Successful digitization of the rail market requires consistent standardization
In the course of ever faster technological and social changes, companies have to assess and align their strategic position constantly. It is therefore vital for the management to define processes which enable them to systematically cope with situations of uncertainty. Megatrends and technological drivers must become focal points of every decision-maker, also in the rail markets.
For the second time, ASTRAN surveyed experts and decision-makers from the global rail markets on their assessment of current megatrends in rail transport. This year, the main focus of our analysis was on technological trends and drivers in safety-oriented railway applications. Below we have summarized the results of our online survey for you.
Digitization and standardization go hand in hand
Experts and decision-makers from 14 countries participated in our survey this year. As in 2016 our first question was:
With regard to the strategic development of your company, how important and how urgent are the megatrends of the rail markets?
Last year, the assessment of the megatrends was relatively balanced. At that time, the participants, mainly from German-speaking countries (Germany, Austria and Switzerland), considered “digitization” as the most important trend and the “competition between customer-specific, proprietary solutions and standard industrial components (Commercial-Off-The-Shelf – COTS)” as the most urgent trend. “Enhanced mobility” and “urbanization” were also ranked as very important.
This year is marked by significant changes. “Digitization” is now perceived as the by far most urgent trend for the strategic orientation of the enterprises. Most importantly, the participants now ask themselves whether in the future standard industrial components (COTS) will dominate the market in contrast to the hitherto customer-specific, proprietary solutions.
The answers of the experts and decision-makers to the following question clearly show that the willingness to rely on COTS components has increased significantly over the past year.
Does your company plan to use standard industry components in the sense of Commercial-Off-The-Shelf (COTS) products?
While in 2016 around 41% of the survey participants stated that they are planning to use COTS solutions in the future, in 2017 this figure is already above 55%. It can therefore be assumed that the level of market maturity of COTS products, especially in the German-speaking rail market, has increased in the past year and will further continue to increase in the future.
A central driver of this development is standardization. In many industries, standards are considered to be the basis for digital solutions. This development is now also increasingly evident in the initiatives to be observed in the railway market. Programs such as the EULYNX initiative show that standardized interfaces, e. g. the RaSTA protocol, represent an important technological driver in the safety-oriented rail market.
On the one hand, standards are the indispensable basis for the success of a digital transformation in the railway industry. On the other hand, standardized components also offer numerous advantages for the companies themselves, whether they are acting as providers of COTS products in the market or as users, thereby realizing specific railway applications based on COTS components.
The challenges are obvious. Rail traffic is determined by a large number of safety-relevant applications. In the area of infrastructure as well as for vehicles and rolling stock, it is of major importance that the existing safety standards demanded by the market are also fulfilled by COTS standard components.
For this, extensive and complex approval processes are still necessary. Both aspects are perceived by the experts as special challenges for COTS products in the safety-oriented rail market.
COTS products on the brink of penetrating the rail market?
It is still a long way to a final market penetration of COTS products in the rail business. It is certain that there is no alternative to standardization, whether in a process of small steps or as a “big bang”. Furthermore, it is clear that the market will impose further requirements on the manufacturers of COTS components.
The two megatrends digitization and standardization, which also dominate the public debate, also determine the future strategic orientation of the railway technology companies. It is clear that a successful digital transformation needs standards in order to consistently enable networking, the core element of digitization, also in rail traffic.
In this regard the development of the railway market is clearly lagging behind other industries – especially the automotive industry. A further shift in the industry structures of the railway market will also lead to an even stronger solution orientation in the future. Flexibility in systems becomes a competitive advantage and a quality feature in national and global competition.
However, standardization is not an end in itself, because increasing flexibility will also increase the complexity of systems and solutions. The associated requirements for application providers, especially in the area of IT infrastructures, will increase significantly. Correspondingly, against the background of price advantages, COTS components represent an opportunity to sustainably protect strained financial ceilings and to reduce development costs – at least on the hardware side.
More information about the influence of digitization on the industry structure of the railway market can be found in our blog entry The digital transformation of the railway industry.
Would you like to take part in our online surveys in the future and be the first to hear about the results? Then sign up using the following contact form. We look forward to your participation and contact.