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How Union Pacific IT drives revenue: Strategy snapshot
Learn from Union Pacific CIO Lynden Tennison's experience
Technology is quickly and increasingly becoming the business’ key source of competitive advantage. But a challenge for many IT leaders is figuring out where to start with revenue generation strategies. A recent report from Harvard Business Review Analytic Services aims to provide a framework to do just that. The report is filled with proven examples of IT-led initiatives that are succeeding in driving revenue.
For instance, Lynden Tennison, CIO of Union Pacific, has an innovation group focused on using technology to run the business better. “It’s our targeted R&D for technology to drive change in the operations of our railroad,” he says.
During the next few weeks, we will share a few of the examples featured in the report to help CIOs who are looking for ideas on where to begin, or how to improve. Download the full report, “Revenue-generating CIOs: Smart strategies to grow the business,” for more inspiration, or follow our snapshot series here.
Snapshot: Union Pacific PS Technology
What it is: Union Pacific’s PS Technology is a for-profit technology subsidiary that takes technology Union Pacific builds internally, modifies it for external use, and sells it in the marketplace, according to the report. The initiative is led by Union Pacific CIO Lynden Tennison and currently generates $35 million in revenue for the railroad company.
Challenge and opportunity: Repurposing internal technology for external use is a viable option for IT to generate revenue, however, it comes with its challenges. For one, it necessitates building commercial-grade software from the beginning, the report points out. “A lot of what we build will find its way into the commercial marketplace, and so we know we have to put a different level of capability and sophistication into our design, our standards, a lot of the things we do,” says Tennison. The perk is that this extra effort up front raises the quality of Union Pacific’s IT capabilities overall, regardless of whether they make it into the marketplace.
Outcomes: According to the report, “The capabilities developed through building commercial-grade software have enabled a number of other subsidiaries that are data and technology-driven, such as Streamline, a door-to-door intermodal service.” The report notes that PS Technology is only one of the ways IT contributes to Union Pacific’s revenue: “While Tennison leads PST and two or three other revenue-generating operations, in cases where IT is more of an enabler to a transportation business, he partners with his peers who own those businesses to drive top-line growth.”
Download the full report to learn more.