Process makeover keeps BART on track

BART is in the midst of a $25 million project to upgrade back office systems such as payroll, HR and finance, but while it can demonstrate significant IT savings, it realizes the importance of winning employee support for the changes. It purchased HP servers to replace an IBM mainframe and also a significant investment in new business process management software.

The Bay Area Rapid Transit system moves 349,000 people daily on 104 miles of track around the San Francisco Bay Area and, outside of the occasional malfunction, operates rather efficiently. But its back-end business processes are the equivalent of trolley cars.

To get back on track, BART is modernizing its payroll, supply chain management and other processes.

The engineer of the business process automation train at BART says the challenge is not how to modernize but how to manage the effects of modernization on the organization, which got its start in 1972 and today has 3,200 employees and a $557 million operating budget.

“It’s not about technology, it’s about cultures and people,” says Robin Cody, deputy program director and CIO of the Business Advancement Program (BAP) at BART

That one of the labor unions derided BAP in a flier as “Big-Ass Problems” gave Cody an inkling of what was in store.

To get started, BART’s $25 million BAP included purchase of new servers as well as software focused on two main areas, ERP and enterprise asset management (EAM).

In the past, BART’s business practices had evolved as “essentially a bartering system of ‘It’s not what you know, it’s who you know,’” Cody says.

That experience is typical of many firms, says Maureen Fleming, an analyst at IDC specializing in business process management software. 

Often, processes evolve ad hoc, “which means that some miracle happens and you get the work done,” Fleming says. “People developed their own understanding of how to do work and then trained [others] … but there’s really no understanding of whether the work is being done efficiently.”

Overcoming skepticism

BART launched BAP in 2001 to a skeptical workforce, Cody says. An employee survey showed that while 88% of respondents agreed that business processes needed to change, only 40% thought BART could or would make the changes.

Cody attributed some resistance to “turfisms,” groups within BART bent on preserving the status quo. “The word ‘change’ scares a lot of people.”

But change had to happen. Some of BART’s business processes were surprisingly low-tech. While hourly employees punched a time clock to track their hours, Cody says, “after that, everything was manual — manual coding, manual math, everything.”

To modernize payroll, BART chose ERP software from PeopleSoft  in 2003, shortly before Oracle announced plans to acquire PeopleSoft. Because PeopleSoft considered Oracle’s bid hostile, it gave BART a discount “to make itself look less attractive to Oracle,” Cody says, and a contract that runs until 2013.

BART used to have to adjust 400 to 500 paychecks a month for errors but in August 2006, after the changeover to the new system, only about 100 checks needed adjustments, Cody says.

In a second phase of BAP, begun in August, BART addressed inefficiency in parts inventory management for train maintenance.

“Our maintenance system didn’t talk to the inventory system,” Cody says. Buyers over-purchased parts inventory to avoid running out of needed parts, but ended up holding some parts for so long they became obsolete.

To help with that problem, BART acquired enterprise asset management software from MRO Software, a company since acquired by IBM. The software helps improve coordination of parts inventory with maintenance, as well as other supply chain management functions.

On the hardware front, BART bought five Integrity rx7620 servers, 26 HP ProLiant blade servers and a few HP ProLiant DL380 servers from HP to replace an IBM mainframe computer.

A key supporter of that decision was John Pickett, HP’s worldwide mainframe alternatives program manager, who suggests software upgrades are easier on servers than mainframes because mainframe applications, upgraded on a piecemeal basis over time, can leave “a mess of spaghetti code” for programmers to untangle.

From BART’s perspective, the swap made financial sense. The $700,000 initial capital expense and $150,000 annual support costs for the HP servers compares favorably with the $800,000 to $900,000 in annual leases and support for the mainframe, Cody says.

Overall, BART expects to spend $25 million in hardware, software and system integration services from Maximus to modernize all its back office systems, but reap $52.7 million in savings by 2013.

Still, business automation projects face tough odds. PeopleSoft told Cody that the average ERP project goes over budget by 78%, and over schedule by 130%, and that 59% of projects end up being scaled back.

Success requires employee buy-in, so Cody invited groups of employees to participate in planning meetings “to allow time for grieving [and] to let them vent.”

“If you’re not going to let it out of your system you’re not going to listen,” he says.

Some employees, however, still felt left out. “From the workers’ perspective it’s not been too large a success,” says Jesse Hunt, president of Local 1555 of the Amalgamated Transit Union, which represents about 875 BART train operators, station agents and foreworkers.

Union members attended meetings but Hunt doesn’t feel they had much influence. “BART would essentially say what was going on with the plan but, unfortunately, the input from the unions was not adopted very well.”

Still, skeptics may be overcome by results, says IDC’s Fleming, who generally recommends companies focus on an initial small-scale demonstration project, choosing one process to automate that will show results quickly.

“They use that project to internally show the results and then [change] becomes viral in the organization,” Fleming says.

Tailoring the change pitch to specific audiences also helps, says Dan Mitchell, technical director for Dunes Technologies, a business process automation software vendor, though not a BART vendor. (VMware last month acquired Dunes.) A project could be sold to the CFO on its ROI, but to others on how it makes work easier.Mitchell also recommends allowing employees to test drive new processes before they’re implemented. “Generally, everybody wants a success, and when you get to the level where you can show everybody that, people are pretty reasonable,” he says.