CN hooks up with SAS to forecast revenue

Canadian National Railway hopes to put its sales and workload management on the fast track through the implementation of predictive analytical software in its revenue management line of business.

The Canadian arm of SAS Institute Inc. on Thursday said CN would be using its Forecast Server, which is designed to uncover time-related patterns and trends, as well as SAS Financial Management, a planning and reporting tool. Terms of the agreement were not disclosed. The products will replace a seven-year-old business intelligence platform from i2 Technologies which CN said is no longer being supported. The two systems will run in parallel until the end of next year, after which the company will be standardized on the SAS tools.

CN Rail’s assistant vice-president of marketing Doug MacDonald said SAS was chosen in part because of a satellite sales and service operation located near CN’s Montreal headquarters. SAS will be providing some consulting and services during the implementation in partnership with CN’s IT department.

“The thing we like is that SAS can handle our data as-is,” MacDonald said. “One of the issues with i2 was it involved a lot of data manipulation . . . we had to make data fit into a certain size. In some cases it would mean having to shorten things substantially, so details would get lost.”

In the early stages, CN’s sales staff will use the system to monitor traffic on its railways and forecast the expected traffic over the following 18 to 24 months. The forecasting and reporting tools will be used by about 125 sales people and eventually about 25 different directors and senior executives, MacDonald said.

“We’re hoping eventually to be forecasting workloads for train crews,” he added.

SAS senior forecasting solutions specialist Craig Carothers said CN and other organizations are trying to allow analytical software to do the heavy lifting of running through the material revenue streams and seeing what will affect their financial performance within the next quarter, month or year. The next step is to be able to take action on that information.

“The farther out you can forewarn and arm the organization about the opportunities and threats, the better off you’ll be,” he said. “What it’s doing is identifying the cause and effect of that change in revenue stream at the most microscopic level that is material to their business.” 

SAS has been promoting the predictive capabilities of its products for several years, but the company is still working hard to raise awareness about what the tools can do, said Mario Ianniciello, SAS Canada’s regional director.

“What we offer is a way for companies to focus less on the operational side of the forecast process — therefore the coding, the modelling, bringing all the data — and more on the optimization of the forecasting,” he said.

CN has been a SAS customer for more than 20 years, but much of it was running on its mainframe, according to MacDonald. “It was not being used for anything substantial,” he said.

While analytics and BI reports can involve some major transitions within an enterprise, MacDonald said the learning curve wouldn’t be too steep for CN employees.

“The single biggest feature that SAS brought was basically an Excel front end,” he said. “We’ll be able to avoid the extra training costs and retraining and will be able to roll out immediately.”

CN is enhancing its forecasting abilities at the same time it is increasing automation in other parts of its business. In July, the company said it had set up a radio-frequency identification system to track goods on one of its intermodal terminals in Brampton, Ont. that may be expanded across its operation.

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