Trucking in the Cloud: Part II
Some of you will read this and say: “I don’t want my company data on the cloud, I just don’t trust it”. Others will think: “sign me up – I have better ways to use my capital”. Both opinions are valid but both may be overlooking a few opportunities and risks.
First of all, let’s look at why you would want to use a cloud-based TMS. At the very basic, IT is not likely one of your core competencies. Moving freight, delighting customers, keeping the equipment in shape and attracting drivers are what you want to be spending your resources on, not owning and maintaining servers or software. TMS Software essentially offers a service that allows you to provide those core competencies. So why not treat it like a service and pay for it that way?
Capital Spending Model versus Expense Model
Traditionally you would spend around $10,000-15,000 or more to purchase and license an server running Microsoft Windows. Possibly more if you required SQL Server. Then you make a large investment in purchasing a TMS and then getting the necessary user licenses. This all shows up on your balance sheet as a capital item. Most likely you had to finance it, reducing the amount of capital available to put toward rolling stock or other assets that direct impact your core functions. You needed a special room to house the servers and networking equipment. You needed to provide air conditioning specifically for that room, as well as a fair amount of electricity to power everything. A cloud based TMS is accessed over the Internet with a secured connection. It requires no equipment other than a desktop or laptop pc (and some can even be used with mobile devices). As a service, the monthly costs are expensed and it will have a minimal impact on your ability to borrow money. An additional feature is that you pay only for what you use as the solution tends to be scalable. Had some turnover this month and are down 3 users? Make a quick phone call and you pay for 3 fewer users this month. Opened a new terminal? Make a similar phone call and you can have users up and running within minutes. If you owned your own server you would still have already prepaid for those user licenses and would incur some depreciation expense regardless if it was used or not. You would also have to go through the help desk, get someone to log onto your server, install additional licenses and then have your IT staff install the software. That’s a lot of overhead that could be better used elsewhere (or just added to the bottom line).
It’s all about trust and security
Let’s address the trust issue. Most cloud offerings have made gigantic leaps in terms of security. The use of technologies such as private or shared keys, the latest in encryption and multi factor authentication will ensure that your data stays safe and only seen by the people you authorize to access it. In a nutshell most cloud providers can offer you the same or better level of security as having the server in your location. In many ways, unless you maintain a large staff of IT professionals onsite you might actually be exposed to more risks having your data inhouse. Has your team applied the latest updates to the server? Are there any vulnerabilities in your router that a hacker could exploit to create an unknown backdoor? These are some of the many items that the TMS provider will provide for you at a much lower cost than doing it on your own. Hardware upgrades, failover backup servers, backup storage and management, the application of software updates – these all become part of the service that you are purchasing.
Collaborate in Real Time
An additional feature of a cloud-based TMS is the ability to allow customer access to some of their data without putting your data at additional risk. If you host your own server then to give a customer access you need to open up your firewall, expose that server to the outside world and rely on either internal staff or a consultant to make sure that they only allowed enough access to provide what the customer needs while preventing the hackers from getting in. A cloud based TMS takes care of the security for you as they have the scale to have dedicated professionals to manage this as well as test the system for intrusion prevention. Now you can quickly and easily allow a customer to get real time updates on their loads, put in tenders and get their own proof of delivery documents.
Some cloud based TMS systems also allow for access with mobile devices. This is something to look at if you have staff visiting customers or have on-call staff at night or on weekends. Giving these users the ability to access the TMS system with either their cell phone or an inexpensive tablet device means fewer hours spent in the office (and possibly reduce overtime costs) and eliminates the need for providing laptops and VPN technologies that allow a user to have more access to your network than you may want them to have when they are not in the office. Losing a $150 tablet is not as hard to swallow as a $1000 laptop and there is less likely that the tablet has any proprietary data on it. Force the user to enter their password each time they log in and that tablet will likely have next to nothing of value to your competition.
So Who Offers a Cloud Product and Who Do I Look At?
The big players like TMW and McLeod offer a hybrid where the equipment can be hosted offsite under their management. Then there are providers who focus more on smaller carriers like Strategy Online, Transcount, LogistaaS, Pantonium, Roadnet, Accellos and many others. Some companies do a full cloud product that is accessed through a browser and some require a locally installed program and then access the data through the Internet. If you are looking at minimizing IT time, a browser based solution is preferred as the provider takes care of everything. Locally installed software still requires someone to install updates, ensure that it is configured properly and then maintain it. Regardless of which option you decide you will be on the way to improved flexibility, lowered costs and back to focusing on why your customers want to do business with you.