Logistics technology: BNSF Railway goes forward with SAP rollout

Jeff Berman, Senior Editor -- Logistics Management, 9/17/2007

FORTH WORTH, Tex.—By taking steps to streamline its internal management processes for financial, human resources, and payroll—and subsequently help shippers better meet expected increases in freight demand—Class I railroad carrier Burlington Northern Santa Fe Railway (BNSF) said last week it will be implementing the SAP Business suite of business applications and Duet software from SAP and Microsoft.

BNSF said in a statement that this initiative will establish a single platform that will interconnect its financial, human resources, and compliance operations, which, it said, will augment transaction visibility, real-time invoice processing, and improved management control. It added that it selected SAP’s Business Suite to bring a more integrated and seamless approach to internal processes. And the interface with Microsoft’s Duet software will be used to enable BNSF employees access data from SAP enterprise applications so that data can more quickly disseminated to employees.

BNSF Vice President of Technology Services Jeff Campbell told Logistics Management in an interview that when making the decision to switch from an internally-managed system to an ERP system, the company took a close look at its technology portfolio with an eye toward the future and how its previous systems would best server its rail shipper customers going forward.

“When we looked at our back office applications, our core financial, payroll, and HR systems—which were all maintained on a legacy mainframe backbone—and also looking at the projected 67 percent growth rate [for freight transportation demand over the next 20 years], we wanted to ensure that our back office was just as well prepared to handle transaction volumes and flows as much as our logistical operations and marketing systems were,” said Campbell. “And we have also focused on large projects that will transform our railroad to a new technology platform that will serve us well for the next 10-to-15 years.”

Campbell also noted that from an ROI/business case perspective, making the move to a large-scale ERP platform made the most sense.

While Campbell stressed that the primary focus of this rollout was replacing various back office systems for internal reasons, he noted that part of the reason to make the move to SAP was strategically from a customer-base perspective.

“When you look at things like the online viewing of invoices, disputing and paying invoices online, and days sales outstanding [among others], and the large customer based of an SAP and you  overlay that with the customer base of BNSF, there are synergies for back office to back office connectivity that are beneficial for BNSF,” said Campbell.

Campbell said the “design and blueprint” phase of this rollout is about halfway done and is on track to be completed by November 1. And he added the SAP installation phase will kick off during the fourth quarter, with a go live date slated for the 45,000 BNSF employees that will be using the new platform of January 1, 2009.

“BNSF is a shining example to other freight transporters,” said Rodney Strata, industry principal, Transportation and Logistics, SAP, in a statement. “IT revitalization is needed today to prepare for the sweeping business changes that lie ahead for the railway industry. SAP is there for them with a business process platform that adds common functionality to years of disparate IT build up. We look forward to continuing our work with BSNF as they move to a complete IT ecosystem.”