Old railway company on track with newtechnologyGregg BarrettTHINK contracts and the thought of administrative nightmares and tedious and boringpaperwork probably fill your mind with frustration and other negative connotations.Well, it’s best you change those thoughts. In the words of Tim Cummins, chief executive ofInternational Association for Contract and Commercial Management: “Organisations thatdon’t manage their contracts effectively will be at a tremendous competitive disadvantage.”Transitioning contract management from the traditional “negative” mindset and approach tothe strategic “value-add” activity that it is, is a paradigm shift and takes a bit of work – but itneed not result in panic.Take Burlington Northern and Santa Fé Railway Company (BNSF) as an example. It operatesone of the largest, oldest and most established rail networks in North America.So you would think a company like this will be slow-moving when it comes to adopting newand emerging technology, right?Wrong! BNSF was an early adopter of “contract lifecycle management” (CLM) software andimplemented it in two months to help streamline its manual processes.In an industry known to have a very tight operating margin, BNSF has a history of beinginnovative and leveraging technology to reduce expenses and improve customer, supplier andemployee relations. The company looks at every opportunity to reduce expenses whichincreases profits and value to the shareholders. Before getting budget approval to proceed onspending real money to acquire and implement an automated CLM solution, you can bet thata solid business case demonstrating savings had to be submitted and scrutinised bystakeholders.Information technology (IT) projects have a reputation of over-promising and over-committing and delivering much less than expected. IT projects are also typically late andcost more than the planned budget.Sounds familiar? Not at BNSF. The business case was scrutinised in detail to ensure that arealistic timeline, cost and expected benefits were presented to the executives.A few of the expected benefits of addressing an automated CLM solution were to:- Streamline operations and reduce manual processes- Automate the contract request process- Reduce clerical staff requirements
- Provide better response and visibility to stakeholders- Monitor and manage compliance and performance- Regulate templates and standardisation- Stay in an overall supply chain management strategy- Integrate with finance to ensure accurate payments- Improve audit controls and complianceAs American teacher and writer Amos Bronson Alcott said: “That is a good book which isopened with expectation and closed with delight and profit.”In any undertaking, setting the right expectations upfront and ensuring that all stakeholdersunderstand them is crucial to the success and adoption of the project.The project team worked with various stakeholders to document the anticipated benefits andsee what the future would look like during and after the system was rolled out (eg. new rolesand responsibilities of stakeholders, scope of the project, specific milestones, overall timelineand future phases).Various “town hall” sessions were held across BNSF to tell stakeholders about the systemand how it would affect them. This fostered a high degree of buy-in from future users of thesystem. The project team provided a consistent message that addressed any apprehensions orquestions.As American industrialist Henry Kaiser said: “Problems are only opportunities in workclothes.” Challenges are always encountered in projects of this nature – how they areresolved is what determines success or failure. The experience of the project team at BNSFhelped tremendously to overcome the challenges. Here are a few of the many challengesBNSF faced.Paradigm shiftAsking people to adopt automated processes instead of the established and proven manualprocesses they had been using for years was a huge challenge. The project team worked withthe stakeholders and demonstrated the ease of use of the new system. They also demonstratedsituations comparing the “old way” with the “new way” that showed the benefits and speedof the software solution. This allowed users to ease their way into the new system. Byadopting a pilot model for implementation, BNSF helped spread the word about how goodthe new system was.Conversion of current dataA large organisation like BNSF has thousands of contracts and templates/exhibits.
The problem is compounded when the data is not stored in an electronic system and existsprimarily in Microsoft Word documents (stored electronically or in filing cabinets). How doyou get all that data into a new automated system?The CLM solution provider had an approach and process to help with the conversion. Theproject team spent a fair number of hours verifying and cleansing the data in the new system.This helped streamline the process by eliminating useless or redundant data.Integration to back-end systemsBNSF had several systems operating on different platforms with data that had to be interfacedwith the CLM solution. It had to decide what systems would stay and whichdecommissioned. This helped reduce the scope of interfaces required.The multiple platforms were a challenge and the inflexibilities inherent in the old systemsmade the interfacing challenging.However, the excellent technology available for integration among various platforms madethe task easier.Customer trainingBNSF has a diverse employee base including many users with very limited exposure tocomputers or the internet. So training was a huge challenge. How do you deliver a consistenttraining programme that addresses simple internet navigation techniques and the use of thesoftware product for one segment of users while delivering a more complex trainingprogramme for another sector that is familiar with computers?Trainers with a wide range of skills were deployed to cater to the unique needs of the users. Aknowledgeable helpdesk was established to handle the different queries.With all the challenges, the dedication and commitment of the project team prevailed as theyimplemented the solution on time and within the allotted budget.A second look at the business caseThe implementation was one of the smoothest BNSF had undergone. The project wasdelivered on time, on budget and with more functionality than was originally sought.Some of the end results included a steep reduction in manual processes (from 16 to fewerthan nine), clerical positions were eliminated, contract turnaround time was drasticallyreduced (from three weeks to less than 11 days), there was enhanced contract visibility, aheightened awareness of compliance and performance measures and rapid e-mail notificationof pending renewals and other contract events.RecognitionBNSF’s efforts paid off and the organisation received a full Return on Investment (ROI) in62 days. It was also awarded the Best Practices in Contract Management Award by theAberdeen Group.
) A full presentation on the contract management effort at BNSF is available atwww.ncmahq.org/files/FileDownloads/PPTs/manthei.ppt