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June 2013



Union Pacific Railroad Article
How information technology helps connect the strategic dots at Union Pacific Railroad



Union Pacific Railroad

By Pat Foran, Editor

The information technology aim at Union Pacific Railroad is to be leading edge, not bleeding edge, as Senior Vice President and Chief Information Officer Lynden Tennison often says. Accordingly, there's "technology in every corner, every curve" of North America's largest freight railroad, another phrase that's part of the information technology (IT) vernacular at UP. But it's what Tennison and his team are trying to do with that technology — and how other railroad departments and customers ultimately use and benefit from it — that makes IT the driver of "next" at UP.

In late April, I visited with Tennison and several members of his growing IT team at UP headquarters in Omaha, Neb., to discuss current initiatives and challenges. Key projects include implementing a new transportation management system, pushing the detection and derailment prevention envelopes, and employing video-game simulation technology to train and retain today's workers — and possibly pique the interest of tomorrow's.

In interviews and PowerPoint presentations, IT teamers traced the evolutionary path they're mapping. They also demonstrated what they believe it takes to straddle that leading edge. They know they have a role to play in helping to connect the strategic dots, and improve the bottom line, at UP.

"A lot of what we're working on is related to operational improvement, safety and asset efficiency," Tennison says. "From the top of the Union Pacific organization on down, we have a consistent view of what it means to drive increasingly better and better performance."

It's a view Tennison has championed since he came to UP in 1992 from American Airlines Inc., where he'd been responsible for the Knowledge Systems organization.

By 1998, Tennison had risen to the position of president/CEO of Nexterna, a UP technology subsidiary that develops applications and hardware solutions for the mobile asset marketplace. In 2001, he was named UP's VP of IT and chief technology officer. He was named senior VP and CIO in 2005.

"When I came onboard, I observed that UP was a market leader in many ways, and had been a technology leader, but that had sort of stagnated," Tennison says. "We weren't aggressively pursuing the edge any longer. We've changed that."

As SVP/CIO, Tennison is responsible for organizing and managing the development, implementation and operation of the Class I's information and telecommunications technology.

"Our entire spend for IT is roughly $300 million a year, plus or minus 10 percent," he says.

The information technology department at a glance

UP's IT department comprises about 2,000 people, including more than 1,300 employees and more than 600 contractors.

About 400 work in the telecommunications unit, which is responsible for maintenance and support of towers, radio repair, the private branch exchange system, all local area and wide area networks, and PC configuration and installations. About 200 employees serve in the UP data center, in positions ranging from computer console operators to "help desk" staffers. The systems engineering unit — "We call them the 'plumbing' group; they keep all the 'plumbing' wired up," Tennison says — comprises between 150 and 200. A research and development unit includes 55 electrical, mechanical and computer science engineers. A dozen employees handle administrative functions and project management.

Meanwhile, an applications development team of about 1,000 is responsible for all of UP's software systems, from writing code to fixing bugs to managing an SAP system.

"About half of them are doing design and development," Tennison says.

Not that the IT group doesn't purchase off-the-shelf software and other technology; it does. But at UP, the in-house engineering group also "builds stuff from the ground up," Tennison says. One reason: the rail industry's relatively small number of big players.

"There are only maybe 35 to 40 railroads in the world that are in the space we're in, and not a lot of venture money is going to be directed toward it," he says. "It just makes sense for us to do some of it ourselves."

The advantages to designing, developing and engineering hardware and software in-house? It can reduce IT unit costs. If what's developed turns out to be a technology UP can market, there's potential for royalty income. It also can help differentiate UP's IT unit in the talent recruitment arena.

"I think it will be our biggest emerging lever point," Tennison says. "And the first project to drill into this applied technology space is NetControl."

NetControl is UP's multi-year project to replace TCS, a 40-year-old IBM mainframe-based transportation system.

"It's a huge deal for us," Tennison says. "NetControl is the family jewels."

Net gains with NetControl

TCS was designed during the manifest train era, but the rail world has changed — from the development of unit trains to distribution and transload centers to containerization. Meanwhile, customers want more information and more supply chain visibility — and, ultimately, better service. So, too, do the IT department's internal customers.

