2017 Integrated Report – Departure into a new era

#Digitalization

Digitalization creates major opportunities but also challenges, and it therefore causes disruptive changes which have a material effect on our business.

Transformation picks up pace significantly

We aim to actively organize mobility and the logistics of tomorrow
Digitalization is changing the mobility market, as well as customer needs, means of transport, driving forces and platforms. The fundamental question remains: How do we get people and goods safely, reliably, comfortably and in an environmentally friendly way from A to B? We want to provide new answers to these questions and thus ensure corporate success in the digital mobility era.

  • Using the opportunities of digitalization
  • What we have achieved
  • Our next steps
  • Creative and innovative ways of thinking about the future
  • Creating a digital customer experience

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Our customers stay connected

Connected everywhere
Since 2017 we have been offering free WiFi in both ICE classes. The quality of the WiFi offering has been significantly improved using new technology. In addition, with maxdome onboard an entertainment offering was launched in the ICE portal with free movies and TV shows. We are also gradually equipping our remote transport fleet with new cell phone repeaters that provide passengers with better reception when they make calls. We have also developed a WiFi concept for regional transport. In October, the green light was given to refit the S-Bahn (metro) fleet in Stuttgart. Over 150 vehicles are expected to be fitted with WiFi by the summer of 2019. In a pilot project “Digital in Regional” we are testing, along with our partners, an IT system to improve customer information. In the Hamburg S-Bahn (metro), we will by the end of 2018 be equipping all 68 stations with WiFi.

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Expansion of digital services

DB route agent informs
The DB Streckenagent (route agent) is an app that individually provides a nationwide update to rail customers across Germany in the event of a disruption through a push notification on the current situation and provides information on possible alternatives. The customer signs up for their personal regional connections that they would like to have monitored by the route agent on an one-time basis or over a longer period.

  • New comfort check-in service
  • Seat reservation in regional transport
  • Cleaning service via WhatsApp
  • Digital in land transport
  • DB Arriva starts new on-demand minibus service

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Employee communication enters the digital world

DB Planet – the social intranet of DB Group
Since April 4, 2017, DB Group has been networking its employees. DB Planet enables real-time communication and sharing of information and digital networking within DB Group. Employees can join in using their business or pri­vate smartphone, tablet or notebook – regardless of location, end device or place of work. DB Planet combines possibilities for direct exchanges and networking with informa­-tion and integration through editorial content.

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Management approach - Digitalisierungund Innovation (DB 02)

We have grasped the significance of digitalization: the digital revolution reaches farther and deeper than any prior changes witnessed in industry. New customer requirements and technologies, in particular, are causing disruptive changes in the marketplace at a pace not seen before.

Over the past years, we have passed key milestones on our digital journey, and developed new products and services, processes and businesses. In addition, we have created the material structural framework needed to grasp the opportunities offered by digitalization. The Chief Digital Officer (CDO), working with an interdepartmental team, drew up the digitalization strategy for DB Group in the year under review. The competence center Digitalization is responsible for operationalizing the digitalization strategy. The digitalization decision makers from the business units and Group headquarters meet regularly in this center. Thanks to their interdepartmental approach, they are managing to align and link centralized and decentralized activities in a digital context along an overarching management system.

The content of the digitalization strategy was designed with technology trends in mind, and includes clear positioning with regard to our material target markets “Smart Mobility” and “Smart Logistics.” The focus is on two areas of action: firstly, the development and digitalization of our core business by developing new digital services at all interfaces to our customers, such as WIFI in ICE trains. Secondly, we are focusing on developing new business models, such as IOKI or Platooning. Alongside the areas of action at the interfaces to our customers, our digitalization strategy also describes the areas of action for “Smart Assets,” smart infrastructure and production, while “Smart Admin” focuses on the opportunities to be gained from digitalizing administrative processes.

To successfully secure our planned positions in our markets, we are systematically advancing DB Group’s Digital ecosystem.

The workforce at DB Group is a key driver of digital transformation. A Group-wide initiative has been put in place to give executives and employees the chance to expand their digital expertise, through training programs and learning opportunities, for example. Networking opportunities and events also encourage learning, exchange and the initiation of interdepartmental digital projects. In addition, the Intrapreneurship Program launched for our employees in the year under review gives employees the opportunity to put their own business ideas into practice.

The digitalization strategy constitutes a digital compass for DB Group and provides an important general framework.

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Rules on driverless vehicles 

In June 2017, the Bundestag adopted regulations on the operation of motor vehicles using highly and fully automated driving systems. The law stipulates that the operation of motor vehicles using highly and fully automated driving systems is permitted “in accordance with their intended purpose.” If the automated driving system is only designed for use on motorways, for example, the vehicle may not be used on other roads. If the highly and fully automated driving system has taken control of the vehicle, the driver may cease to pay attention to traffic and the guidance of the vehicle but must be sufficiently ready to take back control if the system calls on him or her to do so. The law also regulates liability issues. While the vehicle is in automated operation, responsibility for accidents lies with the manufacturer.

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Intelligent automation 

Intelligent automation is bringing changes to all areas of life. Artificial intelligence and the rapid development of speech and gesture recognition, for example, mean that people who are less familiar with technology can interact with machines more easily, individually and intuitively. At work or in private life, machines can increasingly facilitate or entirely take over clearly defined tasks and routine work. Another example is predictive maintenance. In the future, freight locomotives, switches, elevators and escalators will automatically report any malfunctions so that they can be repaired and maintained in a timely manner. In the area of logistics, goods will transport themselves from automated warehouses and will use real-time tracking to provide constantly available information on location, temperature and expected delivery time. For the railways, intelligent automation thus represents an opportunity to assert themselves in the increasingly competitive mobility and logistics market. The digitalization of rail operations can increase performance and reduce costs. 

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On-demand offers

More and more customers expect an offer that is available in real time and can be consumed immediately if required. The increased appetite for such on-demand offers is reducing the importance of traditional offerings presented at designated times, such as TV programs. Providers are being called upon to develop customized solutions that will satisfy customer needs in a faster, more personalized and more cost-efficient way. Market opportunities are further increased if these offers are also easy to use and promise a positive experience. Large amounts of data are usually a prerequisite for producing these offers: the better companies can assess future individual demands, the more reliably and cost-effectively they can provide the right on-demand offers. By analyzing large amounts of data, it is possible to determine the extent and timing of future demand. In order to successfully offer on-demand services for mobility, we use ioki to develop tailor-made solutions for our customers.

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Cities as innovation hubs/smart cities

Cities are increasingly developing into experimental locations for innovative transport solutions. The strong appreciation for urban life, professional opportunities in cities and the better services available compared to rural areas are increasing the influx into urban areas. Denser populations and rapidly growing e-commerce are saddling cities with steadily more traffic. In addition to driving bans, more and more cities are moving into the driving role themselves by using mobility and logistics with intelligent solutions to reduce this pressure. They are working closely with partners from industry, who are increasingly cooperating with cities to implement their own products in urban areas. Internationally, cities have already developed much more strongly into innovation hubs. With our Group program Smart Cities we are shaping the cities of tomorrow: we develop services and offers for the intelligent networking of transport infrastructure – with mobility and logistics from a single source.

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Smart cities 

The ongoing trend toward urbanization presents major challenges to today’s cities. The growth in mobility and logistics are often the source of the problem. With the Group program smart cities, we will develop new, intelligent mobility, logistics and station concepts to increase quality of life in urban areas. To this end, we have already signed a letter of intent with the Free and Hanseatic City of Hamburg on the Smart City Partnership and discussed our concept with other cities and partners. In addition, we are developing new products using mobility and logistics to meet urban challenges. With on-demand shuttles and bicycles, we are developing new solutions for the first and last mile from and to the station to make using a car unnecessary. We are working on cargo bikes and intelligent lockers to organize urban logistics even more efficiently and with lower emissions. We also intend to attract more people to stations and establish a coworking network. In the future we plan to shape the urban future by working together with cities and industrial partners.

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drive passenger transport

In October 2017 we launched ioki, a new line of business for modern, flexible and digital mobility solutions. ioki is developing an open environment for on-demand mobility that is tightly integrated with local public transport and enables seamless mobility. ioki offers all system components from a single source to enable third parties, such as cities or municipal authorities, to operate on-demand mobility services in public transport under their own name.

Particularly in rural areas with a low population density, there is great potential to make public transport more sustainable and efficient with on-demand solutions and to enable individual mobility without having to own a car. In the future, on-demand transport will be operated with autonomous vehicles. After initial test operations in Berlin and Leipzig, the first autonomous public scheduled bus service was launched in Bad Birnbach. The bus operates exclusively on electric power, thereby emitting no pollution locally. As part of the smart city partnership with the Free and Hanseatic City of Hamburg, ioki 2018 will implement a driverbased on-demand shuttle service with connections to local public transport and a test field for autonomous bus traffic in Hamburg.

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drive freight transport 

Autonomous and networked driving will involve fundamental changes for road freight transport. The Group program drive freight transport evaluates the implications of (partially) automated driving for logistics and its value-added chain and evaluates the resulting new business models. Its open-minded approach and expertise in implementation have made DB Schenker a pioneer in this field. The development of expertise in digitalization associated with automated driving is just as central to this as the acquisition of operating experience in the application areas of autonomous driving at an early stage; on rural roads, on highways, in the city and on terminal grounds. In 2018, DB Schenker, in cooperation with MAN and Fresenius University, is carrying out a Platooning Project funded by the BMVI. In addition, in 2018 there will be preparatory activities for the piloting of autonomous truck runs on terminal premises.

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Digital Rail for Germany

We intend to significantly increase the reliability, quality, flexibility as well as the transport capacity and cost efficiency of rail with the Digital Rail for Germany program. To accomplish this, we are taking full advantage of new digital technologies. The target image is digitalized rail transport with an integrated system of capacity management and operational implementation. An important basis for this is an intelligent infrastructure for the coordination of train operations, real-time detection of train positions, high-performance data exchange between train and infrastructure as well as sensor-based obstacle detection. The technologies required for the implementation of the target image were identified in the year under review and their degree of maturity was assessed. Development of the technical specifications began. In order to ensure that Europe-wide standards are created, we work closely with other railways. Feasibility studies for pilots (particularly for the Hamburg S-Bahn (metro)) and the organization for implementation were also initiated. The project requires deepened technology partnerships within and outside the railway industry. In addition to further developing the organization, the focus in 2018 will be on developing and implementing a suitable partnering concept

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On the move

The mobility market is in a disruptive phase. New business models and mobility platforms with customer-centric, digital offerings are increasingly making their way compared to existing providers. The analog customer interfaces that have been in use up to now will become less important than digital ones in the future. In response to these changes, we are pursuing the goal of aligning and further developing digitalization activities at the customer interface in passenger transport in order to make them fit for the future. As part of the on the move Group program, an industry-wide offering of software solutions is being developed to meet the changing needs of end customers and mobility partners and to drive digital innovation in the mobility market.

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Driving innovative solutions

We intend to play a decisive role in shaping tomorrow’s mobility and logistics. We plan to exploit the potential of digitalization for quality improvements and the integration of new offers for our customers. Digital technologies not only make it possible to further develop the integrated rail system, but also pave the way for new business models. Examples of progress made during the year under review in developing and testing new products, features, processes and services are presented below.

Digital planning and construction becomes a reality

BIM is a collaborative method of working where all data on rail infrastructure facilities is fed into an optimized planning, construction and management process that covers the entire life cycle. We intend to use the BIM method to implement all new infrastructure projects that can be standardized or that are complex from the end of 2020. We intend to complete the first phase of the development of principles for efficient digital processes and technologies in the planning, construction and operation of rail infrastructure facilities, which we started in the year under review, by the end of 2018 and move to the professionalizing phase in 2019. The BMVI is funding 13 major infrastructure projects.

DB Netze Stations has been using BIM to plan and construct all of its new station projects since January 2017. At Werbig in Brandenburg, we started using BIM to plan and construct the first station back in 2014. Cost and deadline targets were met and progress on construction optimally integrated into railway operations. Since then the BIM approach has been applied in another 80 station projects.

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Progress in standardizing maintenance

In order to improve rail infrastructure quality, we take advantage of digitalization for maintaining the rail network.

Within the framework of the standardization of production system maintenance (Standardisierung Produktionssystem Instandhaltung; SPI), the scheduling and feedback process of operational maintenance has been standardized and digitalized. The first rollout phase has been completed on schedule and the maintenance system is now operating across Germany in long-distance and metropolitan networks equipped with digital commissioning and reporting. The second phase of the SPI commenced in the year under review as part of the OPEX program. The focus here is on standardizing workflows and processes, especially work preparation and execution, increasing productivity and improving the quality of facilities. The pilot locations are the operations and maintenance sites in Frankfurt and Würzburg; nationwide rollout commenced at the end of 2017 and will be completed by the end of 2019.

Rollout of point machine diagnostics

In order to optimize the availability of switches, a digital remote diagnostic system is used to detect potential faults before they can occur. The DIANA diagnostics platform gives maintenance an indication of a possible fault, allowing preventive measures to be taken. In the future, this should make it possible to reduce drive-related switch defects by up to 50%. Up to December 2017 about 15,700 switches were equipped with actuating current diagnostic systems. Predictive maintenance via the DIANA diagnostics platform will gradually be expanded to include other components.

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Predictive maintenance improves the quality of rail operations 

Since the start of 2017, customers of DB E&C and DB Systemtechnik have also benefited from the maintenance opportunities provided by digitalization: predictive maintenance enables maintenance requirements and damage to infrastructure and vehicles to be identified and rectified by the use of smart data diagnostics/analysis before problems arise. For example, operational disruptions due to switch failures are prevented by the early detection of faults as they emerge. This has a direct impact on customer satisfaction since it allows delays to be reduced considerably. These services are based on networking facility data on a special IT platform.

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Digitalization and big data

Digitalization is an important prerequisite for meeting customer expectations. At the same time, HR processes are being digitalized more and more. Digital tools for Group-wide linkage was developed with the DB Planet social intranet. Digitalization is also reflected in the use of flexible and efficient cloud services. The developments have one thing in common: they inevitably involve data. These may allow direct or indirect conclusions about customers or employees, and in some cases result in transfer profiles.

It is therefore imperative that the personal rights of customers and employees be appropriately protected in such cases. The privacy organization supported the departments and project through sound and sustainable advice in privacy and technical aspects. Specifically, the introduction of Office 365 and Windows 10 (BKU X), DB Planet, Amazon Web Services and new sales platforms were supported in the year under review and reviewed for privacy compliance. Through linking with important stakeholders it was possible to address privacy-related issues early on and enhance our awareness that privacy and digitalization are two sides of the same coin. 

The focus of the audit program was strongly aligned with technical developments and the introduction of new technologies. The auditing in DB Travel Centers and in the passenger rights area are noteworthy, as are the audits of service providers under the new application management. Conducting privacy online monitoring was another item in focus during the year under review. The privacy regulation survey of all executives is conducted every two years to determine and continually raise the level of privacy in DB Group. In the year under review, the privacy online monitoring focused on the use of cell phones and social media applications.