How BNSF Railway Managed Change: An Interview With Elizabeth Obermiller

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In 1999, when BNSF Railway—one of the few remaining transcontinental railroads in North America—decided to merge four primary lines of business, the company faced technology and mindset issues. For instance, the head of one of the business units believed the unit had no customers. In this Inside Scoop interview, Bob Thompson talks to Elizabeth Obermiller, BNSF director of ERM systems, about her role at the company and the challenges—and benefits—of the reorganization.

The transcript of this interview, which was conducted March 7, 2007, was edited for clarity.

Bob Thompson

I’d like to welcome to our Inside Scoop program Elizabeth Obermiller, director of ERM systems at BNSF Railway: the merger of Burlington and Northern in Santa Fe. Elizabeth, welcome.

Elizabeth Obermiller

Thank you for having me.

Bob Thompson

We’re going to be talking about the experiences that you had during several years in providing leadership to this CRM program—they call it an ERM program at BNSF. And by the way, congratulations to you on earning the top spot at the Gartner CRM Summit last fall (2006) in Chicago. That’s part of the reason I invited you to talk to us.

Elizabeth Obermiller

Thank you very much. We were thrilled and honored to be recognized among some truly great companies. And to actually bring home the award was truly exceptional. We’re all very excited here.

Bob Thompson

Just for the record, this was the award for enterprise CRM at the conference, right?

Elizabeth Obermiller

Excellence in enterprise CRM. Correct.

Bob Thompson

I was pleased to be the moderator at the session where you made that presentation, and it really was an outstanding story. I’m hoping you’ll talk a little bit more about it. Could you start by just telling us briefly about your current job and what you’re responsible for at BNSF?

Elizabeth Obermiller

Certainly. I manage all of the business aspects of our customer relationship management implementation, which encompasses, for the most part, everything except the actual development of the system. Our IT department manages the developers and the relationships with our integrators and other consultants that we have to work with. But everything else, from the executive alignment, the business process definition, the design of the system, the training, the testing, the rollout and then the post rollout support—I have a little help desk underneath me—we encompass all of those responsibilities.

Bob Thompson

Where do you report into the organization?

Elizabeth Obermiller

I report to an area called “marketing support,” which rolls up to our chief marketing officer. So, we are known as the “business side,” as opposed to the technical side.

Bob Thompson

Maybe we can talk later about how you coordinate and collaborate with the technical side of your business. But let’s stick with your background for just one more second here. How did you come to BNSF, and what kind of things prepared you for taking on this program?

We had three or four different salespeople calling on the same customer.

Elizabeth Obermiller

Well, I originally came to BNSF straight out of college, not in the department that I’m in now. I had responsibilities within finance and our contract management organization. I then moved through the sales organization for a couple years, working directly with customers and then migrated to the position I’m in today, which is a hybrid between understanding sales processes and developing technologies to support them—which was a blend of the prior experience that I had gathered here at BNSF.

Bob Thompson

Now, CRM means a lot of different things to different people. In some companies, it means customer service in a call center. In others, it means sales. And others, it means marketing. Could you tell us at BNSF, what does the term mean? And as a follow on to that, what do you mean by ERM there?

Elizabeth Obermiller

Certainly. Customer relationship management within BNSF applies specifically to the combination of sales force automation and call center automation. Other companies may include marketing, field service and some other areas within their definition. But, for BNSF, it is primarily sales and call center integration, the processes that operate within them and the supporting technology for those groups.

Bob Thompson

And the term, ERM?

Elizabeth Obermiller

The term, ERM, is specific to my title, and that was just kind of a fluke. We already had other departments and other areas within BNSF that had the CRM abbreviation. One is corporate records management.

Bob Thompson

I see.

Elizabeth Obermiller

And the other one is customer relationship marketing. And just internally to prevent confusion, when my position was created, they gave it the name of enterprise relationship management, meaning that it does encompass the sales and customer support enterprise, as far as how we manage the relationships with our customers.

Reorganization

Bob Thompson

Let’s go back in time and get a historical perspective on the project and when it got started. What were the sponsors of the project trying to accomplish?

Elizabeth Obermiller

Certainly. We began this effort in 1999 after a significant reorganization within our company that took our four primary lines of business that used to report directly to the president’s office, and we created what is today known as the chief marketing officer position and rolled those business units under one. And our new CMO announced that he wanted standardized processes between the sales group and a cohesive platform for sharing the sales process and the post-sales information together, specifically with the purpose of using that information to drive profitable revenue growth.

