The Longest Mile

"Simplify, simplify." For businesses deluged with financial data, Thoreau's famous injunction has perhaps never seemed more pertinent. Innovative users of business performance management (BPM) software made great strides during the past year, especially in adapting the technology to their specific compliance needs and business environments and putting BPM tools into the hands of users throughout the organization.

The winners of the Business Finance 2007 Vision Awards -- BNSF Railway Co., Kansas City Southern, and American Red Cross, Greater Cleveland Chapter -- amply illustrate those themes. But the most striking success shared by this year's standouts was their use of BPM to carve a path through sometimes overwhelming amounts of detail and complexity to a holistic view of corporate performance.

Here's the cream of the BPM crop for 2007:

Revenue Category: Over $5 billion
Winner: BNSF Railway Co.

BNSF's business performance management system is largely a homegrown affair -- and is all the more powerful for it. OnTrack, a forecasting and budgeting tool developed in-house, sits on top of a Teradata data warehouse. The configuration also includes a Hyperion Essbase datamart that stores much of the data created in OnTrack. "Railroads are by nature much different from a lot of other companies," says Thomas Packer, assistant vice president, revenue management. "Our cost drivers and budgets are so different from, say, a plant or even a trucking company that we ourselves pretty much built all of the rules for how the system was going to operate."

The company's rapid expansion was the trigger for the overhaul of its financial systems, which it kicked off in 2001. "We had well over 2,000 different spreadsheets that anywhere from 30 to 70 users at any one time were entering data into," Packer recalls. "Then we had a spider web of macros that would take all of this information and pull it out to build our income statement, balance sheet, budgets, cash flow, and so on."

From the start, BNSF decided to look beyond the finance department as it revamped the system. The company set up a cross-functional team of business users and finance people who were responsible for budgeting and forecasting. "We sat down and said, 'What are the key drivers that we can use in formulas to comfortably attach different expenses to?,'" Packer reports.

One crucial cost driver was the number of crew starts. "Every time a new crew has to come on to move a train, for example, there is a cost associated with that," Packer explains. "In this business, you want to move equipment on the track as fast as you can with the least number of crews, because crews are the biggest variable expense that you can control. So we built those kinds of drivers in." Train miles was another key metric; many expenses -- fuel, for example -- cluster around that.