Aalto University
School of Science
Master’s Programme in Service Design and Engineering (EIT ICT Labs track)
Félix Halcartegaray
E-Parking service for Real-estate managers:
Business model and technologies
Master’s Thesis
Espoo, February 28, 2013
Supervisor: Professor Martti Mäntylä, Aalto University
Instructor: Kalle Toiskallio, Ph.D.
AALTO ABSTRACT
ACKNOWLEDGEMENTS
XXXXXXXXXXXXXXX
Espoo, XXXX, 2014
Félix Halcartegaray
TABLE OF CONTENTS
1
2
3
4
5
Introduction ............................................................................................. 1
1.1
Background ............................................................................................................................. 1
1.2
Objectives................................................................................................................................ 2
1.3
Scope of the Study .................................................................................................................. 3
1.4
Methodology........................................................................................................................... 3
Literature Research .................................................................................. 4
2.1
Business Models...................................................................................................................... 4
2.2
Parking Trends ...................................................................................................................... 10
2.3
Parking Technologies and Access Control............................................................................. 12
Parking Management ............................................................................. 16
3.1
Industry description .............................................................................................................. 16
3.2
Parking requirements............................................................................................................ 18
3.3
Business models used for Parking Management .................................................................. 19
3.4
Current situation for Real-Estate managers (AS-IS) .............................................................. 20
E-Parking Service ................................................................................... 21
4.1
Description of the service ..................................................................................................... 21
4.2
Business Model of E-Parking Service .................................................................................... 22
4.2.1
Stakeholders.................................................................................................................. 22
4.2.2
Suitability of current Business Models.......................................................................... 24
4.2.3
Business model definition ............................................................................................. 26
4.2.4
Stakeholder relationships ............................................................................................. 29
4.2.5
Impact of new buildings and renovations on the Business Model ............................... 31
4.2.6
Incentives for participation ........................................................................................... 33
4.2.7
Point scheme................................................................................................................. 34
Technologies .......................................................................................... 36
5.1
Mobile application ................................................................................................................ 36
5.2
Back Office ............................................................................................................................ 37
6
7
5.3
Modeling and analysis tool ................................................................................................... 37
5.4
Access Control ....................................................................................................................... 38
5.4.1
Access control based on Access Control Lists ............................................................... 39
5.4.2
Access control based on Certificates ............................................................................ 39
Discussion .............................................................................................. 40
6.1
Target markets ...................................................................................................................... 40
6.2
Service packages ................................................................................................................... 41
6.2.1
Information service ....................................................................................................... 41
6.2.2
Information service with indoor mapping .................................................................... 41
6.2.3
Information service with preferred area booking ........................................................ 41
6.2.4
Complete service........................................................................................................... 42
6.3
Assessment of E-Parking Service........................................................................................... 42
6.4
Possible Expansions and Implications ................................................................................... 43
6.5
Recommendations ................................................................................................................ 43
Conclusions ............................................................................................ 44
7.1
Summary ............................................................................................................................... 44
7.2
Limitations............................................................................................................................. 47
7.3
Further Developments .......................................................................................................... 47
8
Bibliography........................................................................................... 48
9
Appendices ............................................................................................ 50
9.1
Appendix A ............................................................................................................................ 50
ABBREVIATIONS
ALPR
Automatic license-plate reader
GPS
Global Positioning System
PGIS
Parking Guidance and Information System
RFID
Radio Frequency Identification
RQ
Research Question
SMS
Short Message Service
VDC
Volts Direct Current (DC)
LIST OF FIGURES
Figure 1: Public Parking Spaces (EU-15) (Q-Park, 2012) ....................................................................... 17
Figure 2: Emerging Trends in Parking (International Parking Institute, 2013)...................................... 17
Figure 3: Summary of Business Model.................................................................................................. 29
Figure 4: Access barrier operating at 12 VDC (from gatedepot.com) .................................................. 39
LIST OF TABLES
Table 1: Willingness to pay by stakeholder .......................................................................................... 22
Table 2: Business Model components for real-estate manager ........................................................... 26
Table 3: Business Model components for user ..................................................................................... 27
Table 4: Relationship with stakeholders ............................................................................................... 29
Table 5: Example of dynamic pricing for points .................................................................................... 35
Table 6: Evaluation of Business Model ................................................................................................. 42
Table 7: Value propositions for Stakeholders ....................................................................................... 45
1 INTRODUCTION
This thesis explores information systems for parking services. The parking industry has faced
important changes in the last decade due to the emergence of technologies. Payment systems have
changed, being based on credit cards and mobile phones instead of coins. Information systems to
find parking have also changed, some of them providing real-time information gathered through
sensors and displaying the information in digital displays and smartphones.
The E-parking service proposed on this thesis considers all these technologies and tendencies, and
proposes a new system that can be used by real-estate managers to provide better information and
more efficient parking. Tenants and guests will be able to park easily and in an appropriate place,
and reach their primary destination supported by the service. This primary destination is not the
parking lot but a place inside the building. Current sensor technology is too costly to be
implemented in many parking lots, but new technology developments allow generating information
for parking lots by relying on alternative data sources that are less expensive, and these sources are
used by this service.
This thesis presents a business model for such a service using technology to provide a value-added
guidance system for real-estate users to allow the real-estate managers to give a better service and
generate ways to capture a portion of the value to generate profit.
This document starts with a presentation of the topic and the research goals, it continues with a
review of relevant literature that supports the development of the business models and required
technologies and presents the proposed service, its business model and the technologies that
support it. The document finishes with a discussion and presentation of results and conclusions.
1.1 BACKGROUND
The parking industry has seen a significant growth in recent years. Over 70% of the world population
is estimated to be living in cities by 2050 (Handwerk, 2008), and this will generate new challenges
that require solutions in the way we approach mobility and parking. In some cities, it is estimated
that over 30% of the traffic in the city is generated by drivers looking for a parking spot (IBM, 2011).
There have been several technological advances in the parking industry, including web reservations,
sensors for each parking space that allows getting a real time view of the parking lot, mobile
applications to find and pay for parking and cloud technologies to allow parking operators to
manage several parking lots from a single centralized location.
These technologies have affected both on-street and off-street parking. On-street parking,
understood as parking at the curbside, directly on or near the street, has been impacted especially
by new payment systems. Off-street parking, consisting of real-estate that is devoted to parking
(buildings or surfaces) have seen important changes on their management thanks to technologies
that provide self-service and centralization and let the parking lot run with little or no personnel.
They have also seen improvements on the information to drivers by using sensors and displays.
Nevertheless these advances, for off-street parking, the basic idea of having a dedicated
infrastructure for paid parking, which includes a real-estate with several dedicated parking spaces
1
and a complete infrastructure to handle controlled car access, payment and exit has not changed.
The alternative is an on-street parking solution that charges for parking owned by the city in the
streets, using traffic wardens for parking enforcement. Although on-street parking has seen some
technology changes in payment and monitoring, essentially the core process has not changed.
For real-estate managers, the main business is not parking of cars but it is a required service for their
tenants. Since they want to improve the parking services provided to the tenants, giving similar
technologies and services as professional parking lots that tenants are using in their daily life (and
also they usually do not have city-provided parking), the only solutions they have at this moment is
to invest time and money themselves, or give their parking lots to a professional car parking
operator. They can add all the infrastructure and charge for it but the real-estate manager loses
control of the parking lot.
This thesis explores a novel approach to tackle some challenges faced by real-estate managers with
providing parking, by introducing an e-parking service that requires minimal infrastructure and
allows the real-estate manager to provide adequate information to tenants and improve the
efficiency in the use of parking spaces, without losing control. The service allows, among other
benefits, drivers to find parking spaces when and where they need them, enabling new
opportunities for real-estate managers.
This approach includes a mobile application and service that allows real-estate managers to provide
a complete "last mile and beyond" navigation solution to their users. By combining multiple data
sources that include weather and traffic information and varied sensors that also consider
occupancy information and historical trends, it is possible to suggest to the user an optimized way to
reach their desired primary destination (building or a specific office or store). The suggestion might
include taking public transport or bicycle, parking guidance and indoor navigation to reach this
primary target efficiently.
For the real-estate manager, this solution provides a holistic view of their parking situation, and
gives them the possibility to offer innovations such as flexible tariffs, pre-booking and sharing of
parking spaces, navigation from the parking lot to the best entrance door and navigation and
assistance inside the buildings, among others. The solution can also include payment applications
and a controlled access system that requires low infrastructure, based on the ELL-i platform
(www.ell-i.org), that allows to control and power the access system by using a single low-voltage
Ethernet cable, taking advantage of Power-over-Ethernet technologies. The service is based on the
results of the research project SPIRE (Smart Parking for Intelligent Real-Estate) that is managed by
HIIT (Helsinki Institute for Information Technology).
1.2 OBJECTIVES
The objective of this thesis can be summarized with the following research problem:
-
What is the structure of a business model for a service that makes feasible for real-estate
managers to provide parking information and services to tenants efficiently?
There are several solutions available for implementing efficient commercial parking, and they usually
require an important investment in infrastructure. This study explores new possibilities of parking
services, based on mobile devices to replace infrastructure requirements. These mobile devices are
2
more suitable to real-estate managers, as they usually have a certain degree of control over their
tenants and can mandate the use of a certain mobile application to access a specific parking area.
The research problem can be further decomposed and summarized in the following research
questions (RQ):
RQ1: What are the components of a feasible business models for an e-parking service?
RQ2: How are parking areas managed and what information do they provide?
RQ3: What are the expectations of real-estate managers in regards of the parking services provided
to tenants and what limitations and challenges they currently face?
RQ4: What technologies are required for the envisioned service to be delivered?
1.3 SCOPE OF THE STUDY
The target of this thesis is to propose a business model and required technologies for a service that
provides parking information, guidance and additional services to users of real-estate with minimal
infrastructure. The business model is developed based on the current business models of parking
management services and other related businesses, and the expectations of real-estate managers.
In this thesis, the required technologies to enable this service will be researched and proposed, but
not developed. This choice is to concentrate on the development of the service concept and
business model for the e-parking solution, and make it appealing to real-estate managers. When this
goal is achieved, it is possible to develop the required technologies in a future work.
1.4 METHODOLOGY
The methodology to develop this thesis starts with a literature research on business models and
parking trends to understand the state-of-the-art in these areas, to be able to propose a service that
takes advantage of them. A literature research on state-of-the-art parking technologies and access
control systems is also performed to know the technological tools that are available to offer a
service that takes advantage of the latest parking trends.
After the literature review, a description of business models used in parking management is
performed to understand how current parking management services work and how is their
relationship with customers. The information is based also on insights from project stakeholders.
Finally, the service and business model is developed and explained, based on the findings of the
literature and parking management research. A discussion follows on the applicability of the
business models and practical considerations for the implementation of the service. The outcomes
of a workshop for discussing the results of this thesis are analyzed to assess the suitability of the
proposed business model for the e-parking service.
3
2 LITERATURE RESEARCH
2.1 BUSINESS MODELS
Before the digital revolution that happened with the internet, the business model of most
companies was quite simple: Develop knowledge, embed it into a product and sell the product.
Money was made by selling the product at a lower cost than what was required to produce and
develop it. With the emergence of new information channels and distribution methods such as the
internet, where customers expect most of the information to be available for free to them, there is a
need to develop new ways to capture value, and this led to the emergence of a field of research in
new business models. (Teece 2010)
Technology development is sometimes associated directly to new business, but to generate a real
business opportunity from them, a suitable path to the market needs to be established. The business
model represents this path, as it takes inputs from the technical domain and provides outputs on the
economic domain that enables profiting from the technology. It provides focus and mediates
between technology development and economic value creation, by establishing a framework that
transforms technologies into economic outputs through customers and markets. (Chesbrough &
Rosenbloom, 2002)
The relationship between technologies and business models is two-way. First, the choice of business
model influences how a technology is monetized and how it generates profit, but the business
model also frames developers in the way technology gets developed. In the other hand, the
availability of technologies (from the company or from other sectors such as a development
platforms or communications networks) influences the availability of business models that are
possible in the current context. (Baden-Fuller & Haefliger, 2013)
The choice of a specific business model by a company drives the decisions taken by that company
regarding the strategy to market their technologies. It also creates a dominant logic (Prahalad &
Bettis, 1986) in the company that allows managers to reduce ambiguity and make sense of complex
choices. Nevertheless the clear benefits a business model has, it also has a cost: the business model
and dominant logic chosen by the company also constrains other future choices, and filters out
profitable possibilities that might be attractive with a different business model. (Chesbrough &
Rosenbloom, 2002)
Since the choice of business model can be the reason for the commercial success or failure of a
technology, it needs to be developed consciously. The ultimate role of the business model for an
innovation is to make sure that the innovation delivers value to the customer, and that the company
can appropriate a part of that value (Chesbrough & Rosenbloom, 2002). There is no way to know
beforehand what the best business model is for a company. The only way to find out is to conduct
some experiments, gather evidence, identify a promising direction and conduct more experiments
(Chesbrough, 2007). Moreover, a business model is built by considering theory and assumptions
about customer behavior. They might not hold on certain situations, as some key assumptions
consider rationality in decision making, that is not always the case (Baden-Fuller & Haefliger, 2013).
To discover if the theories and assumptions are correct, the experimentation approach turns more
relevant.
4
Through an extensive literature review, Trimi & Berbegal-Mirabent (2012) show four methodologies
that support this experimentation approach and that according to them are the main practices
gaining popularity in recent years: Open Innovation, Customer Development Process, Agile
Development and Lean Startup. These methodologies focus on understanding the markets and
environment for a technology and on understanding the value created to the customer by using a
structured trial-and-error philosophy implemented in different ways. This logic boosts innovation
and allows products and services to be created in less time and with a greater assurance of success.
(Trimi & Berbegal-Mirabent, 2012)
After reviewing the importance of the business model in technology commercialization, a definition
helps to frame the discussion better. Several definitions have been attempted, but there is not a
generally accepted one (Morris, et al., 2005). Business models also lack a theoretical grounding in
economic theory, as it assumes that trades are based on tangible products that embed inventions,
and simply selling them allows the firm to capture value, which is not true for many new products
(Teece, 2010). This means that selecting a definition is required to scope the business model
construct in the present work. Moreover, because the e-parking service is not based on the
exchange of tangible products, the development of an attractive business model is important to be
able to capture value from the technology, as explained in the previous paragraphs.
A business model can be defined generally as the “architecture of a firm and its network of partners
for creating, marketing and delivering value and relationship capital to one or several segments of
customers in order to generate profitable and sustainable revenue streams” (Dubosson-Torbay, et
al., 2002). Morris (2005) proposes an integrative definition after reviewing the keywords and ideas
of 30 different authors: ‘‘A business model is a concise representation of how an interrelated set of
decision variables in the areas of venture strategy, architecture, and economics are addressed to
create sustainable competitive advantage in defined markets.’’
A business model, for the present work, is understood as how a firm is structured and its relationship
with the environment, it models the value that is delivered to customers in a way that provides
sustainable and profitable revenue streams and provides a decision-making framework to guide the
firm into the future.
According to Chesbrough & Rosenbloom (2002), the functions of a business model are to understand
the value created for users (value proposition), to identify what users are interested in the value
proposition and how to generate revenue (market segment), to specify the structure required to
provide the offering (value chain), to estimate the cost structure and profit potential of this
structure, to position the firm among competitors, suppliers and complementors and to present a
competitive strategy that helps the firm to have an advantage over rivals. These functions
complement the previous definition.
With a clear definition and desired functions, it is necessary to identify the main components of a
business model to work in a structured way to define it. The key components that will be used in the
present work to present the business model are based on the framework proposed by Alexander
Osterwalder and Yves Pigneur (Osterwalder & Pigneur, 2003) (Dubosson-Torbay, et al., 2002), as
they capture the elements identified in the definitions and functions of the business model:
5




