Among the Thomas the Tank Engine stories is the tale of Henry, an engine that refused to leave a tunnel. CIO for rail freight firm Green Cargo, Ingo Paas, similarly refused to follow the tracks that were expected and instead forged a new path for the Swedish company and, in doing so, has built a new platform that enables rail freight to respond to modern logistics demands, reskilled the technology team and extended the life of an ageing mainframe.
Green Cargo operates 400 trains and 9000 freight trucks, serving its customers in the chemicals, energy, engineering, forestry, grocery, paper, steel and automotive sectors. Its locomotives travel to 270 locations in Scandinavia, and through a partnership network, Green Cargo is able to move goods right across Europe. State-owned, the Swedish firm employs 1,900 and moves 21 million tonnes of freight and reports annual sales of 4.2 billion Kroner. Paas has been CIO since September 2019 and says of the business:
It is a highly regulated sector in terms of safety and security.
He adds that the rail freight sector is dealing with a wide range of challenges, including the threat of a global recession, poor infrastructure investment in many countries and continuing problems with worldwide supply chains.
Paas almost didn’t step aboard Green Cargo. Back in 2019, the leadership team was looking for a CIO to decommission and modernize Green Cargo’s mainframe and SAP enterprise resource planning (ERP) legacy systems. Paas didn’t like the look of this journey, told them so and recommended they look elsewhere for a CIO:
I said there had to be an incremental approach to solving their business problem, and you have not invested in technology for 10 years.
The leadership team believed that the legacy technology was holding the business back, but CIO Paas contested that the business needed to rethink its strategy. Paas could see that technology would play a significant role in modernizing rail freight and the Green Cargo offering, but modernizing the ERP would not be the right approach. He says:
I have seen mainframe and SAP projects fail. The replacement of these two heavy-weight systems had dominated IT thinking for years. But when I asked why we should do this, no one had a good answer. It would have taken several years, during which time delivery of business benefits and digital innovation would have stood still. From my perspective, a higher priority was to regain control of our destiny by enabling in-house innovation rather than continued long-term dependence on outsourced IT.
Paas convinced Green Cargo that if they wanted him to be the CIO, they had to trust him and the technology team to innovate and use technology to change the business processes to deliver business benefits. Yet Paas admits he used to be the type of CIO that arrived at an organization with a plan to replace legacy technologies in the way Green Cargo wanted, but of late, he has reconsidered his role. Today, Paas says CIOs need to create composable architectures to enable the business to quickly deploy technology to meet the needs of the customer. He says:
I explained that we needed a way to accelerate value-driven sustainable innovation. My presentation took just six slides, after which the legacy replacement program became history.
Those six slides covered a new approach that centered on data management - keeping the existing mainframe and ERP as the system of record. Secondly, a cloud platform and cloud app development, and finally, enabling business developers to build internal applications.
In February 2023, the business released its new Green Cargo Connect Customer Portal to provide a digital interface for customers to manage their relationship with Green Cargo. Across the logistics industry, digital platforms are being delivered by port operators and airlines, including Air France KLM. As Paas says, these portals are an example of delivering value to customers:
The portal is a service that we are offering to better utilize the capacity we have in the network and to give our customers the opportunity to connect with us and see right across Europe. There is no other operator that can provide that level of insight.
This, in turn, delivers further insights to Green Cargo, which then provides additional services to their customers:
We have built analytics capabilities for dynamic pricing as we can understand the cost of a service, which has 40 to 50 elements to it, that couldn’t be done before.
Creating the platform
Green Cargo Connect Customer Portal is the first result of the adoption of Microsoft Azure, Google Cloud Platform and the OutSystems Low Code application development platform. The portal is integrated with the SAP and mainframe legacy technologies using Low Code, the Azure hybrid integration platform and data analytics from both Microsoft Power BI and Google. Low Code has been instrumental in the rapid delivery of new tools and services, the CIO says:
We have two Low Code teams, one for integration and an analytics team. We are building high-performance applications that are integrated with the mainframe and enable our staff to move a wagon in a siding using a tablet on-site, for example. That, in turn, informs the customer that these actions are happening.
This level of integration ensures rail staff have insight into the needs of the customer and can take action, whilst the customer can see that their booked wagons are available for loading or unloading. The Low Code teams are now progressing to become product teams as a result of the success the applications have had.
Paas says these applications have enabled Green Cargo to become a composable enterprise:
When I talk to my peers, they see Low Code as great for citizen development, but I look at Low Code as enterprise transformation because with the right approach, you can build composability into your organization.
As rail freight and logistics deal with the changing nature of international trade, the modular approach to applications and application development enables the business and its technology to change rapidly and respond to market shifts. Paas says of the model:
There are lots of savings in terms of punctuality, and we have saved time by reducing code failures.
His experience in composable business inspired the CIO to write a book on the subject. He says:
The fundamental message of the book is all the things you need to consider to be a composable enterprise and what that means for leadership, architecture, finance and the way that you make decisions.
New tech engine
Paas extended the life of the mainframe and SAP ERP platforms, with Rimini Street providing maintenance support to the SAP estate. He has instilled the ethos that the organization only buys technology when the technology provides no business advantage in areas such as finance and HR. While Green Cargo recently renewed a six-year contract with systems integrator DXC for infrastructure services, and DXC will deploy its Rail Cargo Management Solution within the Nordic Transport Rail group for the business, the Rail Cargo Management Solution will provide capacity, fleet and logistics management.
Green Cargo is also using UIPath for automation, and the CIO is now, after three years, beginning to remove the SAP estate and move to the Microsoft Dynamics ERP platform. A new cloud centre of excellence is also being formed to continue Green Cargo’s journey towards greater usage of the cloud.
New skills and old skills
Four years ago, Green Cargo had zero digital capabilities, the CIO says, but the adoption of Low Code has enabled a reskilling of the business. Alongside new digital skills, Green Cargo has taken its mainframe back in-house from an Indian outsourcing provider and, in partnership with a local firm, has found the skills locally. This has benefited the business, too, he says:
We have gone from four releases a year to 300. We had no modernisation, no skills and we were trying to fix their incidents.
Logistics is transforming at all levels. The day before, I interviewed Paas, a Portuguese logistics startup received €1.8 million in funding and airlines and the shipping industry are rapidly digitizing. All of this suggests that Paas is on the right track in his decision to delay replacing legacy technology. The market moves at express speed, and rail has huge sustainability potential, but if the digital experience is poor, then procurement and distribution managers won’t consider rail as an option.