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CDO interview: Danny Gonzalez, chief digital and innovation officer, London North Eastern Railway
The rail franchise is driving a wide-ranging digital transformation, encompassing back-office improvements and enhancing passenger experience
Danny Gonzalez, chief digital and innovation officer (CDIO) at London North Eastern Railway (LNER), says his company’s ability to deliver high-quality services to customers is increasingly enabled by technology and data. “Digital runs through our work like words through the middle of a stick of rock,” he observes.
Gonzalez transitioned to LNER – the rail company that operates the UK’s East Coast mainline – in late 2018 when the franchise moved from previous operator Virgin Trains. He became CDIO at LNER, having previously been marketing director at Virgin. His appointment to the role coincided with a broader recognition from the board that digital transformation would play a key role in the future direction of the business.
“We wanted to make sure that we were able to compete in the marketplace today and in the future, and that basically led to the creation of a digital directorate that I head up, which is actually really unique in a rail franchise,” he says. “I was tasked to set that directorate up and take on digital transformation.”
Gonzalez’s day-to-day role is about making sure the specialists in his 38-strong directorate support wider business transformation. He recognises that rail has a reputation for not being the most innovative industry – and that’s where Gonzalez aims to change perceptions.
“A huge part of the role for me is to be that cultural and transformation agent to set the challenges to the business,” he says. “More specifically within the digital directorate, it’s about making sure our teams are supported and empowered to drive the change that the business needs.”
The company’s transformation encompasses two main strands. Externally, it’s about ensuring customers have a digital experience that supports high-quality journeys with LNER. Internally, change is about creating an efficient and well-run business, with the development of operational systems and processes that are fit for the organisation’s future aims.
“It’s all about making sure that the whole business is modernising itself so that it’s in the best place to compete and that we become the transport of choice in the rail market,” he says.
“It’s all about making sure that the whole business is modernising itself so that it’s in the best place to compete and that we become the transport of choice in the rail market”
Danny Gonzalez, LNER
Gonzalez sits on the executive board at LNER. A technology team run by a head of IT sits within the organisation’s business services department. This IT team is charged with enabling the innovative ideas that Gonzalez and his digital directorate generate.
“A big part of LNER’s success in this space is our method of collaborative working,” he says. “Everyone on the executive team is clear that digital transformation is a priority for us when it comes to being a successful business.
“That positioning really helps all of the teams across the business come together and to understand that digital transformation is crucial for us. We’re lucky to have a managing director who is absolutely on board and championing what we’re doing. And even above that, we’ve got a very supportive chairman.”
Building a platform for change
Gonzalez recognises that transforming an industry that relies on legacy processes and systems is no easy task. As well having to move away from a reliance on paper records and often decades-old systems, his team must help make passengers’ journeys as straightforward as possible across a complicated set of interactions.
“Rail is absolutely full of elements that can go wrong across an end-to-end journey,” he says. “From the retail part of the experience to getting to a train station and on to delays that can occur when you’re on trains and through to the onboard experience and even getting away from the station itself.
“We believe digital plays an absolutely crucial role in helping customers have complete control of all of those elements of the journey. We look at how we can fix any pain points and prioritise the different types of customers that we have.”
Another key factor pushing LNER’s business transformation is the need for operational efficiencies. If technologies can be implemented that help reduce costs and increase profits, then Gonzalez and his directorate are keen to explore potential applications.
“The other part of the equation is the well-documented challenges around the cost of running railways,” he says. “We really need to modernise ourselves to be viable businesses in the future. A huge part of that will be the digital transformation of how we run our business and moving away from legacy processes and legacy technology.”
The digital team has focused on a couple of major programmes to help support its technological explorations. First, they have moved the company’s IT infrastructure to Amazon Web Services (AWS) to deliver a scalable cloud-based booking platform. Second, they have implemented real-time data systems to help create personalisation for customers.
“AWS has helped create an integrated ecosystem to move data around the different component parts of the business,” says Gonzalez. “That allows us to give our tech teams what they need and to create the products and services our customers require.”
