For Whom the Road Tolls
- 12 September, 2003 11:55
It's not often a CIO is asked to rescue a $2.2 billion construction project, but that's exactly what happened when Transurban hired Cesare Tizi to steer Melbourne's troubled CityLink toll road back on track
"I hope you know what you're doing." Those were the first words Transurban CIO Cesare Tizi heard from his managing director after signing a contract to buy back the technology for Melbourne's beleaguered CityLink toll road from the company that originally developed it.
Transurban MD Kim Edwards had good reason to be nervous. Today, the $2.2 billion CityLink road built by his company is viewed as a model of how toll roads will operate in the future, attracting interest from governments as far afield as Taiwan and South America. But that wasn't always the case. Back when Tizi stepped into the newly-created CIO role in April 2000, technical problems and other delays had seen CityLink subjected to scathing criticism from the Melbourne press and local community groups. By the time Tizi arrived on the scene, Transurban was a company under siege.
Billed as Australia's biggest infrastructure project since the Snowy Mountains Hydro-Electric Scheme, the 22-kilometre CityLink expressway was built to link three of Melbourne's four main freeways, slashing travel times with an automated tolling system that eschews toll booths in favour of transponders, called "eTags", mounted on passing cars.
That was the plan, at least until concrete blistering on the Bolte Bridge held up construction and set back crucial work on safety, tolling and billing systems. The opening of the southern section of CityLink was also delayed for a year after cracking discovered in the Burnley Tunnel led to serious leaks. Transurban's construction partner, Transfield Obayashi, spent months anchoring the tunnel to bedrock with rock and steel ties to overcome the problem, but nevertheless found itself the target of a $251 million lawsuit for faulty construction brought against it by Transurban.
To make matters worse, the tolling software that sits at the heart of CityLink - designed for Transurban by CSC - was bug-ridden and months behind schedule. Problems with the mailhouse interface and report writing functions caused serious delays for the development team, and when the first sections of the Melbourne toll road opened in August 1999, the integrated tolling system still wasn't working. At one point, Transurban was losing roughly $200,000 per day in missing toll revenue.
When the e-Tags finally did come into use, things didn't get much better. "The technology was failing all over the place," Tizi says. "People were not getting the e-Tags until late, statements were incorrect, and they'd ring up about their account and the people on the phone couldn't answer the questions."
Tizi arrived at Transurban just before Easter, and almost immediately he heard that plans were under way to hire 100 extra call centre staff to cope with the flood of complaints expected to come in over the holiday period. For Tizi it was an ominous sign of the challenges he would have to overcome.
"When I got this job, my colleagues said I must be crazy," Tizi says today, speaking to CIO in Transurban's plush offices on the 43rd floor of Melbourne's Rialto Tower. At the time, CityLink was a favourite target of the local press, who never missed an opportunity to report on any setbacks the toll road project encountered. Although Tizi found it difficult to adjust to working in the glare of the media spotlight, the opportunity to help Transurban out of its predicament was simply too challenging for him to resist. Besides, criticism was inevitable, he says - especially in a city like Melbourne, where motorists hadn't been asked to pay road tolls for 15 years.
"Toll roads are not liked, as we all know," Tizi says. "They're just something we have to live with. There's a cost to the community but they get it back in more efficient transport, more efficient freight movement, and reduction in traffic jams in the surrounding surface roads."
The specific benefit afforded by CityLink's approach to tolling is that it operates on the "multi lane free-flow" principle: no toll gates, no barriers, and no channelling of cars into a particular lane. Cars can move from lane to lane at will, and the signal from the e-Tag transponder is picked up by a series of overhead gantries and the appropriate toll deducted automatically.
In the split second when a vehicle goes under the gantry it is tracked, photographed and then classified to see if it's a car, motorbike or truck. If the vehicle doesn't have an e-Tag, the system takes a photograph of the front number plate and scans it using optical character recognition (OCR) software to verify that the owner has purchased a day pass, CityLink's product for casual visitors to Melbourne.
