Innovation in Rail Franchising
Innovation Support Pack 1
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Table of contents
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Why should Innovation Matter?
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Supporting Innovation In Rail
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Delivering Innovation in Rail Franchising
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Bidder Engagement Plan
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Why Should Innovation Matter?
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Key Message 1
Innovation is key to business improvement and
competitiveness. TOCs have successfully innovated within
the scope of their operations and are now being given
the freedom to bring their experience to the wider
industry. Additional support and flexibility is being
offered in order for TOCs to achieve the step change
innovation to deliver the UKs future railway.
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Key Message 2
The Innovation in Franchising programme is an
opportunity to implement systemic improvements with
cross-industry collaboration (TOCs, Network Rail, supply
chain) and to de-risk investment within a flexible
franchise framework that incentivises and rewards TOC’s
undertakings.
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Key Message 3
The delivery of innovation in rail franchising will be an
important element of the overall bid process and
throughout the life of the franchise for the InterCity
East Coast and subsequent franchises and thus requires
careful consideration by the TOCs
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What is innovation?
The development and implementation of new methods,
products, services, systems and capabilities with the
potential of delivering transformational change in rail
• Innovation can be realised at any or all stages of the value chain
• Successful innovation requires a strategy, corporate support,
organisation process, competencies & culture, implementation
process, championship (technical, managerial, financial etc)
• Leadership and an embedded innovation culture will result in a
successful and sustainable process for innovations
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Why is Innovation Good
For Business?
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Increases competitive advantage
Increases revenues and profitability
Builds commercial value
Increases efficiencies, reduces costs
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Why Should Innovation
Matter to the TOCs?
• Investment in innovation will benefit TOCs through
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Improving competitive advantage
Increasing revenues and reducing costs
Increasing franchise value throughout franchise and beyond
Improving performance and the customer experience
Exploiting UK rail innovations in global markets
R&D tax benefits
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Why Should Innovation
Matter to ICEC Bidders?
• Innovation will be a key component within the
franchise ITT and bid
• A % of the franchisees revenue will be available for
investment via the (franchise) Innovation Fund
• The Innovation Strategy proposed by bidders in their
bids will be contractualised for the period of franchise
• Step change innovation activities will realise the
generation of IP and increase of franchise value
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Supporting Innovation in Rail
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UK Rail Successes
• Since the privatisation of British Rail 20 years ago the
TOCs have :
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Doubled passenger numbers
Achieved all time high safety levels
Achieved record levels of punctuality
Improved passenger satisfaction by 10% over the past
decade.
• But there are still challenges to be faced in the
future…
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Key Message 4
Unique and timely opportunity to embrace and
implement innovation to realise commercial benefit.
Requirement for innovation moving from the rhetoric
to the tangible being specified in franchises.
Support available to industry is also undergoing
co-ordination and integration at industry level and
through unprecedented investment in UK Transport
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Economic Benefits to Rail
UK Rail Strategy
More effective innovation in UK rail could:
• Increase Capacity and improve Customer
Satisfaction
• Reduce Cost and Carbon footprint across the whole
industry
• Deliver wider benefits to UK plc
• Exploit industry innovations in global markets
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Step Change Innovation
Innovation Challenge
• Cross industry initiatives (other TOCs, Network provider)
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South West Trains & Network Rail alliance
• Alliancing with other TOCs, Network providers, supply
chain
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Staffordshire Area Improvements Programme Alliance
• Leveraging sources of funding, infrastructure & support
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Enabling Innovation Team (EIT) challenges
• Accessing innovations from outside the rail sector
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Common transport sector challenges e.g. big data, positional /
location, materials & manufacturing, energy
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Innovation Maturity Level
• RTS vision for raising
UK Rail industry
through levels of
innovation maturity
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Supporting Innovation
in Rail
• Organisational
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Range of organisations to assist industry in rail but also
other transport sectors
• Financial
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Unprecedented levels of co-ordinated and integrated
funding in rail across all aspects of technology maturity
from research, through demonstration & evaluation
• Transport sector
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Opportunity to leverage best practice / lessons learned /
common challenges from Automotive (Automotive
Council UK) & Aerospace (Aerospace Growth Partnership)
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Funding Landscape
