Is software-as-a-service cost-effective for fleets?
Managing software is complex, expensive, and constantly changing. Software-as-a-service can be more agile and cost-effective than the traditional on-premise model. But how does it benefit fleets?
“There is long-term value, and there is short-term economic value. It’s less labor, less management, less headaches,” Jay Delaney, director of product management for trucking SaaS provider Magnus Technologies, told FleetOwner. “It’s just easier for companies to consume in a SaaS model than your traditional on-prem world.”
In SaaS, the provider manages most of the operations and expenses of sophisticated software management. Fleets can pay for their usage rather than directly and separately for the hardware, software, management, and infrastructure. The arrangement has clear benefits—but can come with setbacks.
Economic advantages
Traditional on-premise software requires companies to manage all aspects of the software and infrastructure themselves—an expensive and complex undertaking. SaaS helps reduce that investment and complexity into regular service for a simple recurring fee.
“You no longer have to manage, purchase, and maintain the hardware necessary to run the application,” Delaney said. “All of that hardware, the management and maintaining of that, plus any networking costs and infrastructure costs are all managed and handled by the software provider.”
With cloud-hosted platforms, carriers don’t have to hire someone to manage a transportation management system, purchase commercial-grade communication and computation equipment, manage a property to host the infrastructure, or regularly replace equipment and personnel.
See also: Fleets Explained: What is a TMS?
“Especially for smaller and midsized companies, that can be a big savings in cost,” Delaney said. “It’s very expensive to manage and maintain that equipment month over month.”
Cloud-based solutions also have easier scaling. As the business grows or shrinks, acquiring the necessary hardware to scale up an application becomes simpler.
“In a traditional software on-premise type of solution, if your business grows, you have to add more hardware and more people,” Delaney said.
A cloud-hosted SaaS provider likely already has the space, hardware, and personnel to expand service, allowing a carrier to easily expand its infrastructure footprint for smaller up-front costs. A similar benefit comes when a carrier needs to shrink its operations.
“In a traditional on-prem world, you’ve already purchased all that equipment; it’s a sunk cost for you,” Delaney said.
Easier updates
Financing the personnel and equipment is only the beginning; software solutions need regular updates.