"When you have high traffic numbers and traffic moving at 100kph, there aren't many systems around that have to manage so much data in real time. It puts tremendous pressures on the IT systems," Tizi says.
As soon as he hit the ground at Transurban, Tizi could tell that CityLink's systems were operating under stress. In fact, they were operating under so much stress that one of his first decisions as CIO was to add more grunt to the IT infrastructure supporting the toll road. At that time, whenever Transurban had to shut down the system to conduct maintenance - a common occurrence during those early days, when teething problems were rife - the company would fall behind in transaction processing. "Catching up was a nightmare," Tizi says, so he immediately increased the system's capacity by adding more memory, disk space, and processing power.
"That was done to buy us time," Tizi explains. "It was obvious the system lacked headroom, so we gave ourselves 20-30 per cent more capacity, which gave us some breathing space. This allowed us to run some diagnostics and have a close look at the design, so we could figure out why it was unstable and why we had so little headroom compared to what we'd been expecting. After all, we were running some pretty heavy iron."
Tizi next hired a team of software engineers, whose job was to examine CSC's original design to see where the bottlenecks were. A sound plan, but a more troublesome problem loomed: Tizi hadn't counted on the fact that Transurban didn't own the technology its business was based on. Prior to Tizi's arrival, Transurban maintained only a token IT staff of two people and instead outsourced almost all its IT operations to CSC, including the development of the tolling software. "Certain things were defined in the initial prospectus, and IT was not big," Tizi says. "In fact, there was a belief that the IT systems would be nothing more than a black box in the corner."
Despite the problems in the tolling system, Tizi harbours no ill will towards CSC. "CSC did a good job," he says. "It was brand new technology that had been developed specifically for Transurban and it was very complex. Even though it was a little bit rough and ready when it was delivered, it had a good architecture."
Tizi has no interest in dragging CSC's name through the mud. He says most of the problems with CSC's original design were nothing out of the ordinary, describing them as "classic first-generation stuff". What was unusual, he says, was the labyrinthine network of partnerships and the legal minefields he had to negotiate in order to get any improvements made to the system.
When Tizi arrived at Transurban, he was told all technological issues were to be thrown to the company's construction partner, Transfield Obayashi. "They would then feed those issues to the integration company," he says. "The integration company would then take the issues up with the liaison people, who would then feed them to CSC - usually CSC's legal department. CSC's legal department would then pass them to the project managers and the technical guys and, eventually, they'd start looking at the problem."
At first, Tizi tried to follow the rules. He went through all the proper channels and drafted formal letters for the benefit of the legal departments. But before long Tizi found himself setting up secret back-door meetings with the system's developers, "so I could at least meet them and have a chat", he says.
"When I joined, I had a look around and identified some of the biggest problems we had. I said: 'Let's fix this problem first. Can I talk to the guy who can fix it?' They said: 'No you can't, you have to talk to the construction company. And you have to put it in writing. We'll give you a response later.'
"I said: 'We're haemorrhaging over here, I don't want to put it in writing and get a response. I just want to talk to the guy who's dealing with that particular module of this application. I just want to have a discussion with him - I don't want to shout at him!' "
Tizi knew he had to collapse those layers if he was ever going to make any headway towards improving the efficiency of CityLink's transaction processing. "The message was getting corrupted in the channels," he says. Every time he made a request, the first thing Tizi heard from CSC was: "Is this a warranty issue?"
"We didn't care if it was a warranty issue," he says. "We just wanted it fixed."
It didn't take long for Tizi to realise that the only way Transurban's problems would ever be fixed was if he fixed them himself. "I couldn't do my job," he says. "I couldn't do typical CIO things, because I wasn't able to influence the people you needed to influence to improve the situation."
Much to the nervousness of Transurban's MD and board of directors, Tizi decided to bring the tolling technology back in-house. "What we really decided was that this piece of technology is critical to our business," he says. "We can outsource the Web site and we can outsource the call centre, but do we really want to outsource our fundamental, core application? My decision was no, that we wanted to bring that in-house."
