Our personal lives are increasingly becoming self-service. When was the last time you called or visited a travel agent to book a flight versus self-booking on Orbitz, Expedia, or an airline’s website? When you get to the airport, do you stand in line to check in at the counter or do you use the self-service kiosk? Do you bank online and use ATMs or do you stand in line at a branch location to speak with a teller? Are there more self-checkout lanes at your local Home Depot or supermarket than staffed ones?
According to IHL Group, transactions at self-service kiosks by North American consumers were expected to surpass $775 billion in 2009 and exceed $1.6 trillion by 2013. “Most consumers have adapted to self-service as a way of life,” Lee Holman, Lead Retail Analyst of the IHL Group, says in the press release. “The current recession is actually increasing the acceptance of the technologies, as they are a hedge against increasing labor expenses during a tough economic climate. They allow companies to schedule their workforce for high-volume periods without sacrificing service during non-peak times.”
Last week, I received an email from a software vendor that is planning to launch self-service transportation management solutions. He asked if ARC had come up with a name for this emerging class of software solutions. I pointed him to some of the writing that we have done in this area: “An App Store for Logistics Software” and “TMS for iPhone: There’s an App for That!” and “Software for the Masses: The iPhone, Crowdsourcing, and Logistics.”
The term “app” seems to have significant mindshare in the market for these types of self-service software solutions, due in part to the immense popularity of Apple’s iPhone and it’s “There’s An App for That” marketing campaigns. Salesforce.com’s “AppExchange” has also been influential.
Another data point: LeanLogistics, an ARC client, launched a “Do-It-Yourself Procurement in the Cloud” solution earlier this year that it calls a “Web App.”
I view this trend as the next evolution of software-as-a-service (SaaS). So, why not keep this term and simply extend it: Software-as-a-(Self)-Service.
It has taken us years to educate the market about SaaS, and there are still many folks out there who still don’t know what it means (see “More Questions About Software-as-a-Service”). Better to build off an existing foundation than starting from scratch. And Software-as-a-(Self)-Service is self-explanatory, which makes life easier for marketers.
SaaS was supposed to help logistics software vendors penetrate the small and midsize market. But the early adopters have mostly been large companies because vendors continued to target this segment. Simply put, the cost of selling to small companies is the same as selling to large ones, but large companies provide significantly more revenue. Software-as-a-(Self)-Service is a renewed attempt at reaching all of those companies using spreadsheets and fax machines to manage their transportation operations in a more cost-effective manner.
Will it work?
It’s too soon to tell, but success is dependent on several factors, including:
- A vendor’s ability to significantly reduce cost-of-sales. Using social media for lead generation and credit cards/PayPal for payment are some approaches.
- Having a solution that is simple to download, configure, and use. This may require vendors to re-architect their solutions. Using online videos for training and live chat for support services will also be required.
- The solution has to deliver value. Sounds obvious, but in their quest to make a solution that is simple to download and configure, a vendor may end up with a solution that is relatively useless.
- The business model has to be profitable. This one is linked to the first point, and since price points are relatively low, making money means bringing thousands and thousands of customers on board as quickly as possible.
Regarding the last point, traditional TMS vendors (and even some 3PLs) often tell me that they can’t believe certain SaaS vendors are making money. From their perspective, there’s