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As the TfL Budget Pie Shrinks, IT Suppliers can Still Get Some Tasty Morsels

"From a supplier perspective, the most obvious near-term beneficiaries are likely to be computer hardware providers (both PCs and servers) and systems integrators"

By CBR Staff Writer

At the end of its financial year (March 2019), Transport for London (TfL) has updated its budget expectations for the coming years, writes Tony Cripps, Principal Analyst, Transport & Smart Cities, GlobalData. The latest draft TfL budget points – not unexpectedly – to a continuation of that rationalisation strategy that started in 2017, with the creation of a centralised Technology and Data (T&D) Directorate.  In this document, the transport body also shows that it has (impressively) halved its budget deficit during the 2017/18 financial year, and is on track to wipe out the deficit by 2023.

While most of these reductions in spending are attributed to cuts across the organisation, the recent rationalisation and reorganisation of TfL’s ICT estate has contributed greatly, without any discernible loss of capability.

To put the scale of ICT spend reductions in perspective, the organisations estimates it has made savings of some £60 million between 2015 and 2018, out of a total spend of £542 million. It’s worth noting that TfL achieved this purely from changes to its technology-related operational model and contracts. Over the years, the body’s diverse responsibilities and complex corporate structure had resulted in a legacy of duplication in ICT functionality and contracts across the organisation.

Read this: TfL Planning iBus2: Complete Revamp of Bus Connectivity

tfl budgetWhile the overall reduction in TfL’s ICT spending is paints a negative picture, there are still significant opportunities for suppliers looking to sell to TfL. For example, this budget update points to a dramatic increase in spending on networks, hosting and end user computing (EUC), partly funded by sharp reductions in the operational costs resulting from infrastructure consolidation, cloud migration and the move away from leasing to managing its own data centre assets.

TfL Budget: Spending Plans Include Payments Systems Portfolio

Another bright spot in TfL’s spending plans include its payments systems portfolio, which is due a series of upgrades to address the alignment of the Oyster and contactless ticketing propositions, associating a contactless card with discounts, integrating the Elizabeth Line into revenue allocation,  software the new “Hermes” card readers,  and migrating to a new rail fare system.  Longer term, the Revenue Collection Contract 2 strategy, which should replace the existing Cubic Transportation System contract in late 2025, is a key opportunity for suppliers.

TfL is also increasing investment in its ERP systems to support the ongoing improvement of its HR (including operational health), finance and supply chain business processes, as well as migration of its SAP system to a cloud hosting. Also on TfL’s ERP agenda are the consolidation of its HR CRM tools, deployment of an enhanced procurement capability based on Ariba, and the roll out of automated processes for transactional financial and payment as part of its financial service centre transformation.

See also: TfL Offers £186 Million to Simplify Asset Management Software

Networks, telecommunications and signalling all play a big part in TfL’s operations, on both the IT and operational side of the organisation. TfL’s strategy has been to establish a unified, interconnected data network for the entire organisation, removing duplication of network footprints and consolidating services. In terms of specific projects, the work to refresh and standardise TfL’s access network and WAN infrastructure is due to be completed by the end of the year, and WiFi service improvements will follow soon after.

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TfL is also party to the long-suffering Emergency Service Network (ESN) project, and needs to integrate its own Public Cellular Network (PCN) services into it. TfL has agreed a further extension of the ESN Phase 1 infrastructure installation works with the Home Office to bring forward all cabling infrastructure in TfL’s tunnels and to a further 10% of stations. Initial bid submissions for the Telecommunications Commercialisation Project (TCP) to generate revenue from PCN assets are expected in summer 2019, following an invitation to participate in dialogue this May.

From a supplier perspective, the most obvious near-term beneficiaries are likely to be computer hardware providers (both PCs and servers) and systems integrators. However, in the longer term these opportunities will themselves shrink. Elsewhere, delays to the role out of the ESN and the opportunity to better align that project with TfL’s own PCN and TCP projects will undoubtedly be a frustration for network equipment and network services providers. However, the promise of better alignment will also bring opportunities to improve the specification of the technical solutions specified, potentially including the use of the rapidly emergent 5G technology.

Suppliers with more niche interests related to the TfL ICT estate should find plenty to interest them, not least in TFL’s new “Surface Intelligent Transport Systems” sub-programme named within its newly created STP. This is especially true with regard to the transport body’s interest in future intelligent transportation systems (ITS), especially the delayed iBus 2 bus management system and the planned renewing and upgrading of TfL’s road traffic management systems.

Perhaps the biggest prize of all, however, lies slightly over the horizon, in the shape of the Revenue Collection Contract 2 strategy, which should replace the existing Cubic Transportation System contract in late 2025.

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