been hesitant about since day one, but in the end, there must be an advantage for everyone. For the road user, road authority and the service providers.’
The cooperating partners – BMW, TomTom, MAPtm, HERE Technologies, Technolution, BeMobile, Brandmkrs and Rijkswaterstaat – are now working out the possible business models. The total costs incurred by each partner for joining the cooperation are calculated and must be lower than the generated total revenue. Next, the partnership must ensure that the share of the “win” is equally divided among the partners. ‘Not everyone equally benefits in all cases,’ says Van den Berg. ‘If anyone earns more, the others need to be compensated to maintain the win-win-win situation.’
Impact driven business models
This can possibly be solved by giving rewards, he continues. ‘We’ve carried out several experiments with rewarding.’ In Amsterdam, for example, the various services from navigation companies can help to reach certain government goals, such as cleaner air and fewer traffic jams, this next to and aligned with the measures taken by the traffic management centres. ‘In case impact has been made, the service providers are rewarded for this. We measure the impact by the number of “reroutes”, the number of cars that the service providers could reroute’ The partner that plays the role of the independent Assessor will determine this.
In the Amsterdam use case, virtual rewards are given to get insight into the complexity of rewarding as part of traffic management collaboration. In Antwerp, on the other hand, real money is part of the pilot. Road users receive a free ticket when one of the tunnels gets too crowded and can take another tunnel for free. Other reward possibilities the partners are considering include discounts at petrol stations or free cups of coffee.
Business model evaluation criteria
The partners are putting together all insights from the different business models and are assessing them according to a set of evaluation criteria, Van den Berg explains, pointing to the Excel sheet he’s working on with his colleagues. First, they check the viability or profitability of the business idea and whether it gives them benefits. Then they check the usefulness or the added value for the community and road users.
Next, the partners check the feasibility to determine whether it is technologically possible to build the tools required, also in the current economic and social situation. Finally, they check the scalability to determine whether the solution can be scaled up and applied in other situations and locations. ‘These four criteria all very important and, in fact, you need to find a sound business case,’ Van den Berg says.
It’s still a work in progress, the business manager emphasises. ‘We’re currently exploring the various options.’ His paper on the potential business models will be published in Spring. Around this time, the SOCRATES2.0 project’s evaluation process is also taking place. It’s a step closer to the European Union’s goal of a fast, safe and green road network.