Rebooting IS operations

After years of talk about outsourcing information services, fleets are finally beginning to sign contracts.Maybe it's that streak of self-reliance that runs so strongly through the industry, but trucking has not been very receptive to the concept of outsourcing its information services.It looks like that is all about to change. In the closing weeks of 1997, The SABRE Group announced a tentative IS

After years of talk about outsourcing information services, fleets are finally beginning to sign contracts.

Maybe it's that streak of self-reliance that runs so strongly through the industry, but trucking has not been very receptive to the concept of outsourcing its information services.

It looks like that is all about to change. In the closing weeks of 1997, The SABRE Group announced a tentative IS outsourcing agreement with the large truckload carrier PST Vans, and HighwayMaster indicated that it was about to announce similar contracts with two smaller carriers. The giant in IS outsourcing, IBM, is also quietly talking to a number of fleets about providing a wide menu of services.

After all this time, why the sudden flurry of activity?

There are a number of reasons fleets are considering outsourcing a viable alternative to in-house IS operations. Although no one alone might tilt the balance in favor of outsourcing, taken together they are beginning to make a very strong argument for turning over the management of information systems and services to a specialist.

First, there's the need to upgrade existing systems to handle the Year 2000. Even if they started with purchased software, many carriers heavily modified their management systems over the years, in essence creating custom systems that will require a good deal of expensive programming time to continue working after 1999. On top of that, many of these legacy systems were designed before anyone even thought of the Internet as a commercial information network, and they run on platforms that are relatively difficult to modify as fleet and customer information requirements change.

Just as fleets are feeling pressure to significantly upgrade their IS operations, the country is faced with a shortage of qualified programmers and other IS technical talent. Not only are technicians hard to find, but salaries are rising sharply and turnover can be high, as other industries with more interesting technical challenges step up their own recruiting.

Information technology is also changing rapidly, as are customer expectations about access to information. Whether it's a private or for-hire fleet, responding to changing information demands can be both costly and frustratingly slow if in-house resources are limited.

Finally, there's the issue of cost. Like equipment leasing, outsourcing IS replaces large, fixed capital investment with a well-defined cost structure that can easily expand or contract as business conditions dictate.

It's no wonder then that some for-hire carriers have decided they should concentrate on trucking and let someone else take over the IS chores. While some private fleets might have theoretical access to much larger IS departments, in reality their information needs are usually a distant second to those of the company's main business. In such a situation, the thought of a vendor answering directly to the fleet operation is very appealing.

But before you pull the plug on your computer system, you also need to consider some of the potential drawbacks to outsourcing IS. Trucking's customers have never placed greater importance on good information. If you outsource your information systems, you are trusting someone else to deliver critical customer services. If they don't, you're the one your customers will hold responsible.

There's also the issue of expertise. No one knows your fleet better than your own people. Can you live with systems developed to meet a wide variety of fleets rather than one built inside your own organization?

Finally, there's the issue of cost. Outsourcing does free you from the large capital investment needed to update your information systems. At the moment, however, capital is relatively inexpensive and fairly easy to obtain for many fleets and businesses. You need to look beyond the monthly fee structure of outsourced services and do some detailed financial analysis to determine the true costs of both approaches.

There's no one right answer here, but obviously conditions are right for IS outsourcing to make significant inroads in trucking. And given the tempestuous nature of the trucking business, it's always good to have a new option.

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