The product or service defines the value proposition of the firm. It is understood as value
given to a specific customer segment, based on one or several capabilities of the firm. The
value creation potential can be enhanced by four factors: efficiency, complementarities,
lock-in and novelty (Amit & Zott, 2001).
The customer relationship element defines how the firm gets in touch with the customers
and what relationships are established with them
The infrastructure element defines what activities, resources and partners are required to
implement the first two elements
The financial aspect defines the revenue flows, pricing and costs, understood as how a
company makes money considering the three elements above.
Furthermore, the value proposition can be decomposed in several elementary value propositions
that need to be defined with the following elements to be correctly specified (Osterwalder &
Pigneur, 2003):




Reasoning: Captures why a value proposition could be valuable to the customer. Value is
normally created through enabling a use that fulfills a customer’s need, reducing a risk or
making life easier through reduction of efforts.
Value life cycle: Addresses in what moment of the value generation process there is
interaction with the customer. It can be in the value creation, through the participation of
the customer in the design or manufacturing, during value appropriation through the
improvement of buying experiences, on value consumption (that is the most well-known
phase) when the customer is actually using the product, on value renewal such as with
updates or renewal of subscriptions, and finally on value transfer, when the customer can
transfer the value he acquired or needs to have something disposed.
Value Level: Measuring the value level of the company allows helps to understand the utility
perceived by a customer. Instead of using an absolute scale as this would be hard to
compare, a qualitative scale that compares with competitors is proposed: me-too,
innovative imitation, excellence, innovation.
Price Level: Compares the price of the value proposition to the prices of the competition. It
is a scale with the following elements: free, economy, market, high-end.
Business models are usually a result of technological innovation, because they help to bring
discoveries to market and give the opportunity to satisfy previously unmet customer needs. There
are many business model possibilities, and some of them are better adapted than others to a certain
environment and customer needs. (Teece, 2010)
A classification helps to understand the different type of business models that are available. One
way to classify them is with a two-dimensional categorization that defines a specific number of basic
types of business models. This seems inadequate for the large amount of business models observed
today. A multicategory approach seems more attractive, positioning a business model between
several dimensions. The dimensions proposed for e-commerce, based on a literature review by
Dubosson-Torbay, et al. (2002) are the following:
6












User roles: Is the user a client or also a provider for other clients? Or nothing is sold directly
to the user but information is gathered from them to offer product and services to other
parties?
Interaction Pattern: Is the service provided one-to-one or provided by many companies to
one or many customers?
Nature of the offering: The offering is a product, service or information?
Pricing System: Is payment according to usage rate, fixed subscription, fee system
(percentage or fixed amount), price list or dynamic pricing (auction or reverse auction)?
Another option is that the service is free.
Level of customization: Is a continuous scale that ranges from mass content to customized
content.
Economic control: A continuous scale that goes from self-organizing to hierarchical. In selforganizing, no single entity has control on the transactions or economic outcomes of them
whether in hierarchical a boss controls contents, pricing and flow of transactions.
Required security: Level of security required to monitor and verify purchases in the system.
Level of value integration: Ranges from integration of components from multiple sources to
deliver a product or service to low value integration by not changing the nature of products
offered to the customer.
Value and cost offerings: Positioned as added value product or service or as a low-cost and
low-price offering.
Scale of traffic: Does the offering require significant site traffic to be viable or a moderate
amount of traffic is enough?
Degree of innovation: The offering can be an electronic version of a traditional way of doing
business (low innovation) to offering functions that where not possible before (high
innovation).
Buyer/seller power: If the power is more on the buyer or on the seller side.
Although there are a large number of possibilities using combinations of the above dimensions, it is
possible to identify some general patterns commonly used in business model design: (Osterwalder &
Pigneur, 2010)
-
-
-
Unbundling Business Models: Consists of a business models that separates the three types of
businesses that coexists in big corporations. They are Customer Relationship business,
Product Innovation business and Infrastructure business. The separation of these types of
businesses in an industry generates new business models.
Long Tail: Consists of “selling less of more”. Offer a big amount of niche products that sell
very little each, but can be produced on demand. This business model requires an efficient
operation that generates low inventory costs and a strong platform to make the content
available to interested buyers.
Multi-Sided Platforms: Bring together two or more groups of people that are distinct, but
interdependent between them. Usually one group is a buyer and the other a seller. These
platforms are of value to one group only if the other group of customers is on the same
platform. The creation of value is by facilitating interaction between the groups. Multi-sided
platforms have strong network effects, as they grow in value to the users when it attracts
more users, especially if those users are from a different group.
7
-
-
Free as Business Model: A free business model allows at least one customer segment to
benefit continuously from a value proposition without paying anything. These non-paying
customers are financed by another part of the business model or by another customer
segment. This model also includes the freemium concept, where it is possible to use a basic
version for free, but the customer has to pay to use premium features. The “bait and hook”
model is also in this pattern, as one product is offered for a very low price to get a locked-in
customer, and the long term payment (repeat purchases) is higher and subsidizes the lower
priced product.
Open Business Models: Is a model where companies collaborate continuously with outside
partners, either outside-in by getting ideas on the outside and exploiting them inside the
firm, or inside-out where ideas, intellectual property or assets are provided to external
parties to generate profit.
In the case of the e-parking service that is the focus of the present thesis, the characteristics that it
presents make it a candidate for the implementation of a multi-sided platform, also known as twosided market business model for the specific case of two parties interacting in the marketplace. A
deeper research on two-sided markets is therefore necessary.
The two-sided market, in economic perspective, is defined as a market where two sets of agents
interact through an intermediary (or platform) and the decisions of each set of agents affects the
outcomes of the other set, usually through the generation of an externality (Rysman, 2009). This
means that for the platform to be interesting to one agent, the other agent must already be on the
platform, and this generates a chicken-and-egg problem that makes the business model and the goto-market strategy more complex.
Many internet and high-technology markets are two or multi-sided and this topic is becoming
increasingly important. For a two-sided market to be defined as such there must be an intermediary,
but also the actions of one side must affect the other side. There are also cases of companies that
manage one-sided and two-sided markets at the same time. Therefore it is better to think about a
“two-sided strategy” rather than a “two-sided market” as the company many times has the choice to
implement either a one, two or many-sided market and it is not a technologically defined situation.
(Rysman, 2009)
The most important strategies that must be defined for a two-sided market from the platform
perspective are decisions regarding pricing and openness. In the pricing, the platform must choose
the policy to use on each of the sides. It might be free to one side (or even negative by giving
rewards to attract more people) while the other side has to pay a considerable amount to cover the
complete costs. The pricing decision is not based only on costs and demand as it is with one-sided
markets but must also consider how the participation on one side affects the participation on the
other side and the profit extracted from that participation. (Rysman, 2009) In fact, this skewed
pricing situation is profit maximizing, as the lower price on one side stimulates demand, while the
other side can take higher prices due to the increased benefits of participating in the platform (Bolt
& Tieman, 2008).
For the pricing decision, elasticity issues must also be considered. If the price is higher, the more
elastic consumers will not participate. This generates an anomaly because the intermediary is forced
to lower the price on one side to attract the more elastic customers on the elastic side, but the
8
bigger amount of customers also makes the platform more attractive for the other side, that leads to
higher prices or more participation on that side. This can easily generate a situation where the
product or service is offered to one side at prices below marginal costs or negative prices and keep
the business profitable by subsidizing it from the other side. Competition makes this effect more
noticeable, as the elastic consumers can change platforms based on the price, and the other side will
follow. The evolution is usually to a situation where one side uses a single platform (the cheapest
one for them) and the other side uses multiple platforms (to reach more customers). Two-sided
platforms also offer possibilities for price discrimination, to offer to an agent an advantageous offer
to make the platform more attractive by having that agent on it (for example, a large retail store).
(Rysman, 2009)
The second strategic decision of two-sided markets is related to openness. This is the number of
sides to pursue and the interaction with competing platforms: there can be little integration, be
completely compatible or seek incompatibility. In the case of pursuing a one-sided market, it is the
extreme case of closeness, but it can be a good strategy to start a marketplace and then become
two-sided by opening access once one side is correctly established. This is a strategy used by
Amazon, which opened to a two-sided market with their “Marketplace”. (Rysman, 2009)
For integration, compatibility is understood as the ability for a consumer of one platform to reach a
seller that is on another platform. There can be partial compatibility, for example with additional
charges associated to contacting an agent on another platform, as is the case with bank ATMs
networks. The choice can also be to stay incompatible, in an effort to lock-in customers and lock-out
competitors but participants can circumvent this by participating in multiple platforms (multihoming). That is the reason for platforms to offer rewards on exclusive membership or usage.
(Rysman, 2009) Platforms also engage in strategies to reduce network effects to mitigate effects in
lower prices due to competition. Examples of these strategies are using per-transaction fees so the
risk to participate in the platform is lowered as charges only come for positive outcomes, and
focusing efforts to capture customers on the single-homing side as the other side (usually the seller)
can usually multi-home and reach more customers that way. (Armstrong, 2006)
Whether there are possibilities to become the “winner” and have a tipping situation where every
participant prefers one platform is determined by the characteristics of the market. If the platforms
can provide differentiated services then they can easily coexist, such as serving different markets. If
agents can participate easily in different platforms, it is less likely to observe tipping. Finally, if the
providers can differentiate themselves from others, regardless of the platform, they are more likely
to be willing to share a platform and tipping can occur more easily. (Rysman, 2009)
As presented, a business model is based on the “vision” and strategy of the business. It is not a
financial model, but an architecture that supports and explains the business viability and can take
different forms. To design it, many decisions need to be made, and these decisions are interrelated.
The focus of this work is on a specific kind of business model: two-sided markets that require
additional decisions to be taken in regards to pricing and openness to offer an attractive value
proposition to each side of the market, and align their interests with the ones from the platform.
A good business model suggests value propositions that are compelling to customers on both sides
of the platform and provides attractive cost and risk structures that enable a significant capture of
value for the business providing the product or service. The design and refinement of the business
9
model is critical to enterprise success. (Teece, 2010). The same technology, but with different
business models, can yield to very different outcomes on the success of the company profiting from
it (Chesbrough & Rosenbloom, 2002).
A unique business model is not enough to sustain competitive advantage as it is generic and easy to
copy on a general level. A strategic analysis is required to protect and generate competitive
advantages that result from new business models, by designing a differentiated architecture for the
business model that make the various elements to support each other and work together well as a
system (Teece, 2010). The business model does not need to be radically different to other
companies, changes can be subtle and even if they might not disrupt an industry, they can result in
important benefits for the innovator (Amit & Zott, 2012). The choices made on the business models
are the foundations for the architecture of the company, and doing changes once established is very
hard (Chesbrough & Rosenbloom, 2002).
2.2 PARKING TRENDS
The trend during the last decades, especially in USA, has been to offer wide free parking everywhere,
and have parking available in any destination, because it is believed that otherwise people would not
come. In the 60s, the same principles were brought to Europe by transportation engineers educated
in USA. In the United States, 99% of all automobile trips have free parking very close to the
destination. (Shoup, 2011)
The free parking is a result of a historical situation: when cars began to congest traffic in USA in the
1930s, cities decided to require off-street minimum parking requirements to new buildings to avoid
cars parking on-street. This means that any new building had to provide free parking for their
tenants and visitors. This solved a parking availability problem, but since each site had to provide a
parking lot big enough for peak demand, the parking lots ended bigger than the building itself.
(Shoup, 2011)
Although these big free parking lots might sound like a benefit, they have hidden costs. First of all,
the big parking lots make the building unappealing for walking to it and the landscape to look like
pavement with a few buildings. Second, the driver does not directly pay for the parking space, but it
has a cost and somebody has to pay for it. Usually is everybody, because the land must be paid for,
the tenants must pay a bigger rental cost and the customers pay a higher price for things, just to
have free parking. The cost of parking has diffused everywhere in the economy. Even people who
don’t own cars need to pay for “free” parking, without realizing it. (Shoup, 2011)
In the case of free curb (on-street) parking, the problem is that it is scarce, and therefore drivers
compete for it. They waste time, fuel, congest traffic and pollute the air just for cruising to find a
space. Once they find it, they have no incentive to leave and use the parking for less time so other
person can use it. (Shoup, 2011). Up to 30% of the traffic inside a city is estimated to come from
drivers looking for a parking space and six out of ten drivers have abandoned their search for a space
at least once in a year (IBM, 2011).
Therefore, there is a parking problem in our society, and our cities are having problems because of
the behavior of drivers. They are invited to drive everywhere due to access to free parking, but they
have difficulties to find parking in some situations and face a surplus of parking in other places that
10
generates pavement areas unnecessarily, locks them for other uses and causes environmental and
water-management issues. The quality of the infrastructure is reduced towards people as everything
is oriented for cars. (Shoup, 2011)
There is a trend and a recommendation from experts to get away from free-parking models, as it
generates several inefficiencies. As explained before, first of all, free parking is never free, but the
cost is spread in different economic agents through taxes, higher building costs and higher prices.
When parking is free, there are no incentives to travel without a car. There are no “savings” of not
using a parking space or using it for a shorter time. Moreover, the free usage of parking lots has the
consequence that it is hard to find a parking space in a crowded area. The paradigm shift goes from
considering a parking problem as insufficient free parking, to aim to provide optimal parking supply
and price. The emphasis is on shared parking facilities among destinations, multimodal
transportation, unbundle parking costs from buildings, and adjustment of parking management
practices. (Litman, 2006)
To provide an efficient parking management for on street parking, the price must be right, and this
means that there are always one or two free spaces on each block. If there are more spaces than the
goal, the price should be lowered and if there are fewer spaces, it should be increased. An example
of this implementation is SFPark project of the city of San Francisco. They installed occupancy
sensors in their curb parking spaces, and adjust the prices of parking once a month to reach the
occupancy goals. (Shoup, 2011)
In many countries there are also “minimum parking requirements” that mandate the amount of
parking that a certain building should have. These parking spaces are usually of single use, and
belong to a single building. Thus, a pub that operates mostly at night might have an empty parking
lot during the day while a nearby office building will have parking needs during the day. It would be
more efficient for both to have a shared parking space, that is used by the office building in the day
and the pub in the evening and would probably accommodate the users of both establishments
better, because they will have more space available than in the previous situation. There are also
situations where cities have reduced minimum parking requirements when developers implement
parking management strategies such as commute trip reductions programs for employees or car
sharing. (Litman, 2006).
Shared parking is one of the ways to make a better use of the parking spaces. Another option to
implement them is the payment of “in lieu” fees to a city, so instead of building private parking for
each building, the contributions go to a fund that allow the construction of a public parking space
that every building can use. In this way, the parking use is more efficient, and a person can park in
one place and visit multiple businesses walking. This generates less car travel, and in turn has
positive secondary effects such as less pollution and less congestion. (Shoup, 2011)
In the case of workplace parking, there have been strategies implemented to reduce the amount of
parking space required. These strategies have the goal of reducing the number of people that travel
alone in a car, by providing incentives for carpooling and public transport use. The primary strategy
used is to provide financial incentives, like a cash-out, for people who don’t drive alone to work on a
certain number of days per week, or to charge a monthly fee for the parking so commuters have
incentives to share rides. (Willson, 2013)
11
Technology is currently available to implement new parking strategies, such as payment by exact
time, dynamic pricing to ensure there is always a parking spot at the destination and the use of
different payment methods. There are several new types of meters (explained in the following
section), like pay-and-display meters, pay-by-space meters, personal in-vehicle meters, payment by
mobile phones and payment by satellite navigation. The main problem to implement these solutions
is not about technology, but about politics. It is hard to convince a district to start charging for their
parking. One way to do it is to reinvest all parking revenue back in improvements to the district, and
in that way to get support from the population that those parking meters are something good for
them. (Shoup, 2011)
2.3 PARKING TECHNOLOGIES AND ACCESS CONTROL
As explained before, several new technologies allow for novel strategies of parking management.
This section presents a literature review of these technologies.
Parking technologies and access control can be classified as five major categories: (Idris, et al., 2009)





