Analysis: IT overhaul drives down costs for rail firms

Cloud, open source and SME services providers have all played a part in enabling the Association of Train Operating Companies to slash operational costs

The Association of Train Operating Companies (ATOC), the organisation that holds together the UK's regionally franchised railway system, is not only migrating its business-critical applications from major systems integrators' data centres to the cloud, but also dumping commercial software too in favour of open source.

The drive to open source and the cloud is being driven by an application modernisation programme that has so far yielded operational cost savings of between 75 and 80 per cent, according to Steve Howes, managing director of Rail Settlement Plan, the separate company that provides the IT services to rail operators.

The shift has been assisted by small and medium-sized services and software companies that have been selected in preference to the tier one systems integrators that ATOC has used in the past. That follows an open tender process in which the smaller services companies' proposals stood out, not just in terms of cost, but also the technical innovation on offer.

"We have contracted three of our applications so far through systems integration partners. All of those three suppliers are using Amazon Web Services (AWS) for hosting purposes," says Howes.

Rail Settlement Plan runs 13 key applications for the railway industry and is in the process of modernising all of them, rewriting them from the ground up. "The most notable application, especially in terms of business criticality, is the ‘ticket on departure' service, on which we have been working with Smart421," he says.

That application enables people to reserve tickets in advance, collecting them from a machine at their station of departure. The other applications that have also made the shift include the fares database, which stores all 120 million different fares available on the UK rail network and pushes them out to operators in a nightly batch process, and the data distribution system, which pushes fares and timetable data out to point of sale terminals.

In addition to contracting with integrator Smart421 to redevelop the ticket-on-departure application, Rail Settlement Plan has also contracted with IPL and iBlocks.

In the process of rewriting the applications, the organisation is retiring its Oracle database licences and application development tools, and migrating to the open source MySQL database - also from Oracle, but licence-free - instead. Indeed, says Howes, the aim is to shift as much as possible to open-source software as part of the operational cost savings that the organisation hopes to make.

"These applications are being rewritten from scratch - they are not simply being moved into a new environment. That's why we have been able to drive cost savings... So the server operating systems are open source, the database is open source, the rules engine is open source, the front-ends are open source," says Howes.

The strategy was developed after the organisation advertised in the Official Journal of the European Community (OJEC), where regulated utilities are required by law to advertise tenders.

There were three main companies that responded, says Howes: first, the tier one systems integrators that everyone will be familiar with and which, indeed, were Rail Settlement Plan's incumbent suppliers. The second, he says, were the well-known Indian services companies, such as HCL, Satyam, Tata and TCL.

"But in all three competitions so far, it has been the small to medium-sized services companies that have prevailed because they have put the most compelling proposals on the table," says Howes.

While they proposed approaches encompassing open source and the cloud, passing on savings to the organisation, the conventional services companies, says Howes, were more likely to propose rebuilding the applications on commercial software platforms, running them on hardware located in their own data centres.

"They [the smaller services companies] tended to demonstrate more technical innovation, particularly with regard to the use of the Amazon cloud. Bigger companies have huge data centres to fill. I guess they are still in a world where they have so much cash locked up in their data centres that they have to use them," says Howes.

While the services companies have put together services in AWS to provide the high levels of availability required - hosting in multiple "zones", for example, in case one data centre goes down - the organisation has also used a number of standard risk mitigation techniques in its contracts. These include the requirement to put the software code in escrow under a third party, and "step ins", which allow Rail Settlement Plan to take over the running of the application in event of a failure by any of the IT services providers.

@GraemeBurton