1. Robin Cody Chief Information Officer San Francisco Bay Area Rapid Transit District (BART) Session Title: Realizing Successful Transformation Within Politically Charged Environments: A Case Study

2. Topics / Overview Business Advancement Program $40 Million Obstacles 5 Year Payback Business Case New Technology Old Culture Business Process Key Strategies Financial Scorecard Change Example Cultural Change Business Transformation

3. Service Map

4. 1940’s, 1950’s, 1960’s, 1970’s, 1980’s, 1990’s, & 2000’s BART’s Evolution BART’S SUCCESS Established In 1957 By The California State Legislature 9-member Elected Board Of Directors First Fully Automated Rapid Transit System In The World Revenue Service Began In 1972 The 8th Wonder Of The World (Trans Bay Tube) Top 10 Public Works Projects In The 20 th Century 2004 Voted # 1 Transit System In North America $1.6 Billion Original Investment Equals $15 Billion In Today’s Dollars TRACK FACTS $577 Million Operating Sources $191 Million Capital Budget 66.5% Of The Operating Budget Is Labor ($323.5M) Electric Bill = $40M / Year 60% Of Operating Expenses Comes From Farebox 3,265 Employees (90% unionized) 105 Miles Of Tracks / 43 Station 389,073 Average Daily Passenger Trips 46,392 Station Parking Spaces 1,398 Bicycle Lockers Train Maximum Speed = 80 MPH Maximum Train Length = 10 Cars 211 Police Officers BART’S IMPACT 4 Bay Area County Span 26 Cities Served BART Carries 50% Of Peak Period, Peak Direction Transbay Traffic Without BART, Another 75,000 Cars Would Be Added To A.M. Peak Direction Bridge Traffic One-Third Of People Traveling Between Central Contra Costa And Oakland Use BART! 50% Of Downtown Oakland Workers Use BART 70% Of East Bay Travelers Are Destined For San Francisco And San Mateo Counties

5. Regional Rail Martinez To Eureka Santa Rosa and Napa Davis Sacramento To Carson City Pittsburg/ Bay Point To Stockton, Bakersfield Dublin/ Pleasanton BART Jack London Square Emeryville Berkeley Richmond San Jose To Gilroy, Santa Cruz, Salinas and Monterey Santa Clara/ Great America Fremont Warm Springs Extension Fremont/ Centerville Millbrae Colma San Francisco Airport Extension Oakland Airport Extension Suisun/ Fairfield San Joaquin Route Roseville

6. Implement Operational Standards & Procedures Change How We Do Business Eliminate Legacy Hardware & Software Enhance Staff Skills And Prepare For Change Achieve Our Commitments To Our General Manager “ It’s Hard To Envision The Future When You Haven’t Caught Up To The Past!” BAP Objectives

7. Couldn’t Support Drivers Facing Our Obstacles Manage Transit District Manage Customer Service Market & Sell Services Manage Information Technology Expand The District Operate Trains And Stations Maintain Fleet And Facilities Manage Human Resources Manage Procurement And Inventory Manage Funding And Finance Business Drivers Old Environment Inefficient With Low Productivity! High Cost Of Support Old Manual Processes System Integration System Expansion Remote Computing eBusiness Lack Of Information Outdated Applications Lessons Learned From Other’s Adequate Resources CBA’s & Leadership Proven Technology Negotiating H / S / M Determining True Needs Finding COT Solutions Lack Expert Personnel Championed From Top Procurement Processes Business Case (ROI) True Costs & Benefits Turfism-Silos Old Culture’s New Obstacles

9. 42% Leadership 27% Organizational & Cultural Issues 23% People Issues ERP / EAM Implementations Success Rate *Standish Group Survey - 1999 84% Fail 16% Finish Why Implementations Fail: Source: Organization Dynamics, Jim Markowsky 4% Technology Issues Other 4%

10. Risk of Failure Organizational Degree of Change INCREASED RISK OF FAILURE Championed From The Top High Low High Low Enterprise Across Verticals Across Departments Department Level Unit Level “ Sponsorship” & Good Management May Be Sufficient Aligned Leadership & Collective Action Are Required

11. Transit & Industry Administrative Best Practices Of “ High Performance Organizations” Reflects Those Functional Activities The Administrative Operations Must Do Well As Core Competencies Moderate Importance - Can Be Deferred For A Brief Period. 20 Criteria Extreme Importance - Fundamental To Day To Day Administrative Operations. 25 Criteria Limited Importance - Impacts Can Be Delayed. 4 Criteria Document Control/Records Management Project Management & Collaboration Centralized Access Network Standards Etc. Marketing/ Graphics Integrated Timekeeping, Payroll And HR Mgmt. Integrated Maintenance, Materials, Inventory & Procurement Mgmt. Integrated Financial Mgmt. Etc. Industry Assessment

