As high expectations and new market challenges transform the commercial transportation industry, companies are searching for ways to streamline operations while increasing productivity, nurturing customers and growing revenue. Data has become the key resource for unlocking efficiency and gaining a competitive edge, but for many companies, it can be difficult to grapple with all of the technology resources it takes to collect or analyze it.
Enter Software as a Service (SaaS) and cloud-based technologies: internet-based applications and functions hosted and maintained by a third party provider in their own environment. Instead of a transportation company owning and managing the software, data storage and Information Technology (IT) their business depends on, they could partner with a SaaS/Cloud provider to use their software, servers and services.
The widespread adoption of this alternative, internet-based approach to a business’s infrastructure is commonly referred to as “digital transformation.” According to a McKinsey report, it’s estimated that the SaaS market will grow by more than 20 percent annually, reaching nearly $200 billion by 2024, a level that would represent nearly one-third of the overall enterprise-software market. But how does this growth impact the commercial transportation industry? What SaaS/Cloud resources are carriers and shippers using to streamline their operations? And how does a company that hasn’t yet embarked on their own digital transformation get started?
In this article and the series that follows, we’ll look at how transportation companies can get started with SaaS and cloud-based technologies, explore what common business functions they can support, and analyze the many ways they can transform a business for the better.
What is a SaaS or cloud-based solution?
SaaS or cloud-based solutions are business software or IT infrastructure (such as servers) that are accessed via the internet and that replace software or infrastructure a company would have typically designed or operated themselves in the past. As the description implies, these solutions are hosted in the cloud, or remotely, by a third-party provider, rather than on-premise by the business.
By offloading the responsibility for these resources onto a provider, companies can reclaim time and resources from updating or maintaining software and services, and instead focus on work that delivers real value to the company. Hosting IT infrastructure on-site can be costly, time intensive, make companies more vulnerable to cyber-attacks and increase downtime if there’s an on-site issue.
This approach to business software and infrastructure has revolutionized daily operations for many companies and provides numerous benefits for a myriad of industries, including transportation, construction and even agriculture. These industries typically use cloud-based systems to improve operational efficiency, provide cost savings, make it easier to scale, increase their operation’s security and much more.
Commercial transportation’s digital transformation
Because of the many benefits, the transportation industry has been undergoing its own digital transformation to adopt SaaS and cloud-based solutions. While at its core, commercial transportation is focused on the seemingly simple task of moving goods from one location to another, efficiently and safely executing this mission in today’s world has become a complex challenge.
Supply chains have gone global and process automation plays a more important role. Internet of Things (IoT) devices embedded in commercial vehicles and throughout maintenance operations generate a river of data that’s vital to operations. And accurate GPS tracking and customer notifications have become more crucial to maintaining a reputation for reliability. As a result, some of the systems and software involved are simply too complex for any one company to manage on its own.
According to a recent S&P Global survey and report, “Two-thirds (67%) of shipping and logistics firms say they have a formal digital transformation strategy in place to actively digitize business processes. Nearly all the rest — 31% — say they are considering or evaluating such a plan. Only 3% say they have no digital transformation strategy.”
Still, the transportation and logistics industry’s digital transformation has been comparatively slow. According to a recent report from ReportLinker, “Global digital transformation spending in the Logistics market is expected to reach $84.6 billion by 2027,” which is an enormous increase from just $3 billion in 2020. It can sometimes feel as though transportation companies are rushing to catch up, but there’s no shortage of ways SaaS or cloud-based solutions can enhance transportation companies.
The benefits for SaaS and cloud for transportation
The IBM Institute for Business Value’s (IBV) Truck 2030 Executive Survey found that 64 percent of truck executives said their company’s future success depends on digitally reinventing themselves. Moving solutions to the cloud is a big part of this digital transformation.
Whether for a commercial carrier, dedicated or private fleet, bulk hauler or freight brokerage, SaaS or cloud-based solutions, such as Trimble’s TMW.Suite, can streamline everything within the daily transportation lifecycle. While many companies are already using transportation management systems (TMS) and other solutions to streamline business processes, those that move to a cloud-based solution are finding increased benefits, including:
- Predictable Costs – There is no need for a large IT investment, including space, hardware and staff, which are all at a premium. Additionally, companies using a cloud-based system won’t have to scramble as technology changes and the need for specific skills shifts.
- Strong Security and Safety – A state-of-the-art SaaS product provides firewalls and advanced security as well as redundant data warehousing and recovery in the rare event of a data breach or outage. Trimble’s partnership with Microsoft Azure activates over $1 billion in annual security spend and 3,500 dedicated cybersecurity experts.
- Improved Accessibility – A SaaS platform can be accessed at any time, from anywhere, allowing a geographically diverse workforce to be in sync even when working in different locations.
- Time Savings – Functions available through a cloud-based system can help companies offload responsibility for maintaining and improving their digital infrastructure onto a third party, freeing up their team’s time.
- Scalability – These systems allow transportation companies to scale more easily without hiring additional employees, buying new equipment or increasing their physical footprint.
Plus, with a SaaS platform, there aren’t typically a lot of upfront costs, which is more important than ever in these uncertain economic times.
Industry challenges and the path forward
The past several years have been hard on the commercial transportation industry. Although fuel prices have fallen slightly and the industry’s labor market is improving, costs remain high and experts are recommending carriers shift from server-based solutions to a SaaS-based system to help streamline.
Companies that invest in SaaS and cloud-based software are better positioned to manage through the inevitable disruptive periods. When companies invest in digital transformation initiatives, they can streamline operations, automate where they can and potentially even reduce the size of their IT department.
But this undertaking is challenging for some. According to the American Trucking Associations’ 2021 Trends Report, trucking remains a small business industry: 91.5% of fleets operate six or fewer trucks, and 97.4% operate less than 20. The benefits of a cloud-based system can be great for small businesses who may not have the margins to manage industry disruptions like larger businesses.
When companies move to a SaaS platform, it opens up their time to do what they do best – focus on their core business and build strong relationships with customers, while also saving time and money, and improving efficiency and security. A cloud-based transportation management system can help organizations keep track of their fleet vehicles in real-time, allowing for better coordination of resources.
Technology will continue to play an ever-important role in the transportation industry and the companies that embrace it and make the upfront investment in a SaaS or cloud-based solution will be set up for long-term success.
To see how you can get on the road to cloud-based digital transformation, contact us now for a demo.