Amtrak - Strategic Use of It

Overview of the Organization

Amtrak (a combination of “American” and “track”) is the brand name of the National Railroad Passenger Corporation, created in 1970 by an act of Congress. The National Railroad Passenger Corporation is a private, for-profit corporation established by government with all of its preferred stock, owned by the federal government and its budget subsidized by federal money totaling more than $1 billion per year. Some common stock is held by the private railroads that transferred their passenger service to Amtrak in 1971. Though Amtrak stock does not pay dividends and is not routinely traded, a small number of private investors have purchased Amtrak stock from its original owners.

Amtrak, headquartered in the District of Columbia, is currently governed by a five-member Board of Directors, appointed by the President of the United States with the advice and consent of the United States Senate. The Secretary of Transportation, the Honorable Mary E. Peters, represents the federal government as a member of the Board. The day-to-day operations are led by Amtrak’s President and CEO, an ex-officio member of the Board, and a thirteen-member senior management team of dedicated railroad professionals, including the Chief Operating Officer (COO) and the Chief Information Officer (CIO).

Amtrak employs over 19,000 people and has a nationwide network of 22,000 miles of routes serving 500 communities in 46 states and the District of Columbia, with some of the routes serving communities in Canada. The tracks for these routes are owned mostly by private freight railroad companies, with Amtrak owning 650 miles of track, primarily in area between Boston and DC. In fiscal year 2006, Amtrak served an estimated 25 million passengers (where about two-thirds of Amtrak’s ridership taking trains in the Northeast Corridor) and recorded $1.37 billion in ticket revenue, a company record.

Current Situation

Amtrak’s information technology (IT) resides in multiple areas due to organic growth of independent software and applications among various departments. Amtrak Technology (AT) group led by the CIO represents the centralized IT function of the organization, while significant IT expertise resides in the functional areas of sales and marketing, operations, finance, risk management, procurement, human resources, etc. Amtrak Technology initiatives for unifying management of IT within Amtrak have been ongoing and have done a good job of keeping pace with the increasing capabilities of the newer software and infrastructure products. Web-based initiatives, SAP and Oracle-based systems can be found throughout the corporation.

The Operations functions at Amtrak headed by the COO include all departments that make the trains go, including Engineering, Train Operations, Environmental, and Mechanical. The engineering department includes all control systems such as power and signal. Each operating department has its own engineers and technicians that implement and maintain business applications relevant to the needs of that department, for example, Engineering uses Maximo while Mechanical uses Spear. These two systems are not directly compatible but each has important data that the other department would benefit greatly in an IT partnership. New systems for Engineering are currently being developed that will allow engineers to acquire data quickly and efficiently. The SAP implementation has been rescheduled to consider adding an asset management module.

To develop a partnership between IT and the business units, Amtrak’s new President and CEO, Alexander Kummant, has recently made a number of key management changes, most importantly making the CIO a direct reporting position to him. This new management team is intent on finding the best and brightest minds to tie together on a higher level the IT platforms across its various business units. To meet this strategic business need, the CIO has created the position of a Group Information Officer too.

QUESTIONS

1. Apply the 5 waves of innovation to any one organization which you know. That is,

a) Identify the activities that they are already doing according to the various waves, and

b) What more the organization can do w.r.t. these waves of innovation?

Solution:

An analysis of the different waves of innovation applicable to Amtrak is described below:

A) FIRST WAVE:

The first wave of innovation was meant for reducing costs. The use of IT in its nascent stages of an organization was focused increasing productivity in the organization. But it can’t be said that it is a one time process, new uses of IT and information systems to reduce cost can be implemented whenever such a scope can be found. Cost reduction was considered the primary responsibility of IT in the initial implementation days. But now cost reduction is only one of the advantages which is sought from any new Information system implementation in an organization. The focus of first wave is to reduce the administrative and clerical costs. The purpose was to replace routine jobs by IT enabled systems which reduced manpower costs as well as minimized errors which in turn minimize rework costs.

The different information systems used by Amtrak that belong to the first wave of innovation are:

Electronic Transaction Express (eTrac)

It is a business process system that automates such Amtrak processes as the creation and approval of payment requests, employee expense reports, purchase requisitions; customer service requests (CSRs) and the administrative approval process. Respective Amtrak policies are embedded in the system. Following submittal, requests are routed to the required approvers, based upon the identity of the user and the total amount of the request.

Financial Information System (FIS)

This is Amtrak’s customized general ledger system to which all accounting transactions are posted. Transaction postings to FIS occur automatically via automatic feeder subsystems such as payroll, accounts receivable collections, material issuance, and accounts payable. Manual journal entries are also made by a select group of employees.

B)