How Kereta Api Indonesia (KAI) Moves through a Digital Transformation

A piping hot tea being discussed amongst researchers is digital transformation. One company seems to stand out in the Indonesian context of digital transformation: PT Kereta Api Indonesia (KAI).

KAI was a traditional railway service, serving the nation’s transportation needs. Before the digital transformation, KAI’s value was solely on giving affordable, traffic free transportation service via railway. The revenue stream was limited: tickets were only sold at the station, advertising space was limited in train and station, renting out stalls in stations, and selling meals in train. The customer segmentation were travelers and merchants, however the business was not consumer oriented. Therefore, they did not know how to leverage the customer segmentation. The customer experience was limited to the journey itself and the only customer relations between them are the KA Magazine and KA Call Center.

However, based on KAI’s statement in 2022, their company was facing the challenges of globalization, thus started KAI’s journey of digital transformation. This transformation has not only built a new business model but has also expanded its scope of operations. The adoption of advanced technologies and digital platforms lead to the more efficient and customer-centric railway network that they have never imagined before.

A Shift in KAI’s Value

With the help of digital technology, KAI transitioned into a consumer centric company. First, they utilize advanced analytics and machine learning algorithms to optimize routes, predict demand patterns, and enhance operational efficiency through their platforms (will be discussed more specifically below). This data-driven approach enabled KAI to offer dynamic pricing, personalized services, and predictive maintenance, thereby significantly enhancing the overall customer experience. They created a new value: a one stop affordable solution for traveling. It includes not only the train services, but also the hotel accommodation, entertainment, internet package, electrical bill, and pre-order food services. This created a new market segmentation outside the travelers and merchants, thus expanding their business scope.

KAI also stores data in data centers and cloud computing, provides connectivity between KAI systems and external companies to improve services such as the PeduliLindungi application (back during COVID-19 pandemic) and Disdukcapil Kemendagri. Digitalization is also carried out in supply chain management, logistics, train operations, as well as maintenance of train facilities and infrastructure so that work becomes more effective and efficient.

Consumer-centric Platforms

Central to KAI’s digital transformation was the strategic use of digital platforms. KAI developed user-friendly mobile applications (Access KAI) and website (kai.id) that empowered customers to book tickets, plan journeys, and access real-time information effortlessly. They could check train position, train route, train fare, etc. Furthermore, KAI utilized big data analytics and IoT (Internet of Things) devices to gather valuable insights into passenger behavior and preferences. They even launched a new feature called “Trip Planner” that makes the best travel planning for their customers. This data-driven approach enabled KAI to enhance customer satisfaction and loyalty. The revenue stream also increased because Access KAI has a consumer loyalty program with basic and premium plans. The application even won Youth Choice Award (YCA) 2022 as the best BUMN application (kai.id, 2022).

Beside mobile applications, social media platforms were harnessed for marketing campaigns, customer feedback, and real-time communication, fostering a sense of community among passengers. Not only utilizing digital platforms for consumers, they also developed a staffing application called “Raileo” to make it easier for employees to carry out their duties while working from home and improve work discipline.

The Impact

According to KAI VP Public Relations, Joni Martinus, digital transformation at KAI has a big influence on the sustainability of the company’s business activities (Republika Media, 2022). Public policy observer, Agus Pambagio, said that the transformation of PT Kereta Api Indonesia (Persero) or KAI in the digital era was a very monumental stage. In fact, it could be said that KAI’s digital transformation is one of the most successful compared to other BUMNs (Liputan6, 2021). By reimagining its business model, expanding its scope of services, and leveraging digital platforms, KAI has not only modernized its operations but has also become a vital catalyst for Indonesia’s overall socio-economic development.

They Still Have More to Come

For the future of KAI digital transformation, they need to continue researching regarding the consumers’ needs. For example, there has been an ongoing major complaint of the dangerous rush hour in KAI commuter rail. This can be managed by using prediction technology to alert consumers. This has been applied by Google Maps that offers information when your train will be busy or quiet. Furthermore, KAI could provide a sensor that detects the fullness of train wagons. Therefore, when a passenger wants to board a train they could easily know which wagon that they could board on, avoiding any further fatal accidents. The safety of the passenger should be a priority and could be managed by the digital transformation.

References

Gupta, Sunil. 2018. Driving Digital Strategy : A Guide To Remagining Your Business.

kai.id. 2022 Lakukan Transformasi Segala Sisi, Kai Raih penghargaan pada youth. https://www.kai.id/information/full_news/5275-lakukan-transformasi-segala-sisi-kai-raih-penghargaan-pada-youth-choice-award-2022 accessed on 25th October, 2023.

Kraus, S., Jones, P., Kailer, N., Weinmann, A., Chaparro-Banegas, N., & Roig-Tierno, N. 2021. Digital Transformation: An Overview of the Current State of the Art of Research. SAGE Open, 11(3). https://doi.org/10.1177/21582440211047576

Subekti. KAI Siapkan Transformasi Menuju Industri 4.0. Republika.co.id. https://ekonomi.republika.co.id/berita/r87uul423/kai-siapkan-transformasi-menuju-industri-40 accessed on 25th October, 2023.

Libriarty. 2020. Digitalisasi Layanan KAI Disebut Jadi yang Tersukses di BUMN https://www.liputan6.com/bisnis/read/4496218/digitalisasi-layanan-kai-disebut-jadi-yang-tersukses-di-bumn?page=2 accessed on 25th October, 2023.