From that point onward, Tizi had to step outside his role as CIO and become a de facto legal professional. Since CSC had developed the original system, all the intellectual property (IP) associated with the tolling and transaction applications resided with them. Tizi had to spend months in consultation with lawyers from both sides before he was eventually able to negotiate the release of the intellectual property, including the source code.
Tizi's desire to bring the software in-house was a radical shift in direction - and a hard one to sell to Transurban's board of directors. To get the IP and the source code meant giving up CSC's warranty, the safety net which had up until then allowed Transurban to deflect blame for the system's shortcomings. Apart from the big money involved in the $2.2 billion project, the negotiations were also undertaken in a tense climate of litigation, with Transurban already in the midst of a legal dispute with partner Transfield Obayashi over delays and traffic problems caused by faulty construction (the dispute was eventually settled in November 2001 when Transfield Obayashi agreed to pay Transurban $153.6 million in damages). Hardly surprising, then, that Transurban MD Kim Edwards asked Tizi if he knew what he was doing after the agreement was signed.
"When we gave up the warranty, that was a pretty defining moment in my life," Tizi says, "because at that point if something went wrong we couldn't go to someone else to fix the problem. It was our baby."
Fortunately for Edwards and Transurban Tizi did know what he was doing, and he set about proving it straightaway. First, Tizi established an internal IT group at Transurban to take control of the technology, or "to take control of our future" as he puts it. The next order of business was to stabilise the technology and get it running reliably.
Tizi and his team tuned, enhanced, and upgraded just about everything in sight. The CityLink system was built around software that had first been delivered in 1996. The operating system, the language, and the Oracle databases used by the system were all 1996 versions. Tizi's team brought the software up to the latest version and tuned the applications, and he now claims that the system's headroom has been increased by 100 per cent "without any additional changes to the hardware".
Tizi says these days Edwards and the board express "tons of confidence" in the IT group. "We proved to him [Edwards] that we could do it, because each release has made the package better," he says. Indeed, in the two years since gaining control of the source code, Tizi's IT group at Transurban has expanded from 2 to 72 and has delivered a dozen new releases of the tolling software. "Now if we shut the system down for a weekend because we need to do maintenance, we can recover on Sunday night. In the past it would take us up to 3-4 weeks to recover from even a small outage."
Tizi admits that the time spent coming to grips with Transurban's legal entanglements was trying, but he insists that it was precisely that kind of challenge which drew him to the role of Transurban's CIO in the first place. "It was a frustrating time when I did that, but I think I learnt something that I don't think I'd have learned in a more typical IT role," he says. Chief among those things Tizi learned is a new respect for the way the construction industry writes contracts. He feels IT projects have a few lessons to learn from their more practical, earthbound brethren.
"I think we can learn from the construction industry how to write contracts, how to manage contracts and how to manage the handover stage," Tizi says. "Companies looking at IT deliverables shouldn't have to stand for it when another company just keeps extending the timeframe. They should expect some compensation. If a reputable company says they're going to deliver something, and they don't deliver it in the time frame, why should someone keep paying? Let's write these contracts differently.
"Generally I think the IT industry has done it very badly," Tizi says. "The construction industry does it very well. The construction industry has a mindset that when they pick a date, the project will work on that day. And it will work on that day because the project is so carefully put together and the contracts are so clearly written."
The Road Ahead
Of the 72 people in Transurban's IT operations group, 42 are devoted to research and development. The reason for such a large R&D commitment is that, having successfully refined CityLink's core tolling application, Transurban now plans to shrink-wrap it and sell it as a commercial product in Australia and overseas.
"Communities want roads, but governments are saying: We can only build them if we toll them," Tizi says. "No one wants toll plazas any more - coin operated ones are just too inefficient. When you introduce multi lane free-flow, with no plazas and no slowing down, you automatically increase the capacity the road has by about 20-30 per cent. It's like adding an extra lane."
After a $20 million, three-year research process Tizi's IT team has transformed CityLink's original tolling system into one with "bolt-on capability", meaning it can be adapted for use with any toll road in the world and doesn't require much expertise to install. The result is the first release of Transurban's own software package, called GATe 1.0.
