This article was first published by the International Parking & Mobility Institute in the December 2024 edition of Parking & Mobility magazine. To read the original article, click here.
Introduction: The Pace of Innovation
In parking, technological innovation has become synonymous with progress.
However, there is a big obstacle that the industry is facing: misalignment in expectations around what makes a successful technology “pilot”.
As is the case in many other industries, technological innovation in parking is exponentially increasing at a faster rate than change management can.
This results in a scenario where innovation outpaces the human capacity to sustain that innovation.
We’ve already experienced the immense fragmentation that has resulted from the flood of technologies that have hit the market in recent years, but there are other obvious systemic problems, too.
There is, quite frankly, a broken supply chain for technology adaptation starting from the buying process and flowing all the way through client success.
We’ll investigate this broken supply chain from the perspective of asset owners, operators, and vendors.
In so doing, we will touch upon a sequence of three things:
- Identifying and communicating a “problem” or “opportunity”
- Defining what a technology “pilot” actually is
- Aligning the interests of all parties to create a win-win-win scenario
Part One: Articulating the Problem That Needs Solving
First and foremost, not all technological innovations need to be “pain pills”.
They can certainly be “vitamins”, meaning that they enhance a process or add other types of value without necessarily solving a protruding problem.
For the sake of brevity, though, let’s focus on a technological innovation that is a pain pill – one that’s addressing a discrete problem.
The example that follows is fully hypothetical and contains fictionalized company names.
There is a parking garage called “C-Garage” that is owned by Inert Owner [Owner] and operated by Operator Adequate [Operator A].
C-Garage has been generating solid cash flow (a tremendous benefit that our industry offers asset owners) but the cost of labor has increased for Operator A.
Minimum wage has increased 50% over time and C-Garage is fully staffed 24/7.
C-Garage was predominately used to park office-dwelling customers for years, but those businesses are working indefinitely on hybrid return-to-work schedules.
As a result, Owner has asked Operator A to start parking transient consumers to make up for the lost income.
Whereas Operator A used to yield 20% margins, they now are scraping for 12% margins and are understandably concerned that their operation could become unprofitable if a few other factors come into play that impact customer volume or labor.
Naturally, Operator A starts looking into adding technology that will enable them to scale down their staffing while tapping into a new, different customer segment: transient parkers.
The next move that Operator A makes is crucial.
They must narrow down and clearly articulate their problem statement before progressing with evaluating technologies and kicking off conversations with solution providers.
If they don’t, they risk going down numerous rabbit holes that won’t necessarily solve their core problem.
Let’s define a “problem statement”: It’s a concise description of a problem or challenge that needs to be addressed.
In this scenario, an unsuccessful problem statement might be:
We aren’t making enough money at C-Garage.
A successful problem statement here might be:
Due to a lower amount of office parkers, we need to monetize the unutilized spaces while also decreasing labor costs.
The first problem statement is unsuccessful because it only accounts for one part of the problem.
One could respond to that statement by suggesting to Operator A that they add third-party online reservation channels to drive more customer demand to C-Garage.
Whereas adding those channels will likely help increase revenue, other issues will arise:
- Who at Operator A will revenue manage those channels?
- What other technology will Operator A need to add to enable these channels?
In short, this proposed solution will not address the staffing problem at C-Garage for Operator A, as it is unlikely that the on-site staff will be able to take on another full-time responsibility of managing these third-party reservation channels.
The second problem statement is successful because it hones in on where the problem originates and highlights that the chosen solution should ideally decrease labor, too.
Part Two: Defining The Pilot
Continuing from that example, we’ll remain vendor-neutral and not indicate whether the solution should include gated or gateless technology.
Either way, there will be a cost associated. Inevitably, the owner or operator will ask “who pays for this?”.
In parking operations, there are many different deal structures that could exist between an owner and operator to help answer this question.
But regardless of who shoulders the burden of cost, there will most likely be a question as to how they can decrease risk during implementation.
One extremely common de-risking measure is to do a “pilot”.
Pilots come in a variety of shapes and sizes, but they are essentially shorthand for “try it before you buy it”.
Now… that doesn’t mean that pilots should be free.
The most successful pilots that we’ve seen consist of shared risk and responsibility from all parties involved. Everyone has skin in the game, so everyone stands to win.