12. BART Current State Business Process And Applications Most Of The Fundamental Day-to-day Business Processes And Corresponding Applications Do Not Meet Business Needs And Growth Expectations Functionally Deficient, But Meets Most Current Business Needs 8% Does Not Address Current Business Practices 4% Functionally Deficient, Meets Limited Business Needs 88% Integrated Timekeeping, Payroll And Human Resources Mgmt. Integrated Maintenance, Materials, Inventory And Procurement Mgmt. Integrated Financial Mgmt. BART’s Assessment

13. Consolidated Cost Statement INVESTMENT COSTS (out of pocket) 2003 2004 2005 2006 2007 2008 2009 Total Hardware $2,000,000 $0 $0 $0 $0 $0 $0 $2,000,000 Software $2,750,000 $0 $0 $0 $0 $0 $0 $2,750,000 Implementation Costs - Includes Functional Implementation, Technical Services, Change Management And Project Management $7,186,000 $10,118,500 $608,000 $0 $0 $0 $0 $17,912,500 Training $524,625 $1,704,625 $264,813 $0 $0 $0 $0 $2,494,063 TOTAL $12,460,625 $11,823,125 $872,813 $25,156,563 Start Up Steady State TOTAL COST OF OWNERSHIP One Time: Hardware $2,000,000 $0 $0 $0 $0 $0 $0 $2,000,000 Software $2,750,000 $0 $0 $0 $0 $0 $0 $2,750,000 Implementation Services $7,186,000 $10,118,500 $608,000 $0 $0 $0 $0 $17,912,500 Training $524,625 $1,704,625 $264,813 $0 $0 $0 $0 $2,494,063 Internal Staffing (SOFT COSTS) $1,276,458 $1,629,279 $479,304 $0 $0 $0 $0 $3,385,041 Recurring: Hardware Maintenance $100,000 $100,000 $100,000 $100,000 $100,000 $100,000 $600,000 Software Maintenance $0 $495,000 $495,000 $495,000 $495,000 $495,000 $495,000 $2,970,000 Total $13,737,083 $14,047,404 $1,947,117 $595,000 $595,000 $595,000 $595,000 $32,111,604

14. Consolidated Benefits Statement FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 Integrated HR/Payroll/Timekeeping Employee Self Service 150,280 $ 150,280 $ 150,280 $ 150,280 $ 150,280 $ Improvement In Timekeeping & Payroll Payroll Run Processing - $ - $ 1,283,531 $ 1,283,531 $ 2,567,061 $ 2,567,061 $ 2,567,061 $ Improvement In Check Adjustment Process & Accuracy Of Pay-Checks - $ - $ 177,837 $ 177,837 $ 355,674 $ 355,674 $ 355,674 $ Integrated Financial Management Invoice Processing - $ - $ 234,123 $ 326,967 $ 458,129 $ 630,312 $ 646,070 $ Report Writing - $ - $ 125,627 $ 276,380 $ 304,018 $ 501,631 $ 551,794 $ Budget Analysis - $ - $ 133,455 $ 350,320 $ 514,971 $ 772,456 $ 811,079 $ Savings In Cabinet Sq. Footage - $ - $ 57,951 $ 91,454 $ 128,392 $ 169,115 $ 214,012 $ Integrated Maintenance Mgt Average Labor & Maintenance Cost Per Car Hour - $ - $ - $ 1,402,656 $ 2,875,445 $ 2,947,331 $ 3,021,015 $ Integrated Procurement & Inventory Mgt Contract Processing - $ - $ 257,449 $ 589,043 $ 1,347,731 $ 3,083,609 $ 3,527,648 $ Capital Allocation - $ - $ 2,424,000 $ 2,515,000 $ 2,590,000 $ 2,670,000 $ 2,803,000 $ TOTAL BENEFIT - $ - $ 4,844,254 $ 7,163,469 $ 11,291,701 $ 13,847,470 14,647,633 $ CUMULATIVE TOTAL BENEFIT - $ - $ 4,844,254 $ 12,007,723 $ 23,299,424 $ 37,146,894 $ 51,794,527 $ Start-up Steady-State

15. BAP Program Scope Phase I Base Agreement Option A GL, Payroll, Timekeeping, Enterprise Portal Human Resources Option B Option C Maintenance & Materials Management Financials Phase II Payroll/Time & Labor Time and Labor Payroll Human Resources Base Benefits Benefit Administration eProfile / ePay Resume Processing eRecruit / eBenefits e-Development Pension Admin. Financial Management General Ledger Enterprise Portal