Parking Guidance and Information System (PGIS): this system can be city-wide, guiding the
drivers to available parking with increasingly detailed information, or it can be only within a
specific parking lot facility. The key components for a PGIS system include an information
gathering mechanism (usually sensors on entrance/exit of parking lots or on individual
parking spaces), information disseminating mechanism (usually variable message signs,
lights and screens) and a control center with telecommunications networks.
Transit based information systems: the functionality is similar to PGIS, but it concentrates
on guiding drivers to park-and-ride facilities and provides information about the parking lots
and also about public transportation including schedules and traffic conditions. This allows
drivers to plan their transport strategies in advance and decide the best way to reach their
destinations.
Smart Payment System: it is implemented to reduce limitations of conventional payment
methods and allow for greater flexibility and ease of operations. It is usually implemented
as contact methods like smart cards, debit cards and credit cards or contactless methods
such as contactless cards, mobile devices and automated vehicle identification with RFID
tags or automatic license plate reader (ALPR) technologies. Other smart payment
technologies are based on mobile phone calls or applications. This category also includes
technologies for enforcement, such as automatic photo ticketing of violations, time limit
violation automatic ticketing and networking of meters.
E-Parking: provides services for drivers to enquire availability and/or reserve parking spaces
in advance to ensure vacant spaces when they arrive at the desired parking facility. There
are many methods to access the system, such as SMS (Short Message Service) and internet.
Advantages of the system are that it can be easily extended to support smart payment
providing a seamless parking experience and also providing the information usually
delivered with PGIS. It also allows providing customized information for each driver.
Automated Parking: considers a fully automated car park, where drivers arrive to a bay, lock
the car and let a computer controlled machine to automatically place the car in an allocated
space. This system allows for maximum use of space because it does not require driving
ways. It allows car stacking and additional safety measures for people and vehicles.
12
The present work is related mostly to e-parking and smart payment systems; therefore, a review of
technologies to enable e-parking services and for payment is required.
For e-parking systems, the occupancy information is very important to provide adequate services, as
it allows to infer statistics for future occupancy and to provide adequate information to the drivers.
Without some sort of occupancy information, an e-parking system cannot provide the service it is
expected to give. Moreover, a parking availability prediction algorithm is necessary, as having only
the real-time occupancy information might guide a driver to a vacant space that becomes occupied
before she arrives (Rajabioun, et al., 2013).
There are two main technological ways to capture occupancy information in a parking lot (the
manual alternative is a person counting the cars in the parking lot): by placing sensors in entrances
and exits and counting the total number of cars in the lot, or by placing sensors in every single
parking space, knowing in real-time how many cars are parked, for how long, where they are and the
location of free spaces. There are many sensors available to provide this information; sensors can be
intrusive or non-intrusive. The intrusive sensors require holes in the road and invasive procedures,
while the non-intrusive sensors can be directly mounted on the roof or the ground of the car park.
The main intrusive systems in use are the following: (Idris, et al., 2009)





Active infrared Sensors: detects vehicles by emitting infrared light and detecting the amount
reflected. Allows for multiple lane operations using multiple beams but is sensitive to
environmental conditions like fog or snow.
Inductive Loops: consists of wire loops that are buried in the pavement. It is constantly
excited with signals, and the oscillation of the loop is measured. The presence of a vehicle
changes the inductance of the loop and it has a direct impact on the measured oscillation. It
is a mature and well-understood technology in massive use. It is flexible as the vehicle
detection zone is easy to enlarge and it has a very good accuracy for count data. They are
the common standard to measure occupancy as a total number of cars in a parking lot by
placing the sensors in all entrance and exit lanes. The main problems is that is an expensive
sensor to maintain, it requires multiple detectors for a single parking lot and the wire loops
are subjected to wear and tear due to traffic and weather. If it is also necessary to detect a
wide variety of classes of vehicles, the detection accuracy can be low for them. These
sensors work correctly in a variety of weather conditions including rain, fog and snow.
Magnetometers: work by detecting changes in the earth’s magnetic field, caused by vehicles.
They are insensitive to weather conditions and less susceptible than loops to traffic wear
and tear. They provide high accuracy but their main drawback is that the detection zone is
small, and multiple units with close proximity are required to detect correctly. They can be
affected by large metal objects different than cars, so good filtering algorithms and an
appropriate installation are important.
Pneumatic road tubes: these tubes are places in the road, and the air pressure generated by
a passing car over them closes a switch, that produces signals to count that vehicle. Despite
the low cost of these sensors and the quick installation and maintenance, their main
disadvantage is that they are temperature sensitive, that the number of axles of the vehicle
affects them and that they are prone to vandalism.
Piezoelectric cables: are made of material that can convert kinetic energy generated by
vibration or mechanical impact into electrical energy. These sensors can differentiate
13

vehicles and can detect vehicle speed. The classification is based on weight and axle spacing
with more accuracy but almost the same cost as an inductive loop. The main disadvantages
are that multiple detectors are required for a single location and that they are extremely
sensitive to high temperature and high amounts of traffic.
Weight-in-motion sensors: detect the weight of a vehicle while they are moving. This system
can be implemented with four different technologies: bending plate, piezoelectric element,
load cell and capacitance mat. The most accurate system is the load cell but is the more
expensive one. This system can monitor up to four lanes and they require refurbishment
work every 3 to 5 years.
For non-intrusive systems, the main sensors in use are the following: (Idris, et al., 2009)






Microwave radar: transmits microwave energy and detects a vehicle but the energy that is
reflected from a vehicle. They are insensitive to weather and can conduct multiple lane data
gathering and measure speeds. The main disadvantage is that they need to be equipped
with auxiliary sensors to detect stopped vehicles.
Passive acoustic array sensors: use microphones to detect a vehicle by the audible sounds
produced by them. They support multiple lane operations and are a passive detection
system. They have problems with low temperature and also with slow moving vehicles that
generate small amounts of noise.
Passive Infrared sensors: They identify occupancy in a single parking space by measuring
changes in the infrared light emitted by vehicles and roads. Their sensitivity is reduced by
heavy rain, snow and dense fogs.
RFID: the system consists of a transceiver, antenna and transponder. The transceiver sends
and reads information from the transponder through the antenna. The main benefits are
that there is no need for contact and it has a low installation and maintenance cost with
good detection at high speeds. The main drawback is that a transponder needs to be placed
in every vehicle that participates in the system.
Ultrasonic sensors: transmit ultrasound waves to the road and detects the waves reflected
back to the sensor. When a vehicle is present, the reflection changes and can be detected. It
allows for multiple lane operations and individual parking space monitoring. These sensors
are easy to install without closing facilities.
Video Image Processing: using the information of one or more cameras, and image
interpretation software in a computer, it is possible to detect vehicles passing through the
cameras by comparing subsequent continuous frames. This technology is easy to implement
as video surveillance systems are available in most parking lots. Detection zones can be
easily added or modified by software if the images are available and by combining multiple
cameras, multiline operations are supported as well. Disadvantages are that they are
affected by several external events such as bad weather, shadows, transition from day to
night, dirty lens and motion due to strong winds. For optimum detection, cameras need to
be mounted at a considerable height, and it can be a problem in parking lots with a low roof.
Other technologies to detect occupancy do not rely on external sensors, but on the information
provided by the drivers. A possible approach is to use a crowdsourcing model, where drivers indicate
the availability in a parking lot through a mobile application. A secondary approach is to detect the
occupancy through geofencing (presence of a user in a certain geographic area and crossing the
14
borders of it) and activity recognition, to infer if a driver was able to find parking on a certain parking
lot or he had to drive somewhere else. This approach has benefits in term of infrastructure, but
suffers from some limitations in regards of accuracy. As part of the SPIRE project, the approaches
mentioned above have been developed, and the recommendation is also to combine the
information with infrastructure sensors to provide better accuracy. (Rinne, et al., 2014)
A drawback of using geo-fencing is that it requires a valid GPS signal to provide the required
accuracy. This is usually not the case with indoor parking lots, as the GPS signal requires a line of
sight with the sky. One method to overcome this limitation is to make the geo-fence bigger, to
include an area outside the parking lot, or use indoor navigation technologies, based on Wi-Fi signal
triangulation or other technologies. Indoor navigation also allows the system to guide the person
inside a building to their final destination. (Liu, et al., 2012)
To provide a balance among the use of sensors and other measurements, it is possible to apply
mathematical methods, such as extrapolation, to estimate the parking occupation based on the
observation of a fraction of parking spaces that are monitored with sensors. This reduces the cost of
implementation because a smaller number of sensors need to be purchased, installed and
maintained. A significant cost reduction, up to a factor of 30, can be achieved by using this strategy.
(Evenepoel, et al., 2014)
In the case of payment, parking meters have improved their technologies, both in payment methods
and in flexibility. The first parking meter, invented in 1935, consisted of a pole where people inserted
coins, and it indicated a certain amount of available time. The new parking meters avoid problems
with parking anxiety due to fixed time intervals and allow flexible policies to be implemented. These
parking meter technologies are the following (Shoup, 2011):



Pay-and-display multispace meters: these meters are placed in the middle of a block with
paid curb parking. After parking, drivers walk to the meter, pay and get a receipt that they
place in the dashboard of the car. This meter can control between 20 to 30 parking spaces.
Pay-by-space meters: in this case, the city paints a number on the sidewalk by each parking
space and installs signs to point the driver to the correct meter. The driver walks to the
meter, selects their parking number, pays for the time required and walk away. They do not
need to return to their car as with the above pay-and-display meters. Moreover, the meters
can be networked to allow drivers to extend the time on their parking space by buying more
time from a distant meter or using a cell phone. Drivers can also get a refund on the unused
time when they return to their cars.
Personal In-Vehicle Meters: these meters are used together with a smart card to store value.
The city installs a sign that posts the zone number of the parking space. When the driver
parks, she enters the zone number into the meter, inserts the smart card and turns the
meter on, hanging it on the inside the windshield with the display visible from outside.
Parking wardens can easily determine if the parking meter is running as they can see the
zone number and parking time through the windshield. Drivers can add value to their cards
when required in special loading places. It has the benefits that walking out of the car to
park is not required, no coins are needed and there is no meter anxiety as you pay exactly
for the time you are parking, so there are no incentives to stay longer.
15