Exploring leading-edge innovations
LNER’s digital directorate has already pushed through some creative solutions to the business’s challenges and the team continues to look for more openings. Gonzalez says their efforts are often focused on innovation opportunities.
“We’re out there looking at things that can really make a difference to the business and we’re looking much further down the roadmap to see the new technologies that could help us address our pain points,” he says. “We give the team a lot of freedom to try stuff, to run proofs of concept and to understand where the technology does or doesn’t work.”
A crucial element of this activity is an in-house accelerator programme called FutureLabs, where LNER works with the startup community to explore fresh and exciting directions. Since 2020, the digital directorate – in combination with an ecosystem of enterprise and startup partners – has launched more than 60 tools and trialled 15 proofs of concept.
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LNER has just run the third cohort of its accelerator, where selected startups receive mentoring and funding to scale up technology solutions alongside the digital team. The first launch of FutureLabs led to LNER’s QR-code-enabled “Let’s eat at your seat” function, which allows passengers to order food and drink from their seats, which was crucial during the social-distancing requirements of the coronavirus pandemic.
Other innovative product launches include Quantum, which taps into machine-learning technology to help process huge volumes of historical data on train journeys. Developed alongside a specialist startup called Jnction, Quantum helps LNER's employees to reroute train services that might be delayed and minimise the impact on passengers.
“Everyone’s really excited about this project and how the technology can be used to transform the way we provide our train services,” says Gonzalez. “When you look at the list of customer requirements, the one that comes out as the absolute number one is, ‘I want my train to be on time’. If anything's going to drive people away from rail, it’s big delays.”
Delivering great connectivity
The provision of Wi-Fi connectivity is another significant issue for people using public transport. As Gonzalez recognises, it’s difficult for companies to provide high-quality connectivity to passengers on trains that are hurtling through the countryside at 125mph.
That challenge is intensified by the increasing number of customers who are using their smart devices to consume TV shows, music and online games from major entertainment companies. LNER research suggest 69% of customers take good Wi-Fi into consideration when choosing how to travel. For business travellers, this figure rises to 79%.
Providing connectivity is tough at the best of times, but it becomes even harder when people stream content that demands significant amounts of bandwidth. LNER’s answer is an innovative approach called Edgecasting, which allows passengers to stream content from ITV Hub without impacting the Wi-Fi capacity of trains.
The rail company is working with technology specialist Netskrt to trial the technology. Popular content is stored on the trains’ servers. When passengers log on to the LNER Wi-Fi service, they are presented with the opportunity to stream content. As well as the proof-of-concept trial, Gonzalez is exploring how other media companies might become involved in the future.
“Edgecasting caches streaming platforms directly onto the Wi-Fi service on a train,” he says. “For users, it’s almost like your ITV Hub account is now on board the train. We are trialling the service on a few trains at the moment. We are also looking to introduce BBC iPlayer and we’re talking to Amazon to see if we can get those guys on board, too.
“We’re really excited about Edgecasting because I think it could solve what has been a very difficult problem around how people stream content. It also frees up bandwidth, so business customers can use our Wi-Fi capacity for the things they need to do. So far, it’s working seamlessly. It’s a very clever piece of technology.”
Reaching the destination
Over the next 24 months, Gonzalez says his team will be working on attempts to understand how the application of more machine-learning tools can help to transform the business.
“We really see that as a space that can change the game in terms of a lot of things that we do,” he says. “It will help our people make better, more informed decisions. Machine learning will also help us automate some of our processes.”
Gonzalez believes automation encompasses a huge area of potential technological advances. He says there are still too many barriers that make it difficult for people to buy transport tickets and services quickly – and there is a significant opportunity to automate processes and allow customers to self-serve.
“By empowering everyone through technology, we are really striving to give customers digital touchpoints at every point that is important to them when they’re interacting with us,” he says. “Ultimately, we want customers to step off our trains and say LNER are providing an amazing experience, whether that’s via digital channels, through our people or on our trains.”