16. The “Danger” Zone Phase 1 Planning Project Kickoff Goals & Objectives Management Plans Team Structure Orientation Training Plans Project Plan Infrastructure Plans Phase 2 Design BPR Fit/Gap Analysis Integration Interface Analysis Functional & Technical Specifications Prototype Development Change Assessment Phase 3 Development Configuration Customization Interfaces Security Reports Life-Cycle Development Unit Testing Phase 4 Testing Final Configuration Production Setup Data Conversion Testing User Acceptance Training Go-Live Readiness Phase 5 Deployment End User Training Migrate Production Data Go-Live PP Support Procedures Phase 6 PP Support Production Support System Procedures System Performance PP Procedures Acceptance Signoff Program Management – Scope, Schedule, Budget & Quality Change & Communications Management WAKE-UP ZONE “ Perceived” “ Influence” Costs Cost “ Reality” DANGER ZONE

19. What How BPR & CM Framework As Is’ BPR Fit / Gap To Be’s Contract Requirements Update Requirements Update Requirements Gap BPRC Approved Declined Fit 1 2-1 2 4 4-1 5 Update Requirements 6 Change Impact Assessment Org Impact Assessment Update Job Descriptions Develop Desk Procedures Training Material Development 7 8 9 8-1 Labor Relations Strategy 7-1 ROI Analysis Enterprise Perf. Metrics (EPM) Performance Metrics 3 3-1 3-2

21. The Sides Of Resistance Keep Bargaining Units Separate Negotiate Make Everything Transparent Include Unions In Decision Making Don’t Let The Unions Divide Your Board Inform Your Board Often And Fully Beneficial Practice Establish Your End-Game Involve Labor Relations Early & Fully Identify Your Biggest Impacts Mutual Consent Clause Know When And What To Communicate Union Leadership Don’t Play New Game By Old Rules Beware Of Bureaucracy Don’t Try To Control The Uncontrollable Don’t Pick The Wrong Battles Don’t Choose Your Own Pace Of Change Don’t Expect Someone Else To Reduce Your Stress Spend Your Energy On Solutions Embrace The Future / Promote The Vision! Understand The Rationale For Change Try To Eliminate Uncertainty Decide To Change / Commit Expect Stress To Rise Management

22. 100’s Of Special Pay Rules Paper Time Sheets 5 Collective Bargaining Agreements No Controls Clerical Data Entry No Management Responsibility / Visibility And....... Example: Automating Time & Labor Rules

24. Payroll Reviews And Batches For Data Entry Employee Punches Manual Time Clock Original T&L / Payroll Process Steps Supervisor Verifies Card For Correctness Tries To Resolve With Employee (Vacation, Sick Holiday, OT, etc.) Employee Reviews Check For Accuracy If Over – Keeps; Under Requests Adjustment And Manual Check 98% Underpaid Timekeeper Adds Time Reporting Codes Prepares Total Hours By Earning Code And Writes On Back Of Card Payroll Is Run, Direct Deposits / Checks Direct Deposits Sent, Checks Printed And Distributed Supervisor Verifies Time Card Approves Or Returns To Timekeeper For Correction Timekeeper Signs-Off On Timecard RLDS Charges Entered Manually. Cards Batched, Headers Created Data Entry Service Creates Tapes For Input Cards Couriered To / From IT For Payroll Processing Payroll Adjusts Checks ( 800 / month) If Manual Check Created, Start The Process Over Again

25. Supervisor Approves Payable Hours Employee Reviews Check For Accuracy Employee Swipes Time Clock Payroll Adjusts Checks ( 100 / month) New T&L / Payroll Process Steps Payroll Is Run, Direct Deposits / Checks Direct Deposits Sent, Checks Printed And Distributed Time Administration Is Processed System Check Exceptions; Wage / Time Types, Rates Shift Differentials, etc

29. Financials Receivables / Payables Asset Management PS EPM Analytics Budgeting Grants / Projects Purchasing eProcurement Maintenance Work Orders / Requests Preventive Maintenance Job Plans / Labor Equipment Tracking Project Manager Mobile MAXIMO Optram – Linear Assets Materials Purchase Requisition’s Purchase Order’s Receiving / Invoicing Inventory Control Storerooms / Items Issues Transfers BAP Phase II Program Scope Phase I Base Agreement Option A GL, Payroll, Timekeeping, Enterprise Portal Human Resources Option B Option C Maintenance & Materials Management Financials Phase II

32. “ BAPtized” Union’s