Mobile Telephone: some cities have introduced systems to pay for curb space using a mobile
telephone. A driver parks, dials the city parking number and keys in the license plate number
of the car and the parking zone where he parked. After returning to the car, the driver dials
the same number to finish the payment. Drivers only have to pay for the exact time used.
With a transponder installed in the car, parking wardens use a handheld scanner without
stopping to check if the car has paid, and if it has not, then a ticket is issued electronically. It
also gives the city a real-time view of parking occupancy around the city.
Payment by GPS: there is a European project of using satellite navigation systems to
implement a pan-European road tolling system. If this plan is implemented, it could be easily
adapted to pay for curb parking as well, charging automatically for the parking time used.
As the literature research shows, there are multiple technologies available to implement smart
parking solutions. In this thesis, a smart parking solution aimed at real-estate managers will be
suggested, and the following chapter presents the main parking management issues that they need
to handle.
3 PARKING MANAGEMENT
Parking strategies and management consists mainly of planning and back-office work, but it has a big
impact on our own transportation choices and behavior. This section presents a description of this
industry.
3.1 INDUSTRY DESCRIPTION
The industry of parking management is divided between big parking operators who manage parking
sites in several cities, and small owner-operated parking lots. Cities also play an important role in the
provision of parking, but their parking lots are usually managed by companies specializing in this
area and bidding to operate a certain parking lot.
According to Q-Park (2012), a large portion of parking spaces are not managed by parking operators,
and they represent a big growth opportunity for this industry. Over 80% of western European
parking spaces, representing over 40 billion euro in revenue are owned by local authorities. Private
companies operate only a small fraction of these public spaces and they are a very fragmented
market. The seven largest parking operators in Europe operate around 4 million spaces altogether,
just over 1% of the total offering. The turnover of these 7 companies reaches 3 billion euro. The
distribution of public parking spaces is shown in Figure 1 and presents the big growth opportunity
available for parking companies, as the need for paid parking increases.
From a technology perspective, the parking industry is also moving towards newer technology that
enables new services and better experiences for customers. The survey 2013 on emerging trends
from the International Parking Institute (Figure 2) shows that, among the trends that have a bigger
effect on parking industry are included new access control technologies and real-time
communication with mobile phones. These are areas in which the service presented in this thesis has
strong presence. (International Parking Institute, 2013)
16
Figure 1: Public Parking Spaces (EU-15) (Q-Park, 2012)
Figure 2: Emerging Trends in Parking (International Parking Institute, 2013)
17
3.2 PARKING REQUIREMENTS
Parking requirements, also called minimum parking requirements, are the policy mechanism used by
different governments to ensure that buildings have space to park the car of their visitors, and do
not overflow neighboring areas with those cars. The numbers vary for different countries, but the
permission to build a certain type of real estate is conditioned on providing a specific number of
parking spaces per unit of construction or of expected visitors.
In the last decades, researchers have shown that these requirements are usually above the real
parking that is used. They are calculated by applying guidelines that assume free parking and
unavailable public transport, such as the data provided by the “Institute of Transportation Engineers
Parking Generation Handbook”. Some governments have reformed the application of their parking
requirements by reducing the number in specific cases, as well as when shared parking is used.
(Willson, 2013)
Some areas also have maximum parking requirements, where new real estate cannot provide
parking over a certain limit. The objective is to reduce the number of cars that reach a certain area
and these areas are usually city centers or financial districts that have vast amounts of traffic and are
well connected by public transport.
Parking requirements trace their origins to 1923 in Columbus, Ohio when vehicle ownership grew. It
was seen as a way to reduce street traffic related to patrons driving to find parking. Minimum
parking requirements have demonstrated, especially in the United States, the development of lowdensity automobile-oriented communities. The sites in these communities are separated by big
parking lots, which incentivize the use of cars even for small distances, because walking is
unpleasant in them. (Willson, 2013)
Parking requirements are calculated based on land use. A basis for the parking ratio is determined
for each land use (such as area of commercial floor or number of apartment units) and a number of
spaces required are specified per each unit of development defined. Some cities define special areas
with reduction rates for defined situations or site-specific negotiations (proximity to public
transport, possibility of sharing parking spaces). (Willson, 2013)
Some authors suggest that minimum parking requirements should be eliminated, leaving the
decision of how much parking to provide in the hands of developers, investors and tenants. This
would produce fewer sites with an oversupply of parking and provide incentives to more innovative
uses of the parking areas, such as shared parking arrangements and fair pricing that manages
demand. There are areas where projects have been approved with no on-site parking. (Willson,
2013)
These parking requirements provide an opportunity to an e-parking service because as cities
deregulate their parking requirements, services that help to make a more efficient use of the
available parking will become necessary or even mandatory. When an innovative service for parking
gives good results, it might even help to accelerate this deregulation or at least provide tools to
investors to negotiate special conditions for projects that apply such a service.
18
3.3 BUSINESS MODELS USED FOR PARKING MANAGEMENT
The main business models used for parking management consist of:



Bid for a parking lot or area, paying an up-front sum and usually also a variable portion of
the income, through an open or closed call for proposals.
Build a parking lot and operate it, owning or leasing the real-estate and taking complete
responsibility and control of the operation including all revenues and loses.
Being hired by a parking lot owner to manage their parking operations. In this case, usually
the operator takes a portion of the income or a fixed fee, and the main profits are for the
owner of the parking lot.
We focus on the latter case, as it is the business model that is currently applied by real-estate
managers who are the main target for the service proposed on this thesis. A building owner might
choose to manage the parking facilities themselves, but for complex facilities or paid parking this
task is usually outsourced to a professional parking operator.
On an outsourced operation, an agreement governs the relationship between the parties, and states
which expenses should be reimbursed to the parking operator and what management or other fees
are involved. Reimbursable expenses should usually be direct operating expenses incurred at the
location, such as labor, labor related, uniforms, maintenance, insurances and supplies. Other
expenses, such as off-site supervision that are shared between parking facilities should be paid via
the management fee. The operator should also provide a statement with a breakdown of facility
revenue. (Martens & Francis, 2008)
The main concerns of property managers in regards to hiring a parking operator is security and
safety, cleaning, on-site presence, maintenance of parking lot, low prices, appropriate revenue
control and collection, transparent information policies, handling of customer complaints and
conflict resolution. The lowest management fee is around $500 US dollars per month in USA.
(Parking Today, 2004)
Big parking operators have limited interest in managing small parking lots, and they only perform
specific services in selected locations because of tactical reasons. They might offer to manage a car
park that influences their properties, or provide enforcement services to avoid cars parking on
nearby streets or parking lots around their own buildings, to push those cars to use their services.
Nevertheless, they recognize that new technologies allow the operation of parking lots at lower
costs, and show interest in managing parking in office buildings and apartment complexes as future
growth opportunities. (Q-Park, 2012)
There are smaller companies that provide only enforcement services, and they make profit by
ticketing drivers that do not comply with parking restrictions. This service allows real-estate
managers to make sure their parking lots are used properly. The enforcement can be with in-person
traffic wardens or through cameras that might include automatic license plate recognition to do
automatic ticketing.
19
3.4 CURRENT SITUATION FOR REAL-ESTATE MANAGERS (AS-IS)
As mentioned before, parking management has gone through a paradox shift in the last decade,
moving from a goal of providing free parking to anyone that wants to arrive by car, to a goal of
having an optimal amount of parking, charging the correct amount to keep the balance, and
implementing additional measures to provide an integrated multimodal transportation solution.
(Litman, 2006)
Real-estate managers are not free from these requirements. They need to provide a good service for
their tenants, and part of the service is to manage parking. Several stakeholders influence the
policies that the real-estate manager must balance to manage parking. First of all, the workers of the
buildings that travel by car need a place to park, visitors need to find their primary destination
building fast and find a parking space close to the entrance, the surroundings of the building needs
to be kept clean, and this means that cars cannot park anywhere they want and finally the parking
requirements of the city need to be considered.
Moreover, a policy that was correct a few years before and that now needs to be changed due to
new conditions can have strong opposition from different stakeholders because usually these
policies affect someone negatively to provide a better overall situation. If the person affected has
strong influences, it might be very hard to implement the policy without managing the political
situation associated with it. An example of this is removing nominated parking, or adding time
constraints to certain parking spots. One example is to implement 2 hours restricted parking for a
parking spot near the door so visitors have priority to use them instead of the worker that arrives
earlier in the morning and takes the parking spot all day. This might face opposition from workers
that arrive early, but improves the overall situation by making the building friendly to receive shortstay visitors that usually have business reasons to be there.
Once the restrictions are in place, a new situation appears. Some people will still be against the
changes and simply ignore the new restrictions. If nothing happens to them, other people will follow
and soon everyone will be ignoring any restriction in place for the parking lot and all effort will be
lost. To make sure the new restrictions are followed, a parking enforcement agreement must be
performed or an access control system needs to be installed. If using a parking enforcement
agreement, the parking lot needs to be patrolled by traffic wardens periodically and they need to
issue parking fines or warnings to drivers who are not respecting the new restrictions. These
wardens also need to know what cars are allowed to park in what areas. This agreement might be
performed with the municipality, to allow municipal traffic wardens to monitor the parking lot, or
with a private company that performs this work.
The problem with patrolling and parking fines is that the drivers who receive fines will complaint.
This might generate new pressure to remove parking restrictions that must be managed by the realestate manager and it makes the change to restricted parking even harder. One possibility to handle
this situation, as the city of Aspen decided to do when they implemented paid parking, is to allow
one free traffic ticket per license plate (Litman, 2006). In this way, the person might make a mistake
and get a parking ticket, but they do not need to pay it and learn to not park there again. If they do it
again, then it is understood that is on purpose, and the fine must be paid, but there are no excuses
that the person was unaware of the restriction.
20
Another alternative to control parking restrictions, as explained above, is to use access gates, but it
is much more expensive than enforcement and requires changes in the parking layout and to install
special infrastructure. It might be an alternative for parking lots where traffic wardens might not be
appropriate, but it adds complexity because access rights must be managed and the maintenance
and monitoring of the gates must be addressed.
4 E-PARKING SERVICE
This section presents an e-parking service proposal for real-estate managers. The e-parking service
consists of an information and guidance service for the real-estate with a mobile application that
guides users, including drivers, to their destinations and provides additional services.
4.1 DESCRIPTION OF THE SERVICE
The main service consists of providing information and guidance to users of a building, especially
drivers that need to use a parking lot, and to manage availability of the parking lot through different
strategies including shared parking, booking of special reserved areas and paid parking offerings. The
service also considers additions such as guidance to the final destination through indoor navigation
and offering minor services for cars to drivers, such as cleaning.
To enable the service, a mapping of the area needs to be performed, identifying the parking spaces
available and their specific conditions. The buildings associated to the parking lot are also reviewed
to identify their entrance gates and other necessary information. To provide indoor navigation, a
mapping of the building needs also to be performed. The parking lot is added to the mobile
application of the E-Parking service and visitors and tenants are guided to their final destination,
recommending the best transportation mode and parking space when it applies.
The mapping of buildings on a first stage should be offered as a service by the company, but once
the process matures the plan should be to offer it on a self-service modality or through specialized
contractors, to allow the service to scale faster as the mapping would be a bottleneck for growth.
To fully use the e-parking service with the reserved parking areas, different signs need to be installed
by the real-estate manager in the parking lot to show that certain parking areas can only be used
with a booking generated on the mobile application.
The parking rules and prices (if applicable) need to be set in the system for the application to work
correctly. An access control system might also be needed if that is the way that the real-estate
manager decides to control his parking lot. In this case, the access control system needs to be
installed and integrated with the application to control who can access. The access system can be
implemented with a traditional access control list, or with a certificate-based authentication system.
The latter option provides a distributed authorization schema that opens additional possibilities for
the real-estate manager to provide temporary control of the access of a specific gate to another
entity who can distribute access permits during that time. The access systems are discussed deeper
in the next section related to technology.
When the configuration and preparation of the parking lot is complete, the parking lot is included in
the mobile application, and drivers can use it to pre-book parking areas and obtain
21
recommendations on what is the better transport option at the moment. If they decide to drive, the
application recommends where to park based on the current occupancy information, historical trend
and the destination of the driver. To facilitate the use of the parking lot by people who do not have
access to the mobile application, especially guests, alternative methods such as a self-printed
parking permit can be implemented.
4.2 BUSINESS MODEL OF E-PARKING SERVICE
To correctly identify a business model for the service, the stakeholders need to be identified. The
proposed business model can be generated considering the needs of each of them.
4.2.1 STAKEHOLDERS
The main stakeholders that need to be considered for the E-Parking Service are the following:









Real-estate Managers: Wants to make money from the real-estate, and provide a good
service to have satisfied tenants.
Real-estate investors: For new projects, they want to reduce the number of required parking
spaces to lower their investment needs.
Tenants: The person that rents the real-estate; wants to attract workers by providing a good
working environment, and make it easy for visitors to access the building.
Workers or other permanent building occupants: They want to reach their workplaces
efficiently either driving their cars or finding easy alternative ways. The parking space at the
workplace also has a symbolic meaning that cannot be ignored.
Visitors: Want to know where their destination point is inside the building, and if driving
they want to park close to their destination point and be guided to it. They might also need
an easy way to request help in case they get lost.
Drivers not related to the building: They want to be able to park in as many places as
possible, and as close to their destination. If the e-parking service offers additional parking
to external parties, drivers that are not related to the building might want to park and pay
for it, making additional money to the real-estate manager.
Traffic Wardens: Wants to avoid violations to the rules, and get money with traffic tickets.
They can be private individuals or working for a city or government. Their task is to detect
drivers that park incorrectly and issue warnings or fines for this behavior.
City planners and authorities: They want to provide sustainable growth to their cities, try to
reduce the use of cars and make sure that when cars are used they have a place to park and
do not drive around looking for parking and generating congestion and pollution.
Service Providers for cars: They do car cleaning, maintenance and minor repairs. They want
to reach as many drivers as possible. It is of interest to them to offer services in a parking lot
to the drivers that usually park there.
The willingness to pay for the service and the reasons for it is presented on Table 1.
Table 1: Willingness to pay by stakeholder
Stakeholder
Real-estate
Willingness Reasoning
to pay
Medium
It is a service that is useful for Real-estate managers to provide
22
Manager
Real-estate
investor
High
Tenants
LowMedium
Workers
Low
Visitors
Very low
Drivers unrelated High
to the building
Traffic Wardens
Low
City planners and Low
authorities
Service Providers
High
better parking for their buildings. However, it is not a service they
critically require, at least at the moment, but more of a nice to
have. If additional money can be made for them, it might be
more attractive.
They might be willing to pay considerable amounts if the service
helps them to negotiate with city planners and authorities to
reduce the required parking spaces for their project. If they are
successful in reducing this amount, they should be willing to pay
advance sums to secure the provision of the service to their
buildings for a specific time and they might also require
consulting services to provide the information to the city and
integrate the required technologies on the new parking lot.
They do not have control over the parking lot, so it does not
make sense to pay for a service that relates to the management
of the parking lot, even though the workers might be affected. If
it allows them to rent fewer parking spaces for the workers
because the use can be optimized with the e-parking service,
they might be willing to pay.
There are no advantages of using the e-parking service for one
person. It needs to be implemented on a site-wide base. Without
enough users, the service cannot work, so the users cannot be
charged. It needs to be free and easy to use for them to get them
on-board fast and without restrictions.
As with workers, there is no advantage for one visitor to pay and
use the system. Moreover, they are not regular users of the
building so there are even less reasons for them to pay. A visitor
usually comes for business to a building, and wants easy access.
Drivers want to park their cars close to their destination. The eparking service allows drivers to find additional parking lots to
what they would have access regularly. The willingness to pay for
access to these parking lots is probably high, as most private
parking lots need to be paid.
The traffic warden service is required to make exclusive areas
work if there is no access control system for them. There is no
reason for traffic wardens to pay to use the service, as they are
providing a service themselves. They are a supplier and should
get paid in some way for the service they provide.
They might not be willing to pay directly, but they might be
interested in making mandatory the use of a service like the one
proposed in certain cases when parking requirements are
reduced. This might help the service to make a strong business
case to use it.
Service providers want to access new customers, and a parking
lot with many cars and owners that can be contacted is an
attractive offer for them. They should be willing to pay to
advertise and offer their services to these drivers.
Therefore, the best candidates to provide revenue to the service are the drivers that are unrelated
to the building, together with service providers. They can access new parking areas that were
previously unavailable, and for this access they are willing to pay. Real-estate investors also have
23
strong interests in paying when they can see a reduction of project costs by using the service. The
next option is to charge a fee directly to the real-estate manager for the provided service.
A secondary option that could be explored is to charge the tenants instead of the real-estate
manager, and give them the possibility to rent fewer parking spaces for all their employees. It is
important to get the cooperation from the real-estate manager. Since real-estate managers will lose
revenue due to the fewer rental of parking spaces, there must be a reason for them to accept and
support the project.
One reason can be that the parking spaces that are freed can be offered to the general public, at a
much higher rate per space, and it can be more profitable for the real-estate manager. This is a
reasonable situation in areas that are in interesting destinations for drivers that are unrelated to the
building.
4.2.2 SUITABILITY OF CURRENT BUSINESS MODELS
As explained in the previous section, the main business model used for parking management for a
real-estate is to charge a fixed amount per month for an outsourced operation. The operator
establishes a budget and charges additionally all direct expenses that result from the operation of
the parking lot.
Software companies aimed to parking management operate either as out-of-the-shelf software
provider, selling a license for a fixed price (and possibly maintenance fees) for a customer to install
and operate the software on their own servers. There is a tendency towards offering this kind of
software in a cloud system. Newer software companies are connecting the parking lot operators to
cloud solutions, which centralize the information to be able to integrate several parking lots into one
solution, allow the parking operators to reduce efforts in maintaining IT infrastructure and gives
flexibility in accessing the information from several devices and locations.
In the case of services that are aimed into sharing private parking spaces (house parking) and
booking parking lots, their business model is based on commissions. From the total amount of the
transaction, these companies charge a percentage that is usually close to 20%. They offer free listing
and searching of parking spaces that provides incentives for users to list parking spaces without risk
and to see what is available. When a user finds a parking space that is interesting for her, she books
it on the website and pays, just as any other booking through internet. Then she receives
instructions on how to reach the parking space and if she needs to print a permit and she can park at
the desired destination. Since these systems are based on trust, they also usually have warranties
and customer support phones, and reviews and rating systems for the parking spaces and the users.
There are services that act as information brokers. They capture occupancy information from
different parking lots using technologies and other sources. The information is usually offered for
free to users through an app offered directly by the information broker, but they make money
charging for access to the information to application developers and especially to car navigation
providers. There are companies offering parking lot information, prices and real-time occupancy of
parking spaces and also companies offering traffic information. By combining these sources and their
navigation technologies, car navigation companies can develop smart routing applications.
24
General business models that are used for e-services were identified in the literature review
(Osterwalder & Pigneur, 2010) and their suitability for the service can be analyzed:
-
-
-
-
-
Unbundling Business Models: Current integrated parking lot operators consist of a bundled
business model with customer relationship business, product innovation business and
infrastructure business. The business has unbundled in the last decade, with companies (and
cities) that only build infrastructure -infrastructure business-, others that concentrate in new
sensors, interfaces and technologies for parking lots -product innovation business- and a
third group that offers operation of the parking lots with employees that are in direct
contact with customers and take care of their needs -customer relationship businesses-.
Long Tail: consists of “selling less of more”. In the case of parking, a “long tail” approach is
offering individual parking spaces in different locations. A big infrastructure is not required,
and it is possible to offer parking spaces that have a low opportunity cost (a parking space in
an office during evening hours) and that might rent a small amount each. The key here is to
have a strong platform to make the parking spaces available to interested buyers and make
the search and availability information easy, providing appropriate incentives.
Multi-Sided Platforms: Parking is by definition a multi-sided platform. Drivers want to park,
but they will not use a service unless they know they can find parking there. Users that want
to offer parking will not list it unless they know they can find drivers to sell their parking
spaces to. Moreover, parking operators will not build parking lots unless there are drivers
that want to park and drivers might avoid visiting certain areas where there is no parking
availability. These groups are distinct, but interdependent between them. The creation of
value is by facilitating interaction between the groups and the bigger availability of parking
on the platform, and the bigger number of drivers, it gets more attractive for both groups of
users (network effects).
Free as Business Model: The free model on the internet is usually supported by a massive
amount of users that benefit of a service for free, and advertisers that pay for access to
those users and finance the platform. These models usually require a continuous use and
large numbers of users that in the case of a parking service are not available. A variation of
the model needs to be considered, because to make the e-parking service feasible at least
one of the customer segments will need access for free and they will be financed by other
customer segments. An alternative that is very popular for e-businesses is the freemium
concept. For e-parking services, it is difficult to envision a basic version for free, with
premium features that are paid because all features are needed to provide a good service,
and “premium” features might mean to make the service too broad. For “bait and hook”
models, it is mainly for product businesses and not for services, and does not apply in this
case.
Open Business Models: The e-parking service should operate using the ideas of an open
business model. A continuous collaboration with outside partners is necessary, to provide
parking, do enforcement, offer services to drivers and recruit users for the platform. Since
different stakeholders are required to make the envisioned services work and it is not
possible to offer the service without them, this collaboration is important.
For the proposed e-parking service, the same business model as an outsourced parking management
cannot be used, as there will be no staff physically at the customer premises. A software-as-a-service
model is more appropriate, but it is not clear who should pay for it as it benefits multiple
25
stakeholders. The analysis of the business model of shared parking portals suggests that a revenue
channel is through drivers who need to park somewhere, and it is possible to charge around 20%
commission for that. Extending the model, a similar approach can be used for service providers that
want to sell services (like car washing and minor repairs) through the platform. Although the eparking service will also have information about several parking lots, they are mostly private and
shall not interest the majority of drivers. This means that acting as an information broker and selling
information seems unreasonable.
By assessing the suitability of more general business models, usually used for e-businesses, aspects
of the business models that are suitable for the e-parking service are identified: it should focus on
providing information and offering parking spaces through software, and not go into the
management of physical parking lots; it should take advantage of the low cost for the service to offer
a parking space, allowing small numbers of surplus of parking spaces to be offered for profit; it needs
to consider the unique characteristics and challenges of multi-sided platforms, clearly identifying the
players and their relationships; it should be free for a specific group of users that needs to be on the
platform for the service to work; and it should specifically address the collaboration with partners.
4.2.3 BUSINESS MODEL DEFINITION
Considering the situation explained above, there are several stakeholders that need to be taken into
consideration when a business model is defined and a starting point to model these relationships is
the multi-sided business model theory. The main implication of this type of business model, as
explained in the literature review, is that it has special considerations in regards to launching the
service and to pricing.
The e-parking service that is proposed can be represented as a business model with a double twosided market. The first one is between real-estate managers (or tenants) and users. If real-estate
managers do not participate on the e-parking service, the service is not useful for users (unless a
parking lot is mapped without participation from real-estate managers and then only occupation
information from crowdsourcing is available). If users are not interested on the service, then the
real-estate manager does not see the e-parking service as useful.
A secondary two-sided market that could be critical for the profitability of the service is between
service providers and users. If we don’t have enough users, then it is not an attractive market for
service providers. If we don’t have enough service providers though, users might still be attracted to
the platform because of the other features, but they might ignore the marketplace for services
totally if they cannot find what they need.
The main components of the proposed business model are presented in Table 2 viewed from the
real-estate manager’s perspective.
Table 2: Business Model components for real-estate manager
Component
Value proposition
Element
Reasoning
Description
The service is valuable for the real-estate manager because they
have a parking situation that they want to improve: They might
have too many designated parking spots, this makes the parking
lot look like space is available, but no one can park there. They
might also have problems guiding visitors to their destination
26
Customer
relationship
Infrastructure
Financial aspects
office and providing parking for them. Another problem might
be the opposite: They have too much parking available, and
they want to profit from it by renting some spaces to outsiders.
Value
life For the real-estate manager in regards to the service, there is
cycle
interaction during value appropriation, value consumption and
value renewal
Value level
The value level is in innovative imitation. There are similar
services that address a specific need, but this service is different
as it addresses several problems at once and the operation is
almost fully automatic.
Price level
One option is to provide the service for free, and get profit from
transactions performed on the platform with external service
providers. A second option is to charge market price and focus
efforts in the development of the service for real-estate
manager and not in recruiting service providers and users.
Getting
in The service will approach the real-estate manager directly, and
touch
present the services to get a service contract.
Relationships The relationship with real-estate managers will be through a
representative that has direct contact with them to improve
services and obtain feedback.
Activities
The software needs to be developed, and a constant
communication must be kept with the real-estate manager
Resources
Representatives, developers, sales, management, relationship
management with service providers
Partners
- Service Providers
- Contractors to install access control systems and signs that
might be required and perform mappings of the parking lots
and buildings to include in the service
- Parking enforcement (traffic wardens) companies
Revenue
Revenue is generated through a fixed monthly payment from
the real-estate manager (€50-€200).
Another option is to make it free for real-estate managers and
revenue could be generated on the other side of the business
model (users paying for services and parking).
Costs
Salaries, indirect personnel costs, platform operation
From the perspective of the user, the business model’s components are presented in Table 3. For
the user the service is completely free, and if he or she wants to participate in the sharing of
nominated spaces or the use of reserved areas, the use of the service is mandatory and requires a
registration from the user. If the usage is only to get transportation recommendations, see actual
and predicted occupation of different parking lots and get navigation, it is not necessary to register.
Table 3: Business Model components for user
Component
Value proposition
Element
Reasoning
Description
The service is valuable for the user because it takes him a long
time to find a parking space. He would like to know in advance if
there is a good chance of finding a parking space, or it might be
better to take an alternative transportation method. He also
wants to pre-book parking some days to make sure there is
27
Customer
relationship
Infrastructure
Financial aspects
availability. Finally, when the user has a guest (for example, a
customer), he wants to provide her with a parking space to
make her visit pleasant and help her to find him.
Value
life The interaction with the user is mainly during value
cycle
appropriation, when the user wants to find a parking space. She
interacts with the service to reserve (and possibly pay) for
parking spaces and to navigate to her destination. During value
consumption (when the car is parked) there might be an
interaction if the user wants to hire a service provider to work
on her car.
Value level
The value level is in excellence. The service provided is based on
gathering information from sensors and other users, and the
operation is almost automatic. It also allows users to hire
services for their cars. It provides a highly value-added
experience to the user.
Price level
The service is free to the users. Since the use must be
mandatory for certain users of a parking lot that is managed
with the service, it must be free for them to avoid barriers of
adoption.
Getting
in The service will get in touch with users through the real-estate
touch
manager and through signs posted on parking lots.
Relationships The relationship with users is automated, with most
transactions running over a self-service system and a customer
service center that handles specific issues.
Activities
The software needs to be developed, the customer service
center needs to handle user’s contacts and the service must run
properly and usage needs to be monitored to improve it.
Resources
Customer service, developers, service providers relationship
management
Partners
- Service Providers
- Real-estate managers
Revenue
Revenue is generated as a percentage of parking and service
transactions operated on the platform.
Costs
Salaries, indirect personnel costs, platform operation
The pricing decisions, for instance providing a free service to users, are based on the literature
review: the user is a critical stakeholder, because if users do not want to use the service it is useless
for real-estate managers and also for service providers and both double-sided markets are not
attractive. When the service is free, the user has smaller barriers to be attracted to the platform if it
provides adequate value for them. In the case of real-estate managers, the free service to users is
also attractive because they can feel confident that most users will not avoid using the service
because of bad pricing.
The pricing for real-estate managers needs to be carefully considered: if a free service is offered to
them, it will probably be easier to get new real-estate managers to use the system. This in turns
makes a more attractive marketplace for service providers, because of a bigger access to users. In
this case, though, the e-parking service management has strong incentives to push the services of
service providers to the users, and it might be perceived as annoying. Moreover, it will be critical to
28
get service providers to sell on the platform early, to validate the business model and profitability of
the platform. This might transform efforts on improving the service for real-estate managers and
users into secondary priorities, and focus efforts into getting more service providers on the platform
and might generate problems with critical mass at the beginning.
Instead, it is possible to charge the real-estate manager a monthly price, since the service is valuable
for him. It allows him to reduce efforts in providing information about parking lots and it helps to
provide a better service to his tenants. This revenue model would reduce the pressure to set-up the
second tier of the two-sided market that is related to service providers and reduce launch risks. It
