The powerful new breed of major-league software applications aimed at commercial trucking has a lot of forward-thinking fleet managers licking their lips. If only they could leap the hurdle of those h...
The powerful new breed of major-league software applications aimed at commercial trucking has a lot of forward-thinking fleet managers licking their lips. If only they could leap the hurdle of those huge up-front costs, they could cash in on the same benefits the big boys enjoy.
The software suppliers, painfully aware that your capital costs impede their market growth, are developing a whole new model around how companies access and use their products. And it would be an understatement to say it’s catching on fast.
Under the original model – the one that may be holding you back – you had to choose your fleet management software and buy it, or at least licence the use of it, from the selected vendor. They wanted their money up front. Then you’d need some sophisticated hardware to run the system, and likely as not expensive help from a consultant or a systems integrator to link your new software with the earlier applications you were using to run the business. You had to train everyone to use this new application. And you had to dedicate information technology (IT) staff – a precious commodity if you could find it – to keeping the whole thing up and running.
Such was the cost to embrace leading-edge technology.
The new model – hosted services – addresses all of these anxieties.
First, no longer do you buy the software, or the computers to run it. Instead, the developer hosts the software on its own computer – or the server of a company that specializes in hosting applications. What you buy is access to the software, according to your needs. Pay as you go.
Most, if not all, the software vendors in this new field provide you with access over the Internet. You link with some very sophisticated fleet management applications through your own desktop PC, using your now-familiar Web browser. You can upload data through scanners, wireless communications devices, cell phones or what have you, as if the system were resident in your headquarters. And you can download activity reports from anywhere that allows you or your employees an Internet connection.
While the developers and vendors – now called application service providers, or ASPs – are trying out various fee schedules – monthly subscriptions, annual fees and so forth – they’re moving in the direction of a transaction-based fee structure. The more you use the system, the more you pay the ASP.
By making their fleet management applications Web-browser-enabled, the ASPs greatly reduce the complexity of making their software talk to your in-house software, thus freeing you from the clutches of systems integrators. The simple browser interface shrinks user training time as well.
And the bulk of those precious IT resources become the responsibility of your ASP, rolled in with providing and maintaining the host server and data center.
The ASP model itself has so attracted software users that market analysts predict phenomenal growth and the virtual transformation of software vendors into ASPs over the next five years.
In a software industry report released at the end of July, AMR Research Inc. predicted that the Enterprise Application Service Provider market would reach $4.7 billion by 2004, getting there on a compound annual growth rate of 153 per cent.
Still more rosy, the ARC Advisory Group expects on-line rental of supply chain software to grow from $77 million in 1999 to $8 billion come 2004.
The vendors say trucking companies recognize the cost-saving benefits of traditional software tools. They’re drawn to the new delivery system model because it focuses on a quick return on a much smaller investment.
Also driving customers to the ASPs are the new realities of the trucking industry: increased competition, shrinking margins, rising fuel costs, increased safety and maintenance concerns, and increased customer demands such as JIT scheduling.
Who’s buying into it? According to the vendors:
All trucking companies will need such networked systems, says one vendor. The biggest will keep it in-house. The smallest will have to go ASP in order to compete.
Small to medium companies that don’t want to pay a large fee to consultants to set up computers and networks.
Companies that have multiple locations and want a centralized database. Information can be shared more easily with their customers.
Larger fleets and organizations who can use the Internet as a means of sharing data with remote branches and as a method of software integration.
The new companies who recognize they don’t need to play technological catch-up. They can be technological front-runners from the start.
Those with the foresight to see the benefits – the same risk-takers and innovators who pioneered GPS, cell phones and Internet use.
Here’s what some of the major ASPs have to offer:
A major player in conventional trucking software, Link Logistics has put its load- and equipment-matching database on the Web as an application called Web Link Gold.