Tizi says it wasn't part of his original plan to package and market Transurban's tolling technology, but when governments from all over the world began to show interest in CityLink's example, he realised he had a classic business opportunity on his hands. IT shops are usually seen as cost-centres; Tizi found himself with the chance to transform Transurban's IT group into a revenue generator.
"There's just amazing demand," he says. "It's not us going out there and saying: 'Hey, does anyone want to buy a tolling system?' We've got a constant stream of people who come here and ask how to get this toll technology onto their roads, from South America, North America, Europe, Japan, Malaysia, the list goes on . . . "
A consortium headed by Transurban has already been awarded the $1.5 billion Western Sydney Orbital project, including all electronic tolling and customer service functions for the 39-kilometre toll road, due to be completed in 2007. Another prospect is Taiwan, where plans are under way to build a giant toll road across the island. There are 10 different companies bidding for the proposed toll road in Taiwan, and Tizi says every one of them has made contact with him, with many having already visited Melbourne to see how CityLink operates firsthand. "It's a brand new industry," he says. "It's like the mobile phone industry was in 1990. We're at the beginning of something that is really growing."
Tizi is clearly very proud to be taking Transurban's Australian-developed technology and selling it overseas. "This is a 'green field' environment, and so the opportunities we have to take our intellectual property and sell it for profit are greater than those of many others, like the utilities or financial services organisations," he explains. "A lot of governments around the world have been trying to come up with solutions in this area and they've headed down the wrong path. When you've proven yourself to be effective and successful in a new industry like this, you're bound to attract the interest of other players."
Tizi is well aware that others have tried to follow this course and failed. Pitfalls may lie ahead, but he clearly relishes the challenge, just like he was eager to take on the daunting task of overhauling Transurban's approach to IT three years ago.
"Lots of organisations have tried this and not all of them have been successful," he says. "A lot of the utilities have built some great software and tried to sell it outside their organisations, and it's not easy to do. But to be able to build some technology and then market it successfully is one of the greatest satisfactions an IT person can get."
SIDEBAR: Making Contact
Until it developed a strategy for dealing with its customers, Transurban's reputation for service was on a road to nowhere
Transurban didn't think it needed a customer management strategy. CityLink's toll technology was supposed to automate the process of sending out bills and statements. But when the original tolling software proved to be bug-ridden and inefficient, the company discovered right away that it needed a better means of dealing with its customers.
"It was never envisioned that we needed a CRM system," says Transurban CIO Cesare Tizi. "All they had in their first iteration of the technology was basically what you'd call a billing system. When the prospectus was put together, they thought that all the computers had to do was grab a transaction from the e-Tag, rate the transaction and put a value on it, and then put it on a statement that was sent to the customer. It looked easy."
What Transurban didn't realise was there were going to be 800,000 accounts and behind each account was a person who might want to contact the company if they encountered any problems with their e-Tag. "When they designed it they didn't take into account that the customer might want to talk to us," Tizi says.
Not only did CityLink's customers want to talk - to the tune of 220,000-240,000 calls a month - they often rang a second time. And they didn't like having to repeat what they'd talked about the first time . . .
"When you turn around and open this road and 800,000 customers want to talk to you and you're not prepared for it, it's a disaster," Tizi says. "Each call was costing us about a dollar a minute, and we were selling a product that was only worth about $7. So if we spent seven minutes talking to a customer to sell him a day pass, not only did we blow our profit, we blew our profit for the next three sales."
Tizi says the end result was a "snowball effect", where problems with the technology were forcing customers into greater contact with Transurban, placing ever more stress on the company's IT resources - resources which were already stretched very thin.
"If your systems generate mistakes, even if it's not many, that creates more drivers for the customers to make contact with you," Tizi explains. "The system was creating mistakes, which drove more calls. Soon there were more customers than we could handle. When customers called, we couldn't answer their queries or deal with them in an effective way. Things just kept escalating and escalating."
SIDEBAR: A Limited CRM Convert
When Tizi joined Transurban in 2000, CRM was the latest industry buzzword. ERP was yesterday's news, and CRM was being hyped as the new way to make more money from customers. Tizi, however, remained unconvinced.
