Illustration: Bryan Christie Design
Click on image to see the entire rail network.

This is part of IEEE Spectrum's special report: Winners & Losers VII

It's no exaggeration that the backbone of the Russian Federation is its railways. With 85 500 kilometers of track and 664 600 railcars transporting people and goods across 11 time zones, Russian Railways is practically a force of nature.

As Russia's fourth-largest revenue earner, the state-owned railroad, based in Moscow, is also an economic force. It employs 1.2 million people, and many millions more rely on the trains to make their living. A brand-new high-speed line now shuttles between Moscow and St. Petersburg in just three and a half hours. At the tiniest whistle-stop, hawkers greet trains with boiled potatoes and pickles, local growers offer buckets of berries, and taxi drivers mill about, ready to scoop up travelers.

If the railroad drives the economy, data drives the railroad. No freight train on the 170-year-old railroad moves without documentation of its contents, the contract for their delivery, and the route map that defines the train's journey. All that information gets tracked by a string of data centers, aided by an optical-fiber network that mirrors every kilometer of track. In total, the data centers manage the movements of the 1.3 billion passengers and just as many tons of freight that pass through the country's far-flung depots each year.

It's strange, then, that Russian Railways' investment in information technology has been minuscule—just 0.6 percent of its total budget, according to Alexey Illarionov, the company's chief information officer. That's between an eighth and a quarter of what a typical transportation company spends, he adds.

No more. In an effort to catapult its operations into the 21st century, Russian Railways has struck a technical partnership with the U.S. computer giant IBM, based in Armonk, N.Y. With IBM's help, the railway is at last overhauling the hardware, software, and communications architecture that underpin its operations. The overhaul will centralize the management of data into new computing hubs, restructure the collection of information on the railroad's field operations, and integrate new automation software to help the railway strategize how to deploy its assets. When the redesign is completed in 2014, the company will do business in a fundamentally new way.

In his massive office at company headquarters in Moscow, behind a hulking desk and flanked by a wall-blanketing map of Russia, sits Illarionov, the man behind the transformation. "For most companies, IT is pretty straightforward," he says in Russian, settling in with a brief tug at the lapels of his wheat-colored suit. "We have a very broad set of tasks—for us it's a complete mix."

EXPERT CALLS
"Congratulations to IBM on its huge IT win. Congratulations to the Russians on their new IT system. However, I wouldn’t short the stock of any shipping company that’s currently five times as efficient as the Russian railroad."—T.J. Rodgers

"I’m skeptical about overhauls of gigantic business operations, particularly state-owned businesses, where the connection between incentives and outcomes is weak."—Nick Tredennick

Illarionov wants the railway to shake off the last vestiges of Soviet-era planning and become a more nimble, modern operation. The first step, he says, is to do away with the railways' diaspora of data centers. Currently there are 17 of these regional branches, each managing the data for a subsidiary railway—an arrangement that made sense back when the regional railways made a lot of operational decisions on their own. Now these centers just slow down operations, making it harder to monitor activity in real time. It's also a managerial nightmare. "Maintaining 17 separate, data-intensive centers and making sure I have a well-trained, well-equipped staff for each has been a burden," Illarionov says. Eventually, there will be just three data hubs, located in St. Petersburg, Moscow, and Yekaterinburg, which sits on the border between Europe and Asia.

That's just the beginning. Ultimately, the new computer network will unify hundreds of discrete software applications into one integrated data environment. "The plan has a simple landscape," Illarionov says, looking down at his desk and swirling his black coffee in its cup. The scale of the project, however, is "colossal," he says.

He ticks off three of the biggest challenges his team and IBM are grappling with. First, to break down the historical divisions between the regional lines, they must write software to redistribute the computing tasks to the three new hubs. Second, Illarionov still works with paltry sums, a problem complicated by the fluctuating valuation of the ruble, which makes budgeting a rather strenuous exercise.

The greatest difficulty, though, arises from the fact that Russian Railways' hundreds of software engineers are developing more than 400 projects in parallel, all of which will have to interact with the consolidated data platform. As any computer programmer knows, writing and debugging just one chunk of code takes time and great care. Seamlessly integrating that software with code written by others is exponentially harder. "The scale of transformation—the number of people involved and the huge number of applications we are forced to consolidate—makes this IBM project unique," Illarionov says.