"There really hadn't been a lot of investment in enterprise resource planning for freight rail in a long, long time, so we began looking at it in the early 2000s," Tennison says.

The IT team began peeling back TCS' layers, scouting the lay of the technology land to develop a transportation system to meet UP's (and UP's customers') evolving needs.

In 2006, the decision was made: UP would replace TCS with NetControl, a computer system that would connect mainframe transportation control systems with one another, and a project that'd take about 10 years and $200 million to complete. Based on a service-oriented architecture platform, NetControl supports five major functions: resource, equipment, shipment, terminal and train management.

For the IT team, the goal was to build a system that will drive improved asset utilization, offer core data support to enable global shipment logistics management and provide automated data collection.

"We designed it to be a 'zero outage' environment," Tennison says. "This is like a shop floor central system. It needs to run 24/7/365."

Another goal was to design NetControl "generically," as General Director IT/NetControl Darrell Hasty puts it.

"Imagine it's a set of building blocks and a large number of them are open source," adds AVP-Information Systems, Information Technologies Mark Foster. "With the way we have coupled them together, we can remove a building block as technology evolves and replace it with another one, and everything's still running at the end of the day."

The house that IT built

The NetControl team of nearly 200 is implementing NetControl incrementally with small, stepped cutovers. ("There's no big bang," Tennison says.) That way, the team minimizes the risk to operations while reaping incremental benefits from the new system. "We're building the new house while leaving the old one," Tennison says.

New-house features include advanced planning and support for terminal and network capacity, and providing tools to forecast asset and crew imbalances. Train engine and yard crews use their personal mobile devices to log in to the system to access their next work assignments. Terminal, yard and train operations have been standardized and optimized via workflow prioritization, providing better data predictability and, ultimately, a better shot at staying the continuous improvement course, Hasty says.

NetControl is web enabled, so training's been "a piece of cake," Tennison says. Job-centric portals feature drop-down menus, drag-and-drop functionality, smart menus and "hover" tips.

"You can still type in old commands, if you want," Tennison says. "But this no longer feels like a 1970s, character-based clunky system."

Eliminating the clunk factor for UP customers also was a priority. NetControl needed to enable UP to be more responsive — from providing more supply chain visibility to offering more proactive customer service to giving customers granularized data to support shipment tracking at the package level.

"We've always moved a train or a car, but we needed to change our thinking," Foster says. "We need to be more like FedEx or UPS and track on a more granular level. We transfer goods and services door to door. It changes the way our IT systems work, the way we have to track data."

Customers can use mobile devices to access NetControl; they can place more accurate orders and see shipment itineraries. They can better manage shipment notifications, which helps them better manage their supply chains, Hasty says. IT team members believe the efficiency and service-quality gains will lead to new customers, if it hasn't already. ("There have been truck conversions," Tennison says.)

As of late April, the NetControl project was a little more than half complete — on time and on budget, Foster says.

"We've replaced over 50 percent of the [software] modules, and there are some 5 million lines of code left running in the old environment," Tennison adds. "We think we're building something that will be around for 25 years."

And not just for UP. The Class I also made NetControl available to Ferrocarril Mexicano S.A. de C.V. (Ferromex). UP owns 26 percent of Ferromex.

"They're about a year, year and a half behind us," Tennison says. "Beyond that, we're not out aggressively marketing it, but we'll make it available if it makes sense."

It certainly makes sense for UP, which is reaping some incremental benefit from the incrementally implemented system.

"We've already achieved $40 million in annualized savings," Foster says. "Here's the bonus — this is just a jumping-off point of the safety improvements and efficiencies we can drive with NetControl. It's a foundation of what we're really going to leverage in the future."

Detecting trends

For a while now, UP has been leveraging IT-developed technology along the wayside. Fundamentally, it's about derailment prevention. It's also about improving safety, increasing reliability, boosting velocity and capacity, and improving customer satisfaction.

"Safety is our No. 1 goal, and derailment prevention is a huge part of that — for us and the communities we serve," says General Director Information Technologies Gary Baker. "And wayside detection plays a big role in helping us prevent derailments."

