Winner: IBM Helps Reinvent Russia's Railroad

IBM overhauls Russian Railways' software infrastructure

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.

Photo: iStockphoto

Consider a few of the many tasks the network must perform. On the most basic level, it must calculate payroll for 1.2 million employees. It must also continuously track the locations, routes, and contents of 624 900 freight cars as they chug across Europe and Asia. In addition, it has to keep tabs on 39 700 passenger carriages crisscrossing the landscape and the round-the-clock ticketing of the 1.3 billion people who ride them every year. Amid those terabytes of data, the railway's databases must also tally the spare parts that the cars, locomotives, and signaling systems may require and keep tabs on the work crews who perform repairs on trains and tracks.

The fruit of these herculean labors could be truly sweet, for Russian Railways and for Russia. By operating its infrastructure more efficiently, the railway will be able to move more passengers and potentially lower its rates for transporting freight, perhaps attracting more Asia-to-Europe traffic along the Trans-Siberian Railway. Lower transport prices could in turn increase demand for the vast stores of raw materials in Russian mines—including nickel, cobalt, diamond, and coal. And for IBM, the project represents a visible foothold in an emerging market that the company views as pivotal to the future of its hardware business.

Showcasing its big iron is part of IBM's goal. The new data hubs will each be stocked with a handful of powerful IBM System z10 mainframe servers, introduced in 2008, each packing the computing power of 1500 ordinary servers, according to the company. IBM dominates the market for these behemoths, but that's not hard, because most of its competitors have left the business. In all, mainframe-related revenue accounts for almost half of IBM's operating profit, according to financial analysts at Sanford C. Bernstein & Co.

The geriatric machines that the new mainframes will replace include Soviet-built clones of IBM's Cold War–era computers, called ES EVMs (the transliterated Russian acronym for "unified system of electronic computing machines"). Starting in the late 1960s, Soviet computer scientists began reverse engineering IBM's hugely successful System/360 and System/370 mainframes, and Soviet electronics makers copied the components. The machines worked well, but Anton Efremov, who heads the travel and transport team at IBM's Russia division, is glad to see those old computers go. "When I was trying to sell hardware during the '90s, I had to compete against the secondhand market of IBM clones," he explains. By replacing some of those machines, the company will gain an increase in performance by a factor of 10 000, if not more.

Each data hub will consist of two identical sets of servers, one for actual operations and the other as backup. Should one or even two of the hubs go down in a natural disaster or an attack, there would still be enough computational power to keep the network up. "What we're doing now is coming up with the microdesign for how we would continue, how we would distribute the workload between data centers, and what would be the critical processes," Efremov says.

Once all three hubs are in place, the tricky task of shifting the data and computing from the regional centers will begin. Such handoffs are parlous, and the railroad will still have to operate during the transition. So to avoid a misstep, Russian Railways will roll out the new network gradually, over three years. The calculations needed to manage passenger train movements, ticketing, and back-office operations for three of the country's regional railroads are currently being shifted to the three new hubs. By the end of this year, about half of the railroads' computing tasks will have migrated to the new hubs, and the following year cargo operations will have moved as well. Soon after, the backup servers at the three sites will be up and running, and in 2013 the vestigial data centers will likely be shut down. Some of the centers' workers will relocate, but others will lose their jobs. That's the irony of efficiency: By shuttering its far-flung data centers, Russian Railways will be pulling jobs out of those territories in order to serve them better.

To help manage all that data, Russian Railways software engineers are writing hundreds of new applications that, taken together, about 150 000 employees will use. The new software will encompass traffic management, digital document entry, and the sales systems for passenger and freight transport. These programs will replace applications that are at least a decade old; a few of them date back to the 1960s. A lot has changed in the programming world since that software came online, and the new system will reflect the latest thinking, especially in terms of integration. "It will not be artificially assembled from different pieces but designed from the very beginning to operate as a whole software complex," Illarionov says.

In addition to in-house software, the network will rely on several IBM software packages, including one called Maximo, which helps companies manage and monitor their assets. In Russian Railways' case, those assets include not just the tracks, cars, and locomotives but also the electricity and telecommunications lines.

The new software environment will eliminate the enormous paper trail that now follows most day-to-day activities along the tracks. By moving to electronic transactions, the company hopes to cut down on a major source of error and speed up the availability of information. Of course, it also means many more bits and bytes to move around. Illarionov estimates that the IT infrastructure will eventually register more than 120 million digital transactions per day on a wide variety of activities. That's at least 20 times as many transactions as a large telecom operator handles, he says. Right now, his team is conducting a pilot project that's logging 2.5 million transactions daily.

Data security will be a bigger challenge for the new system. "One of the things you really struggle with when you move from paper to electronic is how to validate it: How do you know these are real requests and that the data is accurate?" says Randolph Resor, a policy analyst at the U.S. Department of Transportation. "If the data isn't accurate, the system is worthless." That's why each one of the 120 million transactions in the railroad's network will have a digital signature, an encrypted bit of code that ensures the transaction is valid. For an operation as sprawling as a transcontinental railroad, that simple innovation will be essential to keeping the electronic documents flowing.

Among other things, the new scheme should result in a tighter, more efficient use of the tracks. "Your timetable is very critical. You've got to make sure you're running the right numbers of train sets at the right time of day," says Nigel Davies, a vice president for business development at Interfleet Technology, a rail technology consultancy based in Derby, England. "If your systems are out of date, as in Russia, then the number of trains you can run in a span of time is limited." In other words: Railways make money by keeping things moving.

Tracking everything electronically will also avoid a most unpleasant phenomenon: the disappearing freight car. The car itself hasn't vanished, of course, but if the tracking system doesn't know where it is, it may as well have. Such a mistake can be costly, and it can be dangerous. In a previous job, Resor investigated a missing U.S. freight car carrying caustic acid. During the month when the car went rogue, the acid ate through its walls, leached out, and sent two dozen people to the hospital.

The storied Trans-Siberian railway, efficient at last, may finally start to compete successfully with oceanic shipping between Asia and Europe. According to Forrest Van Schwartz, managing director of the Global Transportation Consultancy, in Madison, Wis., transporting goods from mainland China to Europe by way of Russian railroads currently costs five times as much as moving containers by sea from Beijing, around Singapore, through the Suez Canal, and past Gibraltar to Europe's ports. Part of the problem, he surmises, is that too many railroad employees are doing jobs better done by technology. "It's as much a social, keeping-people-employed program as it is a transportation company," Van Schwartz says.

That may be so, but the company is also an integral part of life in Russia. The Trans-Siberian made Russia's Far East accessible to the Western world for the first time, and during World War II the rail lines were essential for transporting soldiers and military equipment to the front lines and for ferrying supplies and people to safer locations deeper within the country. After the collapse of the Soviet Union, the railroad again became a lifeline. Struggling factories sometimes paid their workers with their own wares, forcing them to become off-hours salespeople. In Vekovka, outside Moscow, workers from a crystal factory walked the train station's platforms with vases and chandeliers hoisted above their shoulders, hoping to catch the eye of a seated passenger.

Even now, the railroad is the only means of transport for countless Russians and for the coal, timber, and valuable minerals in distant corners of the country. Roads quickly become impassable in the frigid winters, and commercial air traffic is limited in most places, leaving few options for traversing the 17 million square kilometers that make up the world's largest country. Opening the arteries that allow people and exports to flow can only be good for the railway and the people it serves.

This article originally appeared in print as "Russia Reinvents Its Railroad.

For all of 2010's Winners & Losers, visit the special report.

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