If the owner and operator expect the technology solution provider to wave a wand and solve their problem for free without receiving something in return, then the pilot is doomed to fail.
Conversely, if the solution provider expects the owner and operator to pay full freight upfront for the technology, then they will likely lose the deal.
It is critical for the owner, the operator, and the solution provider to have an early, upfront conversation that transparently outlines risk and reward.
If the owner and operator are not yet ready to buy the solution, they should set clear expectations with the solution provider on “what success looks like” on their end with a timetable in place to measure that success.
And especially in situations where the solution provider is offering a free or heavily discounted pilot, they need to have a target date in mind of when they’ll get paid.
Naysayers will argue that the solution provider should be confident enough in their offering to take on the risk, but people with this perspective likely aren’t seeing the full picture.
Consider this example: the solution is deployed from the top-down, but the actual user on the line level doesn’t utilize it.
Is it the solution provider’s responsibility to invest more in an uncontrollable scenario for them?
Does the solution provider then over-customize their solution and end up upside down on their own business model?
It certainly won’t be good for any party involved if the solution provider goes out of business because they overspent.
Before a pilot kicks off, all parties should define it and do their best to set up the deal for all-around success.
Part Three: Aligning Interests for a Win-Win-Win Scenario
Pilots aren’t just about protecting the downside.
Inherently, the owner, the operator and the solution provider will look out for their own best interests. However, the best partnerships are win-win-wins.
It is reasonable that one should expect something to go wrong during the pilot and account for how that will be dealt with.
On top of that, the terms should be spelled out so that if/when the pilot is successful, all parties come out on top.
Unfortunately, there is a common scenario that can be damaging to all: when expectations are laid out properly and agreed upon, but then one party tries to renegotiate after the pilot.
If the solution provider sees that they have achieved their goals and now have leverage, they might try to take advantage of the owner or operator.
Or, alternatively, after seeing the solution provider invest heavily in deployment, the owner or operator might threaten to cancel, understanding that the sunk cost fallacy may force the solution provider to acquiesce and take a worse deal to try to recoup some of what they spent.
The parking industry is a small industry that is driven by relationships. These relationships are strongest when interests are aligned.
Perhaps upon seeing the pilot’s success…
Operator A knows that the solution provider won’t make their optimal margin on this deal with C-Garage, but they have two other garages with a similar problem and commit to the solution provider that they will expand to more locations.
Or the Owner might also own multiple garages that aren’t all operated by Operator A and commit to expand to their other assets.
These arrangements would enable the solution provider to greatly decrease risk for Owner and Operator A, as they know the pilot could turn into a very profitable deal for them.
1+1=3 scenarios abound and good partners create these together.
Conclusion
Our hope for this article is that whether you are an owner, an operator, or a solution provider, you take away some insights on how to create a successful pilot that decreases risk and tees up optimal outcomes for all involved.
There are many others in the technology supply chain, too – such as parking consultants and advisors – but these points apply nonetheless.
To summarize, misalignment in the pilot stage can result in many cascading problems, such as:
- Solution providers over-promising and under-delivering
- Deal price disparity
- Stagnancy in innovation
- Wasted time and resources
Parties can achieve alignment by:
- Operators clearly defining their problem statement to avoid going down rabbit holes during the process of evaluating solutions providers
- Sharing risk and responsibility so everyone has skin in the game
- Properly laying out and agreeing upon expectations without one party trying to renegotiate after the pilot concludes
- Operators setting clear expectations with the solution provider on “what success looks like” and putting a timetable in place so that the solution provider can reasonably expect when they will get paid
- Aligning interests and working together towards 1+1=outcomes
At this exciting time, innovation through technology can truly be the rising tide that lifts all ships in our industry and enables us to add immense value to adjacent ones.
Parking sits at the intersection of some of the top GDP-producing industries in the United States, such as transportation, mobility, and hospitality.
There is more margin to grab for all parties, whether the solution solves a pressing problem (pain pill) or adds incremental value (vitamin).
By creating and adhering to terms and systems for technology pilots, all of us stand to win big as innovations continue to proliferate.
Ethan Glass is the CEO & Co-Founder of Ocra. He was named to Forbes 30 Under 30 2025 in Transportation & Mobility 2025 and National Parking Association’s 40 Under 40 Class of 2020. To connect, add him on LinkedIn or send him an email at ethan@getocra.com.