Link Logistics’ Brad Aitkin says a new offering, a track-and-trace program, should be online by the time you read this. It allows a trucking company to store information securely and to share it with customers by providing them with ID numbers and passwords.
And, says Aitkin, Link Logistics will add its dispatch software to the Web in the first quarter of 2001. “Our dispatch software allows for easy order entry, invoices, driver settlement, equipment tracking, maintenance scheduling, AR and AP modules.”
Aitkin expects the company will move all of its fleet management applications over to the hosted model, though “we’ll continue to support our (conventional) software in the field as long as there is demand.”
Hosted products are sold by monthly subscription, with a discount if you pre-pay.
Brian Shivley, VP development at Hookup Inc., says his company currently offers introductory ASP services to both carriers and truck dealers. “The products include many of the features that you would expect to find in an e-commerce solution for businesses within the trucking industry,” he explains, “but our specialized niche is in asset management. Hookup.com continues to evaluate ASP opportunities in the small and mid-size carrier market.”
In aiming at small and mid-tier carriers, hookup.com recognizes that they often don’t have an IT staff. “So our products are geared with user interfaces that are very self-explanatory,” says Shivley. “Once the connection to the Internet is established, we take care of the rest of the technical responsibilities. In addition, unlike many dot com companies, we have a responsive customer service department that is willing to walk a user through the system one click at a time. This method eliminates the need for on-site technician visits and the associated costs.”
At this time hookup.com’s pricing fluctuates between a subscription model and pay-per-use. “Volume users prefer the subscription format,” Shivley points out. “The pay-per-use model is slightly more costly, but a customer never pays for a benefit he doesn’t use.”
Shivley says the company’s on-line products are only made possible by networking the information of various partners throughout the trucking industry. “As we look to the future, we expect to release products that include the base functionality of off-the-shelf dispatch programs tied to the powerful cost-controlling information that we are beginning to make available. In fact we are looking forward to offering many of the existing programs with new data exchange capabilities to the market through strategic alliances.”
A pioneer in the field, Mark Bowie says his company, ProMiles Canada Inc., “has been on-line since October of ’98 and is now the only truck mileage/fuel tax/fuel optimization program on the Web. As such we are constantly reaching out to other ASPs in the area of load matching, routing, and logistics.”
Current hosted applications include mapping, routing, truck mileage, fuel tax calculations, fuel-purchase optimization, integration to load matching for backhauls, and vehicle tracking. “We have constant improvements, enhancements, conten
t, and integrations with other ASPs in the works,” reports Bowie.
The company plans to move all its fleet management applications to the hosted model, but will continue development and sales of desktop software as well.
ProMiles leans toward the subscription format in its pricing. For the sake of comparison, Bowie says you might pay $2,000 to buy an application module on CD-ROM, but $50 a month by subscription.
The Internet creates a demand for real-time information from the customers, says Edward Forman, president and CEO of Prophesy Transportation Software Inc., a veteran supplier of trucking applications sold by the conventional method. Trucking companies must offer this information or lose business to competitors that do.
“I estimate that 40 to 60 percent of the small to medium-sized over-the road-companies (about 25,000) will go ASP. This does not include LT or brokerage operations,” he says.
In response to this demand, says Forman, “We will be offering full-scale operational software via the Internet in about three months. This will include dispatch, accounting, mileage, fuel-optimization, driver-management and related applications. The products provide all the basic applications needed by a trucking company to operate its business.”
Virtually all the company’s trucking applications will be hosted, though not all in the initial rollout.
Prophesy plans monthly subscription fees, with some special capabilities made available on a per-transaction basis.
Beyond the software itself, Prophesy intends to gather data, with the hosted customer’s permission, sanitize the data for confidentiality, then share it among those who have given permission. “The companies would benefit from knowing what the prevailing rates and prices are,” says Forman, “especially the little guys who are forced to operate all over North America with very little knowledge.”
Prophesy won’t be the first ASP in the trucking industry to offer this service. Look for others to follow suit.