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Findings of Institutional Requirements for Interoperable Smartcard Fare Payment Systems 17 (including those in New York; Washington, DC; Atlanta; and Los Angeles) start with a lead agency implementing a new AFC system to meet their immediate needs and then expand the use of the new AFC technology to other agencies in the region. 2.1.2 Identifying and Mitigating Operational Differences Another challenge agencies face during the implementation of an interoperable fare pay- ment system is the differences in the way the participating agencies conduct business. For example, many of the largest agencies have extensive internal capabilities, including technical and operational resources to support most, if not all of their design, operational, and mainte- nance needs. The trend to consider outsourcing to fulfill these same needs is increasing. Agen- cies that have extensive in-house resources tend to prioritize more control over their operations; thus, those agencies tend to avoid outsourcing. The different organizational oper- ations philosophies of the agencies must be examined, and compromises must be considered to achieve interoperability. There are two primary dimensions for implementing the system-related service functions of an interoperable system: Centralized--One entity performs all the functions. Decentralized--Each participating entity is responsible for performing its own functions according to established business rules. The project sponsor must decide between a centralized or decentralized approach and must also decide whether the services are delivered using in-house or outsourced resources. The oper- ational philosophies of the participating agencies will determine the approach used for per- forming card-system-related functions. Table 5 summarizes the key characteristics of the centralized and decentralized approach. When choosing the delivery and service approaches, the following factors must be considered: A function should be centralized when it is more relevant for the patron to experience a con- sistent level of service across all participating agencies. Centralization of functions creates increased efficiencies. A function should be decentralized when it is more relevant to an individual agency's operations. A function is a candidate for outsourcing when The function performance levels are easily quantifiable and measurable. The function requires particular technical or skill-based expertise not available within an agency. Table 5. System service approach. Delivery Approach In-House Outsourced Hybrid One agency A selected N/A performs the third party Centralized services for all performs the other agencies functions for all agencies Service Systems Each agency Each agency Some agencies Approach performs the selects a third select a third functions for party to party while Decentralized itself perform its some agencies functions perform the functions themselves