So, we had four independent business units that each had their own way of selling to the customers. So our charge was more from a process perspective: How do we align the sales processes so that they’re more consistent? And we quickly realized that we could define the processes, but in order to sustain them over time, we needed to have systems in place that would support those processes.

Bob Thompson

What were some of the big things that you worked on for the first couple of years of this initiative?

Elizabeth Obermiller

We focused predominantly on just the sales component of account management and opportunity management. Those were the biggest components of the sales process that we needed to synergize across the business areas. So that’s where our focus was, specifically around the sales, the opportunity management component and the account management planning process.

Bob Thompson

Did you find that each of these units had a completely different approach to how they were handling these things?

Elizabeth Obermiller

Yes, we did. One of our business units actually told us that they don’t have customers. So we had to do a lot of change management to convince them that there’s somebody that’s paying the bills, and we call those people customers. They refused to believe that they had customers.

Bob Thompson

What did they think they had?

Elizabeth Obermiller

They thought they had markets.

Bob Thompson

Ah, OK.

Elizabeth Obermiller

Yeah, so it was our agricultural area they work with, what they call the grain traders in the markets: corn, wheat, etc. But we had to do kind of almost a paradigm shift with them to recognize that, yes, they do have to manage pricing from a market base perspective. But when you’re talking about customer satisfaction and building relationships, those are the actual customers, if you will. And we had to help them create that definition.

Challenges

Bob Thompson

So, if I understand you correctly, you had support from the early goings from top management, a new organization set up, and this charter bring things together across the four business units. But then going out to the business unit heads and working with their organization must have been challenging to get them on board and actually come up with something that fulfilled this vision. Can you talk about some of the difficulties you had and what you did to overcome them?

Elizabeth Obermiller

We had a lot of difficulties, like I mentioned before, just getting people to understand that there were similarities between the business units. It took a lot of process documentation and process mapping and then, identifying what the differences were. In a lot of cases, it was a syntax problem. What you referred to as one thing, another business unit called something different. Once we identified the definitions and demonstrated that they were the same, we started to get a little more buy-in.

The other challenge we got was it was very difficult to measure the success of the effectiveness of this program. So we focused our efforts on the departments that had the heaviest involvement in opportunity management and account management and piloted the system with them. Once we had demonstrated successes, we shared those with the other business units to help them see the vision a little bit better than they did previously.

Bob Thompson

So the internal marketing of the project formed the basis of your early success?

Elizabeth Obermiller

Yes.

Bob Thompson

Can you talk about what those benefits were that you saw in the early stages that you were able to help get the rest of the business units on board?

Elizabeth Obermiller

Well, we had a lot of what we call the “soft benefits”: better knowledge about our account, even something as simple as a designated account manager for a specific customer. We didn’t have that before. We had three or four different salespeople calling on the same customer, not realizing that there were these other people that were talking to their customer and sometimes conflicting with what the other person would say.

Simple sales basics like assigned accounts did not exist here. Once we changed those processes, which enabled future org chart realignments and created consistency in our messaging to our customers, selling the soft benefits internally became much easier. We also had faster sales cycle times on our opportunities, which led to greater velocity. We couldn’t tie that specifically to revenue on an opportunity-by-opportunity basis, but the company did grow a little over 40 percent from a revenue perspective between 2001 and 2006. And we do attribute a lot of that growth to the implementation of our CRM system and the opportunity management process.

The project

Bob Thompson

Now, how long did it take from start to—I hate to say finish because these things tend to never be totally finished. But when you look at the major effort in this opportunity management, primarily focusing on the sales process and integrating between the four groups, how long did that take? Was it a couple years? Three years? More than that?

Elizabeth Obermiller

I’m going to say we started in 2000 and we spent a lot of time just defining the processes: the as-is process and then the to-be process. We also spent a lot of time on the vendor selection process. So, from the time we actually began developing to the time we implemented was not that long: probably three or four months. But the components we implemented—the opportunity management and account management—were 2001, and the actual reporting and the secondary components of that for the account scorecard were 2003 and 2004. I would say to get the whole thing done from the sales perspective was a three-year process for us.

Bob Thompson

You mentioned that you spent a fair amount of time on vendor selection. Can you say which vendor you ended up picking and why?

Elizabeth Obermiller

We selected Siebel as our software provider in 2000 and signed a contract with them. We selected them based on projected longevity, primarily, not so much that they had more functionality than the other vendors. For the requirements that we had provided, a number of other vendors were comparable to them and even probably at a lower cost than Siebel at the time. And remember, this was Siebel’s heyday. They were closing deals left and right. But one of the reasons that we chose Siebel is because of what we perceived to be their long-term viability, that we did not feel that they were at risk for being bought by another company or going out of business or generally, long-term for BNSF, that we would lose our support from them.