Snapshot
Government
Technology
Strategy Board
Transport
Aerospace
Transport Systems Catapult
Aerospace Technology Institute
Rail
EC Horizon
2020
KTNs / KTPs
Shift2Rail
Automotive
Horizon 2020
Rail
Marine
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In Franchise
Funding
European
Commission
Advanced Manufacturing Supply
Chain Initiative
NR ‘Match
Funding’
Regional Growth Fund
Future Railway
HLOS £52M
Automotive Council UK
DBIS
RSSB Strategic
R&D £22.5M
Collaborative R&D, SBRI
Circa £130M + leverage
(CP5)
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Funding Landscape
•
EIT sharpcloud support tool for rail-relevant funding bodies
and mechanisms
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Supporting Organisations
Supporting organisations & initiatives established to enable
partnerships, collaboration and innovation within rail innovation
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Future Railway (Enabling Innovation Team, RSSB, TSLG)
Transport Systems Catapult
Other Catapults e.g. High Value Manufacturing, Future Cities
Associations including Railway Industry Association (RIA), Rail Freight Group
(RFG), Rail Research UK Association (RRUKA)
Rail Alliance
DBIS, Chambers of Commerce, UKTI
Technology Strategy Board (inc. Knowledge Transfer Networks, Knowledge
Transfer Partnerships
European Council (EC) Horizon 2020 including Shift2Rail
Innovation portals & initiatives including TfL, Network Rail
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Delivering Innovation in Franchising
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Delivering Innovation in
Franchising: Aims
 Commercial benefits and business drivers for
the TOCs
 Delivering future railway (RTS)
 Supporting the freedom to innovate above and
beyond the norm, recognising limitations,
removing barriers, supporting industry
 Increase franchise value throughout franchise
and beyond
 Improving competitiveness for future
franchises
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Delivering Innovation in
Franchising
The ICEC Franchise Tender process will:
• Require bidders to produce a Franchise Innovation
Strategy
• Give credit, at the bidding stage for the innovation
Strategy and for implementation of the strategy
throughout the franchise
• Establish a fund from mandatory franchisee
contributions to support in-life innovation projects
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Innovation Strategy
What elements make up a good Innovation Strategy?
• A commitment to innovation as a core value within the
leadership and at all organizational levels;
• Access to technical skills and knowledge to provide confident,
creative, well-trained and technically proficient employees;
• A culture that encourages and is willing to accept the ideas of
all employees;
• Systems that not only permit and reward innovation, but
actively pursue new ideas;
• Managers who understand what is needed to be innovative
and are prepared to actively encourage it;
• Employees and managers who have the skills they need for
innovation.
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Franchise Innovation
Strategy
A strategy is required for embedding and delivering innovation
• Alignment & synergy with top level drivers RTS/ NRTS
• The strategy should
– support the specific franchise priorities
– consider how the support and funding available could be used
– address the bidder’s approach to utilising the specific Innovation
Fund assigned to this franchise
• There will be a requirement for the strategy to be refreshed
during the franchise
• Credit will be given, at bid, for this strategy and its delivery
through the course of the franchise period (& beyond)
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Franchise Innovation Fund
 Acknowlegment of limitations to innovation in previous
franchises
 Misalignment of commercial objectives – residual value,
lack of flexibility to de-risk new ideas
 The fund is designed to enable the de-risking of
innovation, pilots demonstrators etc.
 Enables a more robust commercial business case to be
developed
 Franchise revenue will be used for the Innovation Fund
to enable a portfolio of innovation projects to be
undertaken to deliver value
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Key Message 5
A pilot £50 million Innovation in Franchising Fund will be
available for innovative projects over the next three years
covering the East Coast, TPE and Northern franchises
The fund is aimed at innovations developed during the course
of a franchise which may not deliver a clear commercial return
to the TOC during the franchise, but will have an appropriate
benefit to the TOC and wider rail industry as a whole or in the
longer term. The fund is not intended for incremental or
continuous improvement activities.
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About Future Railway
Enabling Innovation Team
The Future Railway EIT has been set up by the rail industry
to accelerate the uptake of innovation. Our mission is to
offer support to practical cross-industry demonstrator
projects, building on the work of the Technical Strategy
Leadership Group, but also seeking out innovative ideas and
proposals from across the industry. Our approach is to:
understand the challenges that industry faces; connect
potential innovators with these challenges; and, where
necessary with potential funding.
The Future Railway EIT is hosted by RSSB, and reports into
TSLG, and is supported by the Rail Delivery Group, Planning
Oversight Group, and RSSB’s Board as well as the
Department for Transport.
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About IXC UK
IXC UK is recognised as a leading practitioner of open
innovation and collaborative development, successfully
delivering innovation initiatives to companies and
organisations in the Transport and other industry sectors.
In supporting the Department for Transport's (DfT)
strategy for introducing innovation as a significant
component of future rail franchises, IXC will utilise its
transport domain expertise and track record in innovation
and through working closely with the Future Railway EIT
plus wider rail stakeholder network IXC will: develop the
appropriate innovation material; and engage with, and
communicate this material to, the rail franchise industry.
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