How big? The railroad has had a 75 percent reduction in mechanical derailments during the past decade, or since UP started installing hot box detectors, which use infrared scanners underneath the rails to assess the temperature of rail-car bearings. Add predictive software, as UP has, and the preventative power is even greater. UP recently connected about 4,400 hot box detectors systemwide into a single network to determine trend lines and better identify bearings before they reach temperature thresholds that could lead to failures.

"We can see a derailment before it happens," Tennison says.

In addition to hot box detectors, UP also has installed wheel impact load detectors and acoustic bearing detectors. Systemwide, the railroad has detectors installed every 20 miles.

"About 20 million data points are evaluated daily in near real time," Tennison says.

Is a particular bearing too hot? What's that wheel's recent temperature history? Which patterns are positive patterns, and which might lead to a failure? The historical data and trend lines are all there, says AVP - IT Corporate Systems Karen Krabbe. If need be, a car will be flagged for setout at the next terminal or the final destination.

Derailment prevention technology isn't limited to wayside applications. UP also is tapping technology to prevent wheel failures on coal trains.

Previously, UP relied on visual inspections to identify outer cracks on wheels, but a crack can split a wheel from the inside before it's visible. For the past five years, the railroad has used a proprietary ultrasonic wheel crack detection system at a facility in North Platte, Neb., to inspect all wheels on heavy coal trains, which historically contributed the highest number of wheel failures. The Class I is the only railroad using the technology, UP officials say.

Watching the wheels

At the North Platte facility, trains roll past a wheel crack detector at 3 mph to 5 mph. On average, the detector flags 125 defective wheels out of every 1 million inspected.

Since UP implemented the system, there have been no coal train derailments caused by a wheel failure.

"It's just one more way we think technology can drive safety and efficiency," Tennison says.

Participation in the industry-wide Asset Health Strategic Initiative could be another. Launched last year by the Class Is and rail-car owners, the multi-year, multi-phase effort is overseen by the Association of American Railroads' (AAR) Safety and Operations Management Committee. The aim: to create a broad strategy for improving the life, health and safety of rail cars by collecting and providing visibility to detailed car information. "There's a lot of energy coming from us on this project," Krabbe says.

Just as there has been for other industry initiatives. For example, a UP-developed ancillary card cage was adopted by the AAR as the next-generation open modular onboard standard. UP also has taken a lead role in helping the industry develop "mote" technology, which would enable railroads to install a radio frequency identification tag containing numerous sensors on rail cars. Areas of study include wireless networking, messaging and energy harvesting, says General Director-Systems Engineering Dan Rubin.

"Motes are the next step," Baker adds.

Other could-be game changers include mobile technology and video, Tennison says.

"I'm not sure we totally understand what mobile's going to mean to us yet, but it's huge," he says. "And video? Security is part of it. But video has the potential to change business processes."

In the meantime, the IT R&D team continues to evaluate emerging technologies to determine how they might be adapted or applied in a rail operations context.

In addition to motes, R&D work has included development of the aforementioned ancillary card cage, locomotive voice radio and an antenna mounting platform to reduce maintenance and variability of RF antenna systems, Rubin says. (For more detail, see "R&D key to the information technology evolution at Union Pacific")

Sometimes, emerging technology is in the eye of the beholder. Ten years ago, a visit to Sony Online Entertainment in San Diego put Tennison on a virtual road he hadn't expected to take.

"When I was out there, there were 2.8 million people accessing online gaming every night," he says. "There had to be a capability in there to leverage for business. I kept thinking, 'Was there some applicability?'"

On a virtual road

Fast forward a couple years. By 2005, two UP employees — Jon Jensen, from the IT group, and Steve Bakunas, from rail operations — were looking for ways to teach new yard employees to become more proficient. Ultimately, Jensen and Bakunas were instrumental in designing software that teaches new employees how to maneuver locomotives in yards, operate switches and sort cars. The IT group worked with P.I. Engineering to develop the virtual-reality training software.

The first rail operations simulation program recreated UP's yard in Cheyenne, Wyo. UP and P.I. Engineering developed two additional simulator programs that incorporate a hump yard and remote-control locomotive training. The Class I now uses the virtual-reality program at training locations systemwide. Last year, UP rolled out a fleet of four mobile classrooms. The 53-foot trailers each feature seven workstations that can accommodate two employees.