Bob Thompson

Well, of course, they did get bought by Oracle. Does that change your feeling about Siebel at all?

Elizabeth Obermiller

Not exactly. Our concern as far as the longevity of the company that we selected was from a support perspective, will we continue to be supported on the platform that we have? And the information we’ve been provided since the Oracle buyout is that we are going to continue to be supported. Actually, they’ve given us a lifetime guarantee, which is better than what we got from the Siebel representation. So we have no complaints with the Oracle purchase of Siebel.

Bob Thompson

I’m going to come back to some of the evolution of your project in a moment, but since we’re talking about technology, there’s been a lot of changes in the last few years toward on-demand technology. Have you thought about that in retrospect, saying, “Gee, maybe we should have, or we could have, considered on-demand CRM?”

Elizabeth Obermiller

It doesn’t sit well with our business model physically because what we have today is already so highly customized. There just aren’t any out-of-the-box CRM solutions that fit the railroad environment. There are a lot of nuances that we need as a part of our business process that require customization of the application. The way our sales force is set up and distributed, it fits our business model better to have the system that we have, as opposed to an on-demand product.

Bob Thompson

Let’s talk more about what’s been happening the last two or three years. You focused on the early goings-on in the sales process. What happened next?

Elizabeth Obermiller

We started pulling in data outside of just your business deals. For BNSF, that meant, of course, your standard financials specific to a customer. In railroad terms, it’s: How many cars are they shipping? And what’s the revenue and the profitability on those? And then on-time performance: How are trains performing for those customers?

We look at how they do business with us. Are they managing their billing and their payments electronically, either through EDI channels or through our web-based applications? Or are they still calling and faxing us? We look at their customer survey results; how does that impact the overall business that we do with our company? We also measure their receivables: How well are they paying us? Are they on time? Are there any external service requests that they have? And general call volumes to our customer support center. Much more than just basic opportunity information.

Pretty much any data that we can get on our account, we pull that together and create kind of a holistic view of all aspects of the customer. We use that to develop better strategies with our customers.

Bob Thompson

How about how the call centers link into this game plan? Have you done work in that area, or has it been more just integrating information that you’re already collecting from contact centers?

Elizabeth Obermiller

No. The call centers, we implemented them in 2002 on a Siebel platform, and all of their inbound calls are captured within our system. Those feed into our overall account scorecard, where we’re measuring customer interaction. The call centers, themselves, use our Siebel system for their day-to-day operations. It provides the security for the customers who are calling in. It allows them to log all of the comments from the calls, as well as to submit a field service request if the call is not first-call resolved. So they actually use the CRM platforms every day. And if there was an outage, they are significantly impacted by it.

Benefits

Bob Thompson

Let’s go back and discuss benefits. Take a day in the life of a typical worker, somebody who’s using these systems. What was different about how they’re able to do their job in 2000 versus today, 2007? How is it delivering more value to the business or to the customers they’re serving?

Elizabeth Obermiller

The first difference is the overall efficiency. The way we’ve designed the system, it provides 90 percent of the information that an account manager needs to do his job or her job very quickly.

Bob Thompson

They didn’t have that available as easily back in 2000?

Elizabeth Obermiller

In 2000, they did not. They had spiral notebooks and spreadsheets on their desk. And there was no sharing of information between account managers or between systems. So you’d have to run your own reports to find the financials of your customers. You’d have to look in your own notebook on what were the opportunities you had with that customer. So, really, just from an efficiency standpoint, we took the processes, defined them the way they should have been, and then we built this system around the 80/20 rule of, “What does a BNSF sales manager need every day to do his job effectively? And we provided that to them. Just the information and intelligence that they get today is so much better and so much faster for them to obtain with a system than it was without.

Bob Thompson

How do you attach business benefits to that improved capability?

Elizabeth Obermiller

Very softly.

Bob Thompson

It’s tricky, isn’t it?

Elizabeth Obermiller

It is tricky, and we have had the good fortune here at BNSF to have a lot of sponsorship at the executive level from people who, in their past life, used to be a line salesperson. So they understand the difficulties of the past way of doing business. And when we show them the way our CRM system can support improving just those tasks and providing much more information that much faster, it’s a very easy sell to them because they get it. So we’ve been very fortunate in that regard to have that understanding and support from our executive levels.

