Railroad becomes software company

Railroad becomes software company

Summary: More evidence of the lines blurring between technology vendors and consumers.

TOPICS: Cloud, IT Priorities

InformationWeek's Rob Preston recently published an interesting articleon how one of the nation's largest railroads decided it should also build its own software. Not only does this fly in the face of all the conventional wisdom that says packaged and SaaS applications are the way to go, but it puts the railroad itself in the software business.

More evidence of the lines blurring between technology vendors and consumers.

In the porcess, the Union Pacific Railroad "generates $35 million to $40 million in revenue a year selling or licensing some of those technology innovations to other companies, including rivals, creating a small profit center within its $300 million-a-year IT cost center," Preston writes.

The company -- which operates one of the biggest shipping and transportation oeprations in North America, required software and systems too complex for the mass-market package vendors to service, such as supply chain applications, and even its own firewalls. Service oriented architecture is part of this effort, the article adds.

The company has also built its own gaming software, a Flight Simulator-type application ntended to help train engineers, conductors and inspectors in virtual environments. This may be the ultimate profit center: "The company is now looking to sell that software to other railroad companies, as well as to construction, mining, and energy companies, under its PS Technology unit."

(Photo: Wikipedia.)





Topics: Cloud, IT Priorities

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  • Sprint

    Railroad becomes telecommunications carrier: Sprint began as the internal microwave network of the Southern Pacific railroad.
    Robert Hahn
  • Anschutz and UP

    So Mr. Ahschutz owned lots of telecomm fiber rights under the railroad tracks, where you can have long lines of gently bending path for fibers. Anyway, he decides to buy Rio Grande Industries, parent of the Denver & Ro Grande Western to secure fiber rights through the Moffat Tunnel. Owning a railroad gave him access to the golfing club, and he went to play golf with the leader of the UP. The UP has been run as a military operation since the beginning, and the leader is all powerful. Anschutz realized quickly that the man was a bit nuts, but that's where you make money. He called his guys in, and he quickly learned that the UP was always terrified that someone would cut them off from Chicago, which they reached via the C&NW railroad. Well, the D&RGW was too small to use to confront the UP, so he bought the SP for a song (it was cheap, they had fallen apart with some land deals that went bad). Then, he approached the management of the C&NW and asked them if they wanted to make a bundle of bucks. SURE! So, he set up a coal>taconite round trip that undercut UP's price, and then did articles for the train mags. Well, that made it appear that the C&NW was getting into bed with the SP! The UP leader guy was foaming at the mouth, how dare they threaten the UP!!! So, the UP bought the SP, the D&RGW and the C&NW for FAR too much, then ripped them to shreds, causing system-wide gridlock in the process. The funny thing is that Anschutz got a position on the UP board. I guess they never figured it out. Gotta love it though, it was a masterstroke worthy of the old Rail Barons! :-)
    Tony Burzio
  • Obviously you never worked inside a railroad co as a programmer

    Norfolk Southern is one of the corporations in which I consulted. They wrote many custom applications inside. They didn't become a software company nor did they blur any lines.