allows the project to focus resources in providing the best experience to users and validate the
business model and value provided through the payment and loyalty received from real-estate
managers. In a secondary stage, the marketplace for service providers can be developed, when there
are a big number of users on the platform and thus the offer is more attractive. This can generate a
higher convenience for users and also a secondary revenue stream.
Figure 3: Summary of Business Model
The two-sided markets of the business model are summarized in Figure 3. Drivers and real-estate
managers form one two-sided market where there is an exchange of a parking right from real-estate
managers to drivers, which makes drivers to want to use the system but with no direct cost. When
there are a big number of drivers on a certain real estate, service providers want to give them
services for the car, and are willing to pay to contact those drivers.
4.2.4 STAKEHOLDER RELATIONSHIPS
Since the aim is to establish an open business model, and several stakeholders have been identified
in the above sections, it is important to define the relationship and cooperation levels that will be
generated with each of them. This is identified in Table 4.
Table 4: Relationship with stakeholders
Stakeholder
Real-estate
Manager
Type
of Reasoning
relationship
Very Strong They need to introduce changes to parking policies and promote
the use of the service. Without their commitment and support it
is not possible to implement the e-parking service as envisioned.
29
Real-estate
Investor
Very Strong
Tenants
Strong
Workers
Weak
Visitors
Very weak
Drivers unrelated Medium
to the building
Traffic Wardens
Very strong
City planners and Very strong
authorities
Service Providers
Strong
The work with real-estate investors must be one-to-one in a very
engaged consulting project, helping them to provide the
necessary data for negotiating with city authorities and
supporting them in the most efficient implementation of the
service.
The support from the tenant might not be too necessary if the
leader is the real-estate manager. In cases where a tenant might
be able to reduce rental of parking spaces thanks to the eparking service, the relationship is stronger as they will be the
entry point to the real-estate manager.
The workers need to use the e-parking service, but a strong
relationship is not needed, as the use will be mandated by the
tenant or the real-estate manager.
As with workers, there is no need to establish special
relationships with visitors. Guests will directly provide them with
necessary instructions to park.
They need to have a way to contact the service in case of
problems with the offered parking space and for general
support. The main contact is through support representatives on
different channels.
Traffic wardens are essential for making exclusive areas work
when there is no access control. The e-parking service needs to
have partners that can supply traffic warden services in every
region where it will be offered. There must be a very strong
relationship with them, including exchange of customer
information and databases of cars that can be parked on certain
areas. The relationship must also include ways to solve
controversies in fine application that do not degrade the quality
of the service.
City planners and authorities need to understand the benefit of
using the proposed service, and how it helps to fulfill their
objectives. It might be possible to implement special parking
requirements when the service is used, and this makes the
service very appealing to real-estate investors. For the city
planners, having less parking for less cars is also good as the area
becomes more pedestrian friendly.
Service providers are not essential to the service, but they might
represent an important revenue stream. They must be screened
to offer good services, and a strong relationship is needed to
allow them access to specific parking lots and provide contact
information of the drivers that require a service.
A direct relationship with real-estate managers is required for the service to work. They need to
contribute by offering access to the information needed to populate the system and they might also
need to do changes on the infrastructure. On a secondary level, the relationship with tenants should
also be strong if they have been the leader to implement the service. Their needs have to be fulfilled
and they need to receive clear reports to assess the savings that the service is providing them.
30
The service also needs to partner with traffic wardens on different areas, to offer the required
enforcement of the reserved areas of parking lots. For offering additional services, partnership with
external service providers, such as car cleaners, need also to be sought.
In the case of users, although a direct relationship with the e-parking service provider is not
required, their engagement is very important. The work with the real-estate manager and/or
tenants needs to include a communication plan to support user engagement. The complaints of
users need to be addressed fast and the service needs to be monitored, especially at the beginning,
to make sure that there are no objections that might prevent proper adoption of the service by
users. There will not be a channel that generates a strong relationship with individual users, but they
will be supported and heard by the service to make adjustments and provide an adequate
experience to them.
The relationship between real-estate investors and city planners, and the impact on the proposed
service and the business model is elaborated in the next section.
4.2.5 IMPACT OF NEW BUILDINGS AND RENOVATIONS ON THE BUSINESS MODEL
New buildings and especially renovations that change the usage type of a building (for example,
from a warehouse to an office) need to provide at least a certain number of required parking spaces
(called minimum parking requirements) or might require a negotiation with city authorities to
define, among other important matters, this number. In some cases, the minimum parking
requirements have a considerable impact on the costs of the project as underground parking might
need to be built at a cost of over $40.000 dollars per space (Willson, 2013). For renovations, it might
even not be possible to do the project altogether because there is a lack of space.
Spring Street in Los Angeles, USA is an example of this situation: it had splendid office buildings that
were left vacant in the 1960s. Before 1999, the city required two parking spaces per apartment for
residential buildings in central Los Angeles, and it was not possible to fulfill the requirement in these
historical buildings. They were vacant for five or more years already, and might have been
demolished. In 1999, the Adaptive Reuse Ordinance was adopted and it allowed the conversion of
these buildings into residential units with no new parking spaces. Developers on average provided
0.9 parking spaces on-site and 0.4 spaces off-site for each apartment. Contrary to what many people
believed, there was a market for people with less than two cars per family, or even with no cars, and
the 56 office buildings that were converted proved to be a successful project despite the lack of
parking spaces on-site. (Shoup, 2011)
Some cities have developed other alternatives to lower the minimum parking requirements. One
alternative is that real-estate developers reduce the parking demand by providing incentives, such as
transit passes, to encourage alternative modes of transport instead of cars. This allows developers to
build less parking than what is required by the minimum parking requirements and reduce project
costs. Another alternative is called “in lieu” fees, where cities give the option to developers to pay a
fee in lieu of providing the parking spaces. If building private parking spaces is more expensive than
this fee, the developer pays to the city and avoids building those spaces. The city uses the fees to
provide public parking spaces that can replace the private parking spaces that are not provided by
developers, and since the use is shared by several projects, a smaller number of total parking spaces
is required than the total amount that was not built. (Shoup, 2011)
31
The use of shared parking has several benefits, especially combined with multiple types of building
usages: fewer total spaces are required, it is possible to park once and visit several destinations and
a better urban design is achieved (Shoup, 2011).
Real-estate developers and investors might be an important foundation of the proposed business
model, because they need to meet and negotiate with cities regarding parking requirements. An eparking service allows them to share parking in a single use building, and reduce the requirements
by increasing incentives to change to alternative modes of transport instead of a car. As explained
above, providing incentives to reduce car usage for smaller parking requirements is already an
accepted practice for several cities.
The service also allows real-estate developers to provide a better value proposition when maximum
parking requirements are in place and they cannot build more parking spaces. They can explain to
prospective customers that the building is equipped with a smart parking service, and it allows to
have a more efficient use of the available parking space and to provide alternatives.
The provision of the service can directly convert in additional revenue for real-estate projects, and
provides an opportunity to add required infrastructure to the parking lot (sensors and access control
systems) to take the highest advantage of the service while the building is in progress. The service is
transferred to the real-estate manager, with a prepaid service agreement for an amount of time, and
it is a good way to show the benefits that can be achieved by using the service for reducing the
number of required parking spaces and providing a better experience for the users.
Providing the service to real-estate developers and investors is an attractive opportunity for growth
as it provides revenue in advance to the actual use of the service. This is especially important in the
beginning stages and might be a good strategy to become an established player in the market.
For new buildings and renovations, there are also opportunities to design and prepare a parking area
especially suited for the service. It can have preferred parking zones with access control and some
sensors, like occupancy and counting sensors in some areas, or even License Plate Recognition
cameras that make the service work better. All of these are much easier to integrate into a new
project that requires construction than an already existing and operating parking lot.
After the real-estate investor pays to configure and install the service, it is transferred to the realestate manager for the operation with prepaid fees for an amount of time. This prepayment reduces
uncertainty in the time that the service will be operating at a minimum, and can provide economic
feasibility for the service to provide mapping of the inside of the building and install beacons that
allow to implement advanced benefits such as indoor navigation and routing to the most convenient
parking space based on the final destination.
Focusing initially on new projects and renovations to offer the service might be a good strategy to be
established on the market, as it allows a fine tuning and personalized installation, including a
“teething” period while the building starts to operate to correct any issues. Besides, the possibility of
adding sensors and access control systems that helps to operate the service in a more efficient way
helps to showcase the benefits of the service to the maximum extent possible. After obtaining knowhow from these installations, it is possible to automate part of it and let partners handle future
project to support a faster growth.
32
4.2.6 INCENTIVES FOR PARTICIPATION
Each stakeholder has different incentives for participation. Each of them will be explored in this
section.
For real-estate managers the incentive is to improve the parking service they are providing to users
and tenants, and possibly reduce the number of complaints. They might also want to establish a
different parking policy, and need to make the change attractive to users.
Real-estate investors are interested in reducing the parking requirements of their projects, as this
reduces costs. The service might help them negotiate with city authorities to accomplish this goal.
City authorities in return are interested of increasing the density of some areas, and reduced parking
requirements are also positive for them as it generates more pedestrian-friendly areas.
For tenants, the main incentive is economic, and it is measured as the number of parking spaces
they can reduce from their rental contracts. By using a shared parking scheme, it might be possible
to reduce the monthly payment in parking by reducing the number of parking spaces, and still
provide with parking to the same number of people that they were serving before.
For users, the incentives are more complicated. In the case of a user who does not have any
designated parking space, with the application they can see the real-time and forecasted occupancy
of the parking lot and decide where is the best place to park that day or even to leave the car at
home. It might even be possible to provide an area where they can book a parking space a few days
per week, so they can have a concrete improvement of their previous situation by using the eparking service.
For users that have a designated parking space, incentives need to be set. These users have no needs
for an e-parking service. They just arrive to the parking lot and park on their designated parking
space. These users need to set their designated parking spaces as free when they are not using
them, and for these it is possible to set financial incentives (give a cash-out or prizes for the number
of days the parking lot is unused and shared) or it can be a social incentive (providing rankings of the
people that shared their parking lots more or that have more points).
Another area where user participation is needed is for informing availability of different parking lots
in a crowd-sourced scheme. The highest possible number of users, when they reach a parking lot,
should inform about the occupancy so the information can be provided to other users. An incentive
for this can be a points system. When a user shares the availability of a parking lot they can get
points, which could be used to provide financial and/or social incentives. Examples of financial
incentives might be physical products, services for the car, booking of parking spaces or cash-out. In
the case of social incentives, it might be possible to set a ranking of the users who contribute the
most, or give badges or other virtual goods that highlight the person’s positive behavior.
One way to manage the incentives is to generate a point scheme, which can be used for different
purposes inside the application. This point scheme is explained in the next sub-section.
33
4.2.7 POINT SCHEME
A point scheme can be used to manage the behavior of users. The basic assumption is that when a
user has more points, that user can get more rights in the application, and when the user performs
actions that are wanted by the service, the user can earn such points.
Points should mainly be used to book parking, an action that is free to the e-parking service and is of
great value to the user. There is a trade-off between complexity and flexibility in the use of points, so
a complete program will be presented next and a partial implementation will be proposed for the
current service, at least on the initial stages.
For the points system to work correctly, the designated parking spaces must be converted into a
designated and restricted parking area. This area should be assigned with a cost to park per day,
measured in points, and this should be the maximum amount to charge for the area. Every user that
had a designated parking space should receive the amount of points that allows her to park in the
designated parking area every day. This designated parking area shall be made bigger than the
number of parking spaces that were used as designated parking, to allow more users to park in that
area, in addition to the people that already had the right to park.
When the areas are delimited and the points have been distributed, the drivers that used to have a
designated parking space can continue to drive to the designated parking area and park in any free
space. They will automatically be booked every day to the designated parking area. There will be
free spaces always for them, as the demand for this area will be tightly controlled to avoid overbooking. Therefore, the transition to non-designated parking is made easier for these users.
For the users that did not have designated parking spaces before, a number of points will be
distributed that allows them to park in designated parking areas for a few days per months. These
users can find creative ways to make a better use of these days, for example, by sharing car rides
with other users and using the days of each one.
The system will have a dynamic pricing system that allows to use designated areas with a lower
forecasted occupancy (but that might be less convenient for the user) for a lower number of points.
In this way, the user can choose to park in the less convenient area, but be able to park more days
per month. Desired behaviors can also be rewarded with points: if a user supplies the availability of a
parking lot through the application, they get more points; if they leave the car at home on a day that
is forecasted with high occupancy (for example when it is raining) they get additional points. In this
way, the user can book parking areas for a bigger number of days, and can also contribute to the
better use of the system. An example of a user participating in dynamic pricing is shown in
Table 5.
If the user is not participating in the dynamic pricing scheme, he can access the convenient parking
lot (4 points) only 13 days (a little more than two working weeks in a month because he has 52
points). The other days he needs to find parking spaces on the public area if they are available. He
can use the service to review availability. A user that participates in the dynamic pricing system,
contributes by sharing availability information and accepts a few offers is able to have a booked
parking space every working day.
34
Table 5: Example of dynamic pricing for points
Action
Initial points for the period
Booked parking on convenient parking lot for 1 day (4 points)
Accepting an offer to park further away 1 day (2 points)
Accepting an offer to leave car at home on a rainy day
Book parking on convenient parking lot for 11 days (4 points daily)
Inform parking availability daily of 2 parking lots for 10 days (0.4
points daily each)
Accepting an offer to park further away during 2 days (2 points
daily). The offer is made because a special event is taking place and
the service detects that more parking is required for visitors.
Book parking on convenient parking lot for 3 days (4 points daily)
Car-pool one day and share parking costs (1 point each, 4 people)
Points left are available on the next month
Points
52
-4
-2
6
-44
8
Balance
52
48
46
52
8
20
-4
16
-12
-1
0
4
3
3
Some users will like to optimize the use of their points, and will want to get the dynamic offers that
allow them to park cheaper a certain day and receive additional points for their actions. But there
are some users that will find this annoying, and who do not want additional decisions on their life. It
is therefore necessary to consider the points system and dynamic offers and suggestions as an opt-in
scheme. For the users who do not want to participate, they can just use a number of bookings of
parking spaces per month on a certain area without worrying about points and special decisions.
In the case of designated parking users, it is very important to have some incentives. The current
situation is optimal from their perspective, and any changes that would make the situation worse
would need to provide benefits in other ways. For the service to work correctly, they need to set
their parking space as free when they are away. This will allow them to save some of the points that
they have assigned by month, and these points need to be useful for them. It might be possible to
develop an even more convenient parking area that is reserved mainly for visitors, but that might be
booked by employees for a high number of points. Designated parking users might be willing to
participate to earn access to these areas, or the points might be exchanged for services or cash-outs
but this latter solution will have a higher monetary cost.
Because the point scheme might be hard to explain together with other required changes when the
service is deployed, it will follow an evolution pattern to make it easier for users to understand. On
the first phase, a number of points will be distributed, certain areas will have a points cost to park
and will allow booking, and users that contribute to the availability of parking lots will earn points.
The simple scheme will operate for a few months, and when users understand how the service
works, where they can park and how they can book parking, an invitation to the dynamic pricing
system will be provided, highlighting that it might allow for users to have even more convenience on
the days they choose to arrive to the building by car. The users who opt-in will start receiving offers
35
to park further away for a cheaper price, or get additional points for leaving the car at home on a
day a high occupancy is expected (because of an event or for weather forecast of rain, for example).
This will allow users to participate in dynamic pricing, see if they like it and otherwise opt-out. If a
majority of users is participating in dynamic pricing, it will be possible to introduce initiatives to
reduce the usage of car or to optimize the use of parking spaces, further improving the contribution
of using this e-parking service.
5 TECHNOLOGIES
This section discusses the technologies that are needed to provide the e-parking service described in
the previous section. These technologies include a mobile application that is accessed by users, a
back-office system to handle data and manage the process and possibly an access control system to
restrict entrance to specific areas of the parking lot.
5.1 MOBILE APPLICATION
This subsection describes the mobile application that is accessed by users. To provide the expected
service, a mobile application with specific features needs to be implemented. The minimum features
that the mobile application needs to provide are the following:











Display parking areas, conditions and suggestions based on destination.
Occupancy status of parking areas and forecast of occupancy.
Booking parking spaces areas based on points availability or permit status.
Booking a parking space for a fee.
Booking of a parking space for a visitor.
Set a designated parking space as available for a period of time.
Automatic detection of parking action to prompt for perceived occupancy and count an
additional car parked at the area.
Automatic detection of departure to remove a car from the parking area and update the
occupancy status.
Automatic detection of a user with a designated parking lot leaving at peak times to ask for
permission to share their parking spaces.
Browse services for the car that can be hired through the application.
Give offers to the user when dynamic point scheme is in operation.
Additional features that might be useful but are not required for the correct implementation of the
service:



Suggest alternative parking areas if the main area is full, proactively before the user arrives if
the main parking area is known to be full. This might also include suggestions to use a
nearby P+R with good transit connections to the destination.
Share other parking spaces the user might have (home parking space for example) in
exchange of a payment.
Find car-pooling opportunities inside the community (advertise that you want to carpool and
you go to certain area, then other people interested can search by areas).
36

Know the indoor map of the building, and suggest parking or multi-modal trips that help to
arrive close to the final destination, and provide some indoor guidance to find the desired
destination point (an office, specific store, etc.)
5.2 BACK OFFICE
The mobile application described in the previous section requires a back office service that provides
the required information. The back office service needs to handle the following:












User authentication and rights.
Parking area location and characteristics.
Intelligent recommendation engine to provide best parking lot based on a final destination.
Indoor maps of buildings to guide the user to the final destination point.
Parking occupancy calculation and forecast. This requires fusion of multiple information
sources: For the occupancy, the data from the application (automatic and crowd sourced)
need to be considered as well as any sensors that are part of the infrastructure of the
parking lot (like car counting sensors and others). For the forecast, using additional external
information, such as traffic conditions and weather, might help to provide higher confidence
results and provide users with a better overall experience.
Parking points management.
Offer and charge for rented parking spaces.
Visitor management.
Manage availability of designated areas based on expected occupancy, bookings and user
input.
Provide information to traffic wardens with authorized cars that can park in a certain area.
Calculate and provide dynamic pricing offers for points and fees.
Track conversion of incentives campaigns, for example, if someone parks further away or
uses public transport, gets additional points.
5.3 MODELING AND ANALYSIS TOOL
To support the sales process and especially negotiations with city authorities, a modeling and
analysis tool is required. The objective of this tool is to estimate the amount of reduced parking that
can be achieved by the use of the application. It should learn from the usage that the application
sees and improve the estimates as the use of the service is increased.
The main outputs that this tool should provide are the following:
-
Number of parking spaces required (showing how many can be reduced)
Number of parking spaces that need to be in a restricted area for bookings
% of trips that have a reduced car use
Monthly cash-out program costs
For providing this output, the following parameters should be used.
-
Number of parking spaces currently available
37
-
Number of designated parking spaces
Current estimated occupancy of parking area at peak time
Number of people served by the parking area
Average percent of people travelling at a single time
Distance to closest bus stop
Cash-out amounts for employees reducing car usage
This model can be implemented with “black box” methodologies or more transparent ones. The
main benefits of a “black-box” methodology is that a more complex estimation that considers more
variations can be obtained, with the risk of getting a model that is too calibrated for the current
parking lots (over-fitting) and does not behave well in unknown conditions. Since these models do
not allow to easily seeing what parameters are affecting the most, they are a good idea when several
samples are available, but otherwise it is better to avoid them. Examples of these models are neural
networks, genetic algorithms and simulations.
This means, for the first stages of the project when only a few parking lots are using the system, it is
better to use more transparent models. They might give worse estimations but are better to
understand what parameters influence the most and how the model gives the results. A model
based on a statistical regression should give the best results once a few parking lots with data are
already available.
As a second step, with more data, it would be possible to build a simulation model that allows to
extend the statistical regression to other scenarios and from this point, when several parking lots are
available, it is possible to implement the more advanced “black box” models that require more data
to work correctly.
This tool should be implemented initially based on a calibration from the pilot case, and be improved
continuously when new sites are incorporated into the service and new observations can be made.
5.4 ACCESS CONTROL
The access control system requires a gate, a controller and an authentication and authorization
method. The selection of the gate depends on the speed and frequency required for the entrance
system, as well as the restrictions presented by the physical location of the gate. Most gates operate
with AC voltage from the grid. There are gates on the market that operate at 12 Volts DC and require
2 amperes of energy to operate (Example on Figure 4). All of them require additional cabling to
provide the energy. The proposed access control system uses an ELL-i board that receives DC energy
and data using a single Ethernet cable. This board can be housed inside the gate case. This solution
provides a lower installation cost by using a single standard Ethernet cable for the installation, and
provides the required processing and DC energy that the gate needs. Several authentication
methods can be developed to control the gate in this architecture, and they are discussed in the next
subsections.
38
Figure 4: Access barrier operating at 12 VDC (from gatedepot.com)
5.4.1 ACCESS CONTROL BASED ON ACCESS CONTROL LISTS
The access control system based on access control lists consist of a centralized location that holds
the status of each individual that is known to the system. Based on this status, the system decides
whether to open the gate and allow access. This system requires a centralized administration for the
permits, and a connection and a query to the access list every time there is an access request.
The main benefit of this technology is that there are several commercial implementations already on
the market, and it is easy to integrate non-contact cards, tickets and other means of identification.
The main drawback is that a permanent connection is necessary to authenticate the users, and a
centralized location needs to be kept highly secure and updated to store the correct access rights.
5.4.2 ACCESS CONTROL BASED ON CERTIFICATES
The access control system based on certificates allows decentralization of the authorization to enter
a parking lot. The decision to allow entrance is based on a cryptographic procedure to verify if the
individual that wants to enter holds a valid permit that is digitally signed by an authorized
distributor. The system allows having different distributors of permits that can grant specific rights
to enter, and they do not need to be maintained in a centralized location.
By using certificates, several alternatives can be implemented, such as permits that can be issued by
a third party only on a specific day (for example, for special events) by providing the third party with
signing rights only for one day. Other option is to give signing authorization with specific conditions
39
to individual tenants, who can decide directly about what person gets access to the parking lot
without involving the manager. It might be possible to have resellers as well, and in general allow
very flexible distribution schemes of parking permits, while maintaining control and integrity of the
system through the control of signatures and validity of access certificates.
Another benefit of this option is that a centralized access control list is not required, and the gate
with the processing board can decide by itself if an individual has a right to access, without
consulting a server. If for any reason the network connection or server is not working, the system
can still decide about the access rights. A connection is only required to update information
regarding the validity of signers of certificates and for logging, and not for every entry. This
synchronization can be performed whenever the connection is available, and does not transform it
into a critical part of the system.
6 DISCUSSION
This section presents a discussion of the E-Parking service presented on the previous section.
6.1 TARGET MARKETS
The service can be targeted to several types of real estates: it can be offered to residential buildings,
offices, shopping centers, conference venues, office buildings, etc.
To choose the most adequate target market, it is necessary to review the characteristics of the value
proposition to different users. Clearly, the biggest value proposition is to drivers that frequently visit
a building but do not have assigned parking. The market where this customer is represented better is
in office buildings, universities and technology campuses, and they should be the primary focus area
for the service. In this target market, there is a clear value proposition to users and real estate
managers, because the user can get a better experience to get to their everyday destination on the
best transport mode, and the real estate manager can have a better quality of service with parking
and possibly reduce costs.
In residential buildings, the possibility of sharing parking spaces is reduced, as most people return to
their homes at about the same time and usually the whole family is not travelling together, and if
they do the car is probably at home. If it is possible to share the parking area during the day with
other nearby land uses, the use of the service might be more attractive to earn revenue from the
unused parking spaces.
For hospitals, conference venues and shopping center, the shared parking functionality, except for
employees, is not very useful because most visitors are sporadic. What should be interesting for
them are the information service and parking and travel mode recommendation considering indoor
mapping, that allows users to select the best way to reach the booth, store or hospital area they are
looking for. This requires extensive mapping and intelligent algorithms and should be considered as
a secondary market after the mapping and recommendation systems have been tuned with the
primary customers.
40
6.2 SERVICE PACKAGES
There are several alternatives of possible service packages that can be implemented, and a choice
can be made if all of them are offered or only a selection. This section outlines the different
packages that can be offered, based on the proposed business model.
6.2.1 INFORMATION SERVICE
The basic service level is an information service, based on crowd-sensing, crowdsourcing and
possibly infrastructure sensors to present the occupancy status of the parking lot. This allows drivers
to select the best parking lot according to their experience and the information presented by the
service. Since there are no tangible financial outcomes for real estate managers, it might be hard to
charge them a monthly fee for the service, but the offering of services for the car (cleaning, minor
repairs) might be a reasonable revenue stream. The service knows when a car is parked and where,
and can conveniently offer services that are attractive to the user and earning a fee over them. This
service might be interesting for areas with temporary visitors such as shopping areas, hospitals as
well as office buildings.
6.2.2 INFORMATION SERVICE WITH INDOOR MAPPING
A mapping of the building can enable intelligent services such as best parking recommendation
based on occupancy and desired destination, or travel mode selections depending on the location
and occupancy, effectively fulfilling the vision of the service of make the last leg of the journey as
easy as the other parts that use existing services such as journey planners and GPS navigators. Since
there is a clear benefit for visitors to the building of obtaining recommendations and guidance to
arrive to their final destination, this service can probably be offered for a monthly fee to the realestate managers, who can offer it to his or her customers. This service is particularly well suited for
big areas with several visitors like conferences, shopping centers and hospitals.
6.2.3 INFORMATION SERVICE WITH PREFERRED AREA BOOKING
The service includes information on available parking areas, but also provides incentives for
crowdsourcing of occupancy through the point scheme explained before, and allows for booking of
preferred parking spaces. This also allows the rental of surplus space automatically to external users
and provision of special parking to guests. This service specifically includes incentives to reduce car
usage, and this in turn should reduce the amount of parking required. By lowering the amount of
parking, the real estate manager can see a tangible financial result that justifies the monthly
payment of the service: it is possible to use fewer parking spaces, or to generate more revenue by
renting some of it to external users. This service package requires the installation of access control
systems or an agreement with traffic wardens to make sure that only authorized cars will park in the
preferred areas to make it work. The main revenue stream should be a monthly charge,
complemented by fees on external parking rental and minor services for drivers.
This is the service package that is used on the current thesis as a basis to develop the service. This
decision is made because indoor mapping does not represent a change in the business model
directly, but requires additional investment in gathering information and possibly installing
infrastructure beacons to enable location-awareness indoors. Moreover, the addition of indoor
mapping is related to a technological feature but does not impact the structure of the service in any
major way.
41
In the case of the information service without preferred parking, as the participation from the users
is required to provide adequate information (unless there are enough infrastructure sensors to
replace the data from users) there are no concrete incentives that can be provided to support a
change of behavior in them. Therefore, by also considering the preferred parking, it is possible to
provide a broader solution that can also change the behavior of drivers to select alternative mobility
solutions. For this reason, the service package of the information service with preferred parking was
selected for further development in this thesis.
6.2.4 COMPLETE SERVICE
The complete service consists of the information service with indoor mapping and preferred area
bookings. This allows providing intelligent guidance to people who are unfamiliar with the buildings,
especially guests, and give them a good experience. A special parking area can be booked for them,
based on the proximity to their meeting point, and they can then be guided to the correct door and
elevator or stair that eases the arrival to the meeting point. Mapping the interior of a building
requires time, and therefore this option should be coupled with longer term agreements or special
fees to generate such mapping.
6.3 ASSESSMENT OF E-PARKING SERVICE
The assessment of business model for the e-parking service was performed through the feedback
received on a workshop with different stakeholders.
The value propositions identified where provided on a table, and several business model
combinations were presented for stakeholders to evaluate them. The results are presented on the
next table.
Empty spaces were also left available for workshop participants to be able to add value propositions
or business model components that might be necessary.
Table 6: Evaluation of Business Model
Need / Business Model
Information Service
Information
booking service
and Information, mapping
and booking service
Plan trip based on
parking availability
Find a parking space
easily
Obtain
parking
availability
through
crowdsourcing
from
drivers
Help guests arrive
more
easily
to
meetings
Provide better parking
service to tenants
Value obtained for real
estate manager
Possibility of charging a
42
price (how much?)
6.4 POSSIBLE EXPANSIONS AND IMPLICATIONS
The proposed model is focused on improving the parking experience to drivers. The vision of the
SPIRE project is to go beyond and improve the travel experience to building users. This vision means
that besides driving, other travel modes need to be considered. Public transport, bicycles and
walking are also means of transport that need to be integrated more tightly to the service to provide
a truly smart and integrated mobility service to arrive to the final destination, inside a real estate.
This requires combining several information sources. The indoor mapping of the real estate must
also be available to give navigation into the correct entrance door to the building and help the
person to reach his destination inside the building.
This vision has an impact on the business model, because it localizes it. To provide the integrated
service, the public transport schedule of a certain area needs to be loaded, and every building on the
service must be mapped to know where the parking areas are, bicycle shelters and offices. Thirdparty services (such as Nokia HERE) can be used for information on public transport schedules, but
the buildings need to be mapped manually in every area.
6.5 RECOMMENDATIONS
The business model proposed on the present works seems reasonable based on the outcomes of the
workshop. Since it is a novel service, prototyping it is recommended. Several prototypes should be
built, to test different aspects of the service. The aspects that should be tested with a prototype are
the following:







Users are willing to share their parking spaces if they have designated spaces
o One hypothesis is with and another is without incentives
Users want to share the availability of spaces in a parking area with other users
o One hypothesis is with and another is without incentives
Users want to be offered small services for their cars (cleaning, etc)
Real-estate managers are willing to modify their parking areas to enable the use of the
service
Users want to get points to park in preferential and pre-booked areas by engaging in
activities that contribute to the more efficient use of the parking lot, such as leaving the car
home on a certain day or contributing the occupancy information of parking lots they see.
The service reduces the number of needed parking spaces to allow the same number of
people to park compared to the situation without service.
Real-estate managers are willing to pay for the service.
To test these hypotheses, it is recommended to first prototype a service to share parking spaces, and
understand what kind of incentives the user need to be willing to share. The second aspect that
should be prototyped is the willingness of users to share availability information for parking lots.
The prototype should be a service where users can indicate that a certain parking lot is full, and
other users can see this information
43
The next stage is to make a more holistic prototype, where it is possible to evaluate how the
behavior of users changes when incentives and a preferred parking area that can be booked with the
point scheme presented in this work is used. This prototype should be a service that allows sharing
the occupancy of a parking lot, receive points for sharing the occupancy and exchange those points
to book parking in a preferential area. All the prototypes should be associated with data collection
tools and co-creation workshops to extract insights and ideas from users.
After the foundational hypotheses have been tested with the previous prototypes and any changes
have been performed, it is recommended to run a pilot closed alpha test of the system. This means
that the system will have all the required functionality, but with a reduced number of users to be
able to follow them closely and understand any issues they might be having.
To implement this alpha test, the following actions will need to be performed:









Selection of the alpha test parking site and users
Mapping of the parking area
Definition of preferred parking zones where parking can only be with pre-booking
Installation of signs to indicate the preferred parking area
Access control system or agreement with traffic wardens to enforce usage of the preferred
parking area only by authorized drivers.
Distribute initial points for booking preferred parking, depending on the current parking
policies of the real-estate (if someone has already nominated parking, automatically book a
preferred parking area everyday)
Information sessions with building users to explain new parking policies
Information sessions with alpha users to explain how the system works and get them
started
Continuous monitoring and gathering feedback from alpha users and real-estate manager
on how is the experience.
Only at this point, and after a successful alpha test and the real estate manager of the test building
willing to pay for the service because he sees value, it is possible to say that the service and business
model have been validated.
The best case would be to implement a full scale service in the same building where the alpha test
was performed, and from the results of this building be able to secure additional installations. After
the service is working well and the company understands what is required to implement it, it is
possible to recruit partners to perform the rollout of additional sites and scale the service to
different countries to grow.
7 CONCLUSIONS
This section concludes the thesis, and presents a summary of the findings and proposals, together
with limitations of the study and further developments needed to further validate the business
model.
7.1 SUMMARY
44
The purpose of this study was to develop an e-parking service for real-estate and describe the
supporting technologies required for the service. The work was based on research questions derived
from a research problem, and they are addressed next.
The first research question was “What are the components of a feasible business models for an eparking service?” The business model was decomposed in several components. The most important
component was the value proposition, and it varied for different stakeholders. The value
propositions for each of the direct stakeholder that are benefited by the service are summarized in
the next table.
Table 7: Value propositions for Stakeholders
Stakeholder
Real-estate Manager
Real-estate Investor
Tenants
Workers
Visitors
Value Proposition
They have a parking situation that they want to
improve: They might have too many designated
parking spots, this makes the parking lot look like
space is available, but no one can park there.
They might also have problems guiding visitors
to their destination office and providing parking
for them. Another problem might be the
opposite: They have too much parking available,
and they want to profit from it by renting some
spaces to outsiders.
They want to reduce the project cost. One
option is to reduce the number of parking
spaces, but most cities mandate a minimum
amount of parking spaces per area of building.
With the e-parking service, it is possible to show
the city that a smaller amount of parking spaces
are required because they are used more
efficiently.
For tenants that rent a specific amount of
parking spaces for workers and visitors, it is
possible to reduce the required number of
parking spaces by using the service. This allows
tenants to reduce their rental costs for parking
by reducing the number of parking spaces used.
The service is valuable for the user because it
takes him a long time to find a parking space. He
would like to know in advance if there is a good
chance of finding a parking space, or it might be
better to take an alternative transportation
method. He also wants to pre-book parking
some days to make sure there is availability.
Finally, when the user has a guest (for example,
a customer), he wants to provide her with a
parking space to make her visit pleasant and help
her to find it.
When they want to visit a place, they want to be
able to arrive to it easily. If the visitor is driving,
this includes finding a parking space that is near
45
Drivers unrelated to the building
Service Providers
their destination. It also includes guidance to
reach the destination and have a way to request
help if they get lost.
When drivers need to reach a destination, they
would like to have several options to park. The
service can provide offers for parking in different
buildings.
They want to find new customers, and the
service helps them find the customers they
want. Since the service knows who has a car
parked on a certain parking lot, and has a way to
contact the driver, it can be used to offer
services like car cleaning and minor repairs.
The second research question was “How are parking areas managed and what information do they
provide?” The main results obtained from answering this question is that larger parking areas are
usually managed by professional parking operators, either on a subcontracted basis or as owner of
the parking area. Smaller parking areas are usually managed by the same person as the real estate
that it belongs to and these management activities are usually minimal, corresponding to
maintenance and defining initial parking policies but without active involvement and introducing
dynamic incentives.
The third research question was “What are the expectations of real-estate managers in regards of
the parking services provided to tenants and what limitations and challenges they currently face?”
The answer to this question is that real-estate managers are mostly interested on providing a good
environment and experience to tenants and building users. They are not so interested in maximizing
all possible profits from the building, but their interest is on keeping good relationships and making
the tenant comfortable. This can be understood from the perspective that the main income comes
from rental agreements, and if the tenant leaves because of a bad experience, there are high
amounts of money lost, that probably minimize any additional earning that can be made by profiting
from other areas that can probe contrary to the good experience of the tenant.
The fourth research question was “What technologies are required for the envisioned service to be
delivered?” and the answer is that it depends. Different service packages were defined, and each of
them requires a separate amount of technologies. The technology can be separated in two different
areas. One is access control, and it is required if the use of traffic wardens wants to be avoided.
There needs to be a way to encourage people to follow the rules of the parking lot, and it can either
be with physical barriers that need technology to operate, or traffic wardens that provide
enforcement with regular patrolling and ticketing. The second aspect of technology usage is
environmental sensors, and their use is based on a continuum scale. On one end, it is possible to
avoid it at all, but the information obtained from the service will depend on the willingness of the
drivers to participate, and this can be risky. On the other end, if sensors are deployed on every
parking space and cameras to recognize license plates are available in the whole parking lot, the
service can operate automatically and do not even require traffic wardens or contribution from
users. A basic amount of sensors is recommended to be able to complement the information from
users, meaning at least a system to count the number of cars that enter and exit a parking lot.
46
Finally, to answer the research problem, the answer of all the previous research questions is needed.
The research problem was “What is the structure of a business model for a service that makes
feasible for real-estate managers to provide parking information and services to tenants efficiently?”
The business model should be provided as a software-as-a-service model, because there is no
physical management of the parking lot, and therefore an outsourcing contract is not adequate for
this. The paying party cannot be the drivers, because this lowers incentives for them to participate,
and their presence is crucial for the proposed two-sided business model. The first candidate to pay
for the service is the real estate manager or a real estate investor that hires the service to reduce
parking requirements on a building. Alternatively (or as a supplement) the service can also be
financed through the commissions earned from renting parking spots by the hour to external drivers
and from services (such as cleaning) offered to people who parked their cars on a participating
parking lot. The use of a restricted parking area where people can access by “paying” it with points
provides the incentives for drivers to participate, change behaviors and contribute data to the
application, and highlight additional benefits compared to the situation without the use of the
service.
7.2 LIMITATIONS
The business model presented on this thesis has limitations. It is based on discussions with realestate managers, researchers and other stakeholders, as well as a literature review and market
analysis and trends in parking. The present business model can be taken as a good starting point, but
the real validation must be performed with the prototypes and pilot project that needs to get to
market. During this phase, the different components of the business model need to be tested
through experiments as mentioned in the recommendations section, and in case of failure, they
must be transformed and a new experiment needs to be designed.
As shown in the literature review, business model development is a highly iterative process, and
requires several experiments to find the correct business model. When a business model that passes
the experiments is found, the commercialization phase can start by organizing sales and designing
the processes to be scalable. Only in this phase, a robust business model is present and the company
can start executing it.
7.3 FURTHER DEVELOPMENTS
Further developments include the execution of experiments to validate the assumptions of the
business models presented in this thesis through the prototypes found on the recommendations
section. This will allow the business to start with a robust business concept that can scale fast.
Technology to support the business model needs to be developed and improved. The mobile
application and backend services need to support the value propositions presented in the business
model and the described service. The current state of the developed technology allows
implementing some of the prototypes to validate the foundational hypotheses.
A prototype of the access technology should also be built to validate the feasibility of providing the
type of access control system suggested, and develop the require technologies that will take it to the
market.
47
8 BIBLIOGRAPHY
Amit, R. & Zott, C., 2001. Value Creation in E-Business. Strategic Management Journal, Jun/Jul,
22(6/7), pp. 493-520.
Amit, R. & Zott, C., 2012. Creating Value Through Business Model Innovation. MIT Sloan
Management Review, 53(3), pp. 41-49.
Armstrong, M., 2006. Competition in Two-Sided Markets. The RAND Journal of Economics, Autumn,
37(3), pp. 668-691.
Baden-Fuller, C. & Haefliger, S., 2013. Business Models and Technological Innovation. Long Range
Planning, December, 46(6), pp. 419-426.
Beaudouin-Lafon, M. & Mackay, W. E., 2007. Prototyping tools and techniques. In: A. Sears & J. A.
Jacko, eds. Human-Computer Interaction Handbook: Fundamentals, evolving technologies, and
emerging applications. Boca Raton, FL, USA: CRC Press, pp. 1017-1039.
Blomkvist, J. & Holmlid, S., 2010. Service prototyping according to service design practitioners.
ServDes.
Blomkvist, J. & Holmlid, S., 2011. Existing Prototyping perspectives: Considerations for Service Design.
Helsinki, Nordic Design Research Conference.
Bolt, W. & Tieman, A. F., 2008. Heavily skewed pricing in two-sided markets. International Journal of
Industrial Organization, September, 26(5), pp. 1250-1255.
Chesbrough, H., 2007. Business model innovation: it's not just about technology anymore. Strategy
& Leadership, 35(6), pp. 12-17.
Chesbrough, H. & Rosenbloom, R. S., 2002. The role of the business model in capturing value from
innovation: evidence from Xerox Corporation's technology spin-off companies. Industrial and
corporate change, 11(3), p. 529.
Dubosson-Torbay, M., Osterwalder, A. & Pigneur, Y., 2002. E-business model design, classification,
and measurements. Thunderbird International Business Review, 44(1), pp. 5-23.
Evenepoel, S. et al., 2014. On-street smart parking networks at a fraction of their cost: performance
analysis of a sampling approach. Transactions on Emerging Telecommunications Technologies,
January 2014, 25(1), pp. 136-149.
Handwerk,
B.,
Available
at:
[Accessed 03 02 2014].
2008.
National
Geographic
News.
[Online]
http://news.nationalgeographic.com/news/2008/03/080313-cities.html
IBM,
2011.
IBM
Global
Parking
Survey
2011.
[Online]
Available
at:
http://www-03.ibm.com/press/us/en/pressrelease/35515.wss#resource
[Accessed 14 February 2014].
48
Idris, M. Y. I. et al., 2009. Car Park System: A Review of Smart Parking System and its Technology.
Information Technology Journal, 8(2), pp. 101-113.
International Parking Institute, 2013. Emerging Trends Survey 2013.
[Online]
Available
at:
http://www.parking.org/media/245544/2013_emerging%20trends_web.pdf
[Accessed 19 02 2013].
Litman, T., 2006. Parking Management Best Practices. Chicago, Washington D.C.: American Planning
Association.
Liu, J. et al., 2012. iParking: An Intelligent Indoor Location-Based Smartphone Parking Service.
Sensors (Basel, Switzerland), 12(11), pp. 14612-14629.
Martens, J. & Francis, B., 2008. A Guide to Managing Your Parking Facility. [Online]
Available at: http://www.buildings.com/article-details/articleid/6096/title/a-guide-to-managingyour-parking-facility.aspx
[Accessed 17 02 2014].
Morris, M., Schindehutte, M. & Allen, J., 2005. The entrepreneur’s business model: toward a unified
perspective. Journal of Business Research, 58(6), pp. 726-735.
Osterwalder, A. & Pigneur, Y., 2003. Modeling value propositions in e-Business. ICEC '03 Proceedings
of the 5th international conference on Electronic commerce, pp. 429-436.
Osterwalder, A. & Pigneur, Y., 2010. Business Model Generation. Hoboken, NJ: John Wiley & Sons.
Parking
Today,
2004.
Available
at:
[Accessed 17 02 2014].
Commercial
Parking
Operators
Speak
Out.
[Online]
http://www.parkingtoday.com/articledetails.php?id=75
Prahalad, C. K. & Bettis, R. A., 1986. The Dominant Logic: A New Linkage Between Diversity and
Performance. Strategic Management Journal, 7(6), pp. 485-501.
Prahalad, C. & Ramaswamy, V., 2004. Co-creation experiences: The next practice in value creation.
Journal of Interactive Marketing, 18(3), pp. 5-14.
Q-Park,
2012.
Available
at:
[Accessed 19 02 2014].
Annual
Report
2012.
[Online]
http://www.q-park.com/en/company-profile/annual-report-2012
Rae,
J.,
2007.
Bloomberg
Businessweek.
[Online]
Available
at:
http://www.businessweek.com/stories/2007-09-12/seek-the-magic-with-serviceprototypesbusinessweek-business-news-stock-market-and-financial-advice
[Accessed 22 04 2014].
Rajabioun, T., Foster, B. & Ioannou, P., 2013. Intelligent parking assist. 2013 21st Mediterranean
Conference on Control & Automation (MED), 25-28 June 2013.pp. 1156-1161.
Rinne, M., Törmä, S. & Kratinov, D., 2014. Mobile crowdsensing of parking space using geofencing
and activity recognition. 10th ITS European Congress, Helsinki, Finland, 16-19 June 2014.
49
Rysman, M., 2009. The Economics of Two-Sided Markets. The Journal of Economic Perspectives,
23(3), pp. 125-143.
Shoup, D., 2011. The high cost of Free Parking. Paperback ed. Chicago, Washington D.C.: American
Planning Association.
Sjödin, C. & Kristensson, P., 2012. Customers' experiences of co-creation during service innovation.
International Journal of Quality and Service Sciences, 4(2), pp. 189-204.
Teece, D. J., 2010. Business Models, Business Strategy and Innovation. Long Range Planning, AprilJune, 43(2-3), pp. 172-194.
Trimi, S. & Berbegal-Mirabent, J., 2012. Business model innovation in entrepreneurship.
International Entrepreneurship and Management Journal, December, 8(4), pp. 449-465.
Willson, R. W., 2013. Parking Reform Made Easy. Washington D.C.: Island Press.
9 APPENDICES
9.1 APPENDIX A
50