Bob Thompson

How about in terms of getting to the day-to-day users? I’m not thinking so much about managers but salespeople, customer service people in the call center, getting them to do the things or to behave differently. Do you have any tips that you’ve uncovered over the years, in terms of gaining their buy-in and adoption?

Elizabeth Obermiller

We employed an external consultant on the initial rollout to help us with a formal change management program, the details of which are quite large. But the end result was tremendous buy-in up front. And what we saw was, not only did we ramp up a lot faster with the usage and adoption, but the overall growth increased because the basic tenet of getting buy-in if you have peers who are championing it or selling it to you.

Bob Thompson

So that was part of this plan, to get floor leaders to show the way?

Elizabeth Obermiller

Yes. We actually mapped-out department-by-department who were our champions and who were our resisters. And we used our champions to create a peer network explaining the benefits, kind of doing informal training and selling. We actually employed some of our resisters to help us: “Hey, can you help us test this system?” And they would give us a lot of feedback on what they didn’t like. But when they saw that we took their feedback and made changes, it helped them buy into the system even more.

Bob Thompson

Are there any general conclusions you could draw about why these, as you call them, “resisters” had that mindset and required some extra attention?

Elizabeth Obermiller

Some of it was just the personality of the person. There are people who are more accepting of change than others. We had to be aware of that. Those are the people that we tried to include in part of the development and release cycle. Others were just simply unaware of what the changes were, why the changes were coming, and what the benefit was to them. In those cases, we had formalized an internal marketing campaign, if you will, where we had a blitz of all different media: posters, table tents in a break room, emails with video demos and newsletter bulletins that we just put out with the facts of what was coming, the “what, why and what’s in it for me?” Once you could sell them on the logical argument, the change acceptance came pretty quickly after that.

Bob Thompson

How many people ultimately did you involve in this change process?

Elizabeth Obermiller

In the actual change process, I would say we had 30 total, so about one champion or resister per 10 users is what it broke down to.

Bob Thompson

So you had about 3,000 total users, but you targeted roughly 10 percent?

Elizabeth Obermiller

We had 300 central original users and about 30 change-management designs. We call them teams.

Bob Thompson

What does the future hold for you at BNSF and what kinds of initiatives you’re looking at?

Elizabeth Obermiller

We are looking at how we evolve from the customer relationship management, kind of the textbook definition of that—which we feel we’ve completed our build-out for that—more to: What is the customer experience management? And how does the foundation that we set through our CRM initiative help lead us into a successful customer experience management program?

Bob Thompson

And why are you interested in that?

Elizabeth Obermiller

Well, like I said, we feel like we’ve finished out a lot of our goals for CRM, and when we talk about growing our business and building relationships, we think it’s an important aspect to look from the customers’ perspective about what are their experiences with BNSF and what can we do as an organization to improve those, such that we end up benefiting our bottom line?

Bob Thompson

Any quick things that come to mind, as you get input from your customers? Things you can improve?

Elizabeth Obermiller

We’re still kind of in the initial gathering phase. We just launched a new survey last year that we called a customer relationship survey. It’s not just satisfaction, but there are significant questions in the survey specific to their perception of their relationship with BNSF. We are just now starting to be able to mine some of that data from the insights that are being provided from our customers. So it’s a little too early to say just yet.

Bob Thompson

It sounds like a fascinating project, and for what it’s worth, it’s something that I’m seeing quite a lot in companies. Evolution of customer management in its full form goes through kind of basic phases, automation and internal processes. And the last year or two, there’s been a tremendous amount of interest in what, to me, fills the vision for CRM, which is: How do you create a relationship that’s valuable to the customer that’s going to drive loyalty? I think you’re going to have a lot of fun working on that in the next couple of years.

Just a closing thought here. Of all that you’ve learned over the past several years, is there one bit of advice that you could share as to what others should do if they’re heading on an initiative like this?

Elizabeth Obermiller

It’s hard to boil it down to just one answer or “the silver bullet,” if you will. The best thing that we’ve had for BNSF is the strong executive sponsorship. Without that, I think everything else that we’ve had in place would not have mattered. You can design the best system; you could do it with the best cost; have the best change management; super processes defined across the board. But if you don’t have an executive that buys into it and supports its usage going forward, that old adage, “If you build it, they will come,” does not apply.

Bob Thompson

That sounds like great advice. Elizabeth, thank you so much for sharing your thoughts with us on Inside Scoop. I really appreciate it.

Elizabeth Obermiller

You’re very welcome, and thank you so much for the invite. I appreciate it.

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