"I certainly had some of the big problems with CRM implementations in my mind when I ventured into this role," he says. "CRM didn't achieve its promise because it was complicated to install - in some cases more complicated than ERP systems - and the value add simply didn't come along. You couldn't actually sell more things to the customer, or sometimes you found the customer didn't even want a relationship with you."
In the end, Tizi decided CRM did have a place in helping Transurban manage its relationship with customers, but as a means of reducing the cost of dealing with its customers, not to get more out them. "We had another look at CRM to see exactly what we were trying to achieve, and it got down to plain old saving money in dealing with the customer," he says.
The plan Tizi envisioned was to formulate a "channel strategy", which involved creating a range of new streams though which customers could interact with Transurban, including the Web, customer service kiosks and call centre technology that mixed human operators with interactive voice response and natural language speech recognition. The goal was to ensure that the interaction would be the same in every channel and, crucially, that on the back end each customer interaction would be recorded in a single, easily accessible record.
"To us CRM became a means of migrating customers away from human channels - our most expensive channel - into electronic channels. But the idea was to give them an experience that was consistent across all of them, and one that a human operator could visit when a customer did interact with us."
Transurban's motivation for using CRM to shift customers away from human channels to electronic channels isn't hard to discern. Whereas a call made to CityLink's call centre used to cost the company about $1 a minute, interactions via the Web cost the company only 5 cents each. With a cost-cutting incentive like that, it's no surprise to learn that Transurban was in a rush to get a new customer relationship system in place. The company opted for Clarify, an off-the-shelf product from AmDocs.
At the top of the agenda, says Tizi, was to integrate the new systems with Transurban's billing applications so that call centre staff would be able to view a customers' billing details while speaking to them on the phone. Customisation work was also undertaken in conjunction with Genasys and CTI to develop "screen pops" - pop-up windows containing a customer's account history which appear onscreen when the system transfers a query from an electronic channel to a human call centre operator. Thanks to this technology, Transurban call centre staff no longer have to ask customers to repeat all their details.
"Just being able to talk to the customer intelligently, effectively, and with up-to-date information made an enormous difference to the way the customers behaved," Tizi says. "The average call length shrunk because the customer didn't have to keep explaining things - and you didn't have to listen while they blasted you for not knowing they'd already made contact with you."
The system went live about a year and a half ago and Tizi claims that since then, customer interactions have expanded in every new channel. "We've shifted probably half our customers from human channels to electronic channels. The situation quickly improved to the point where we were free to sort out the inaccuracy of the systems - the issues which were generating the calls in the first place."
SIDEBAR: CityLink: How it Works
CityLink joins together three of Melbourne's freeways, creating a 22km expressway linking Melbourne's airport, port area and industrial centres. The road uses a fully-electronic, cashless tolling system without toll stations or boom gates. Motorists can travel the entire route without stopping or slowing to pay tolls, helping to maintain free-flowing traffic on the expressway.
- Drivers are required to register with CityLink, either by opening a toll account or buying a day pass.
Those who open an account receive a small wireless transponder, known as an e-Tag, to install on the vehicle's windscreen.
- As traffic passes underneath one of the road's 17 overhead gantries, a driver's e-Tag is detected and the tolling computer deducts the fare for that zone from the driver's account. This process completely removes the need for drivers to slow down.
- A 5.8GHz dedicated short-range communication (DSRC) microwave link at the toll gantry is used to communicate to the vehicle-mounted e-Tag. In the split-second communication the e-Tag and gantry exchange security information, serial numbers and account status details, and the toll is charged automatically.
- Drivers whose vehicles are not equipped with an e-Tag can opt to have their licence plate numbers registered on a day pass list.
Mounted on each gantry are cameras for photographing vehicle licence plates and classifying vehicles by size and type (such as car, van or truck).
- Licence plate photographs are scanned using optical character recognition (OCR) software and then used to confirm that a driver has purchased a day pass or if not, to nab toll evaders.