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Digital Rail Sector Deal and the Economics of Skills Development

The launch of the Governments Rail Sector Deal (RSD) saw a number of key initiatives and a vision for the future of the industry unveiled. Delivering the benefits of new digital rail technology is at the heart of this Rail Sector Deal. The Sector Deal will enable companies to drive innovation, invest in research and development, upskill their workforce and look beyond the UK to export markets worldwide.

With a focus on enabling the UK Rail Sector to nurture, empower and retain digitally skilled workers, the RSD is at the heart of the work we do.

The impact of digital transformation in rail cannot be underestimated and it is prudent to assume that 80% of the industry will require some level of training or education over the next 20 years. This equates to around 200,000 workers requiring some form of training or education intervention. NSAR (National skills Academy Rail) has estimated that this market could be worth up to £600m, with a claw back from the Apprenticeship levy approaching £200m. So we are talking about some big numbers here.

By digital skills for rail we mean both the generic digital skill sets and the additional skills existing disciplines will need to fit, optimise and maintain new digital assets. There is already a shortage of both. The existing training market will provide some highly limited numbers of the former – without an equivalent Digital Rail Academy concept the latter will exist mainly in suppliers, who will then monopolise the market at considerable cost to efficiency and jobs. Wage inflation is already at 8.8% in signalling engineers and over 10% in the generic disciplines eg data analysts.

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So something must happen. Here’s the economics logic.

Perhaps appropriately, the economics of training are themselves being transformed by new technology.

Firstly, PAULEY’s enhanced software is increasingly being used to create online, augmented and mixed reality environments that significantly enhance the learning and assessment experience.

Secondly, and related, customers expect training to be delivered in a more flexible way, at their depots, at non-traditional times and with a blend of human and virtual trainers. For example, at NTAR a growing proportion the rolling stock training is delivered via server, laptops and virtual and augmented reality headsets at depots by software and intelligence provided by PAULEY. This has transformed the training economics by reducing the biggest single training cost for existing staff – release costs.

Future academies will be virtual: (Example based on £10M Budget) – instead of spending £7m on a building, £1m on hardware, £1m on staff training and £1m on software, it may be more balanced; £3m on a software platform (designed by industry for industry), £1m on hardware, £2m on staff training and £4m on client onsite training facilities. The overall cost of training supply will not drop or change dramatically but the number of users will be higher, the experience more immersive and the release costs will halve.

So a unit cost of £200 per head per day might become £150 0r £100 per head per day over time, but a release cost of 8 hours for 4 hours training in a centre will be halved as much of the training will come to the worker. The effect of adopting PAULEY technology is already transforming the rail training market today.

Existing industry and treasury productivity work shows that there is currently already a market failure in relevant training, leading to wage inflation and costs of poor capability (rework etc). For the first time these have been modelled at the level of unit costs, at 9% and 6% respectively. Put another way, unit costs are 15% higher, now, than they could be had the investment been made.

Training and skills development is a critical element to increasing productivity. We know this. Implementing new technology and then training staff in new, contemporary skills is a double win, not only at an industry level but also at employer level.

In line with the ethos of the RSD, PAULEY have launched HoloSkills, a new product to convert any training material into next-gen Augmented Reality using Microsoft HoloLens. This platform (and others that PAULEY will deliver with strategic partners) will help the rail industry align and ensure consistency in all areas, from drivers through to maintainers, infrastructure to rolling stock, crew and beyond…

The HoloSkills platform has been tried, tested and refined as a new industry standard at NCHSR and is now ready to revolutionize rail training! HoloSkills is the first in a new line of immersive products PAULEY will launch early next year.

Invest early in the RSD and in PAULEY technology and you’ll notice the difference. Not only economically, but also from an engagement and an immersive learning perspective by delivering improved productivity and driving digital transformation within your organisation.

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