"In a virtual world, UP yards have been recreated to a high degree of accuracy," says Jensen, VP of marketing and sales - commercial technology offerings. "The track space is the same, the elevation and sloping, the right switches — it's very closely aligned with what's out there."

Just as it would be in a state-of-the-art video game.

"You also have the ability to make mistakes, the kind you can't afford to make in the real world," Jensen says, adding that the program also is available for other industries, including construction, mining and shipping. "Here, making mistakes is part of the learning process."

The top five safety mistakes trainees make in the virtual environment mirror the ones workers make in the field — a validation of the virtual environment, IT teamers believe. More validation, perhaps, is UP's safety performance during the past two virtual training years. Last year marked the best in the Class I's 151-year history — UP achieved a 1.01 reportable injury rate, surpassing the previous record of 1.15 set in 2011. There are additional safety, productivity and efficiency gains to be had, and the virtual training environment can help the railroad achieve them, UP officials believe.

"Some real-world training is hard to get," Jensen says. "But in this world, the sky is the limit."

There are management training applications to be tapped, as well, Jensen says. High-and-wide clearance, too, is another potential simulation option. Or the simulation exercise could be a bit more strategic, something that presents trainees with a plethora of what-if scenarios to work through.

"You could simulate a day in the life of a flood, where we shut down two bridges," Tennison says. "That's where this is going."

And because railroading is a team sport, there's a logic to having workers/players train together at some point — from different locations. "What's coming next is a multi-player experience," Tennison says.

The technology-talent link

The next-generation technology is as important as the next-generation talent the IT team needs to recruit and retain. In IT, technology and talent are inexorably linked. As Tennison notes: "It's hard to find graduates who want to work in assembler code, and TCS [the old transportation system] has 11 million-plus lines of it."

It's a balance, then, and one Tennison believes UP is striking nicely. It has to: "45 to 50 percent" of the IT team will retire within the next 10 years, he says.

So the search for top talent is ongoing. UP recruits at institutions nationwide, including Carnegie-Mellon University, Georgia Institute of Technology, Massachusetts Institute of Technology, Michigan State University, the University of Illinois and the University of Texas-Austin. In December 2012, UP opened an 11,000-square-foot IT center in Austin, Texas, to locate recruiters and IT group leaders closer to where some of the talent resides. The facility is a software and engineering R&D center. The IT department also has expanded its internship program to include about 70 year-round and 40 summer interns.

A special breed

Like his Class I counterparts, Tennison knows he's competing with Google et. al for the best and brightest. But he likes his railroad's chances.

"Sometimes, all it takes is getting them here and showing them what we do," he says.

And not just what they do, but how. At UP, the IT group acts as a technology company integrated into a railroad operation, Tennison says. Work teams of six to 10, rather than 500, design, develop and engineer software and hardware. The idea: People have a voice and the best ideas rise.

"We're looking for people who ask questions," says Tennison, who recently was named "Technology Leader of the Year" by The AIM Institute, which cited his leadership in the use of video game simulation for training, and his entrepreneurship and commitment to worker development. "We are investing for the long run, and in IT, the biggest investment is people."

It takes a special breed to do all that strategic dot-connecting. Tennison considers his team among the best of IT breeds.

"I've worked for a number of companies, and I would put us up with any of the organizations I've worked with," he says. "Some of the things we're doing with NetControl, on an enterprise level, are as good as anything you'll see at the top technology companies."

By the IT numbers

At Union Pacific Railroad, there's technology in every corner and around every curve. North America's largest freight railroad has:

  • 22,000 PCs
  • 54,000 portable and mobile radios
  • 7,770 locomotive radios
  • 5,200 locomotive data radios
  • 1,145 base stations
  • 2,000 wireless access points
  • 4,600 routers/switches
  • 7,700 end/front-of-train devices
  • 6,700 locomotive camera systems
  • 171 private branch exchanges/gateways
  • 18,500 phones
  • 600 centralized traffic control circuits
  • 800 automatic equipment identification systems
  • 4,375 defect detectors
  • 700 microwave sites
  • 34,000 miles of commercial fiber
  • 1,500 towers managed

Source: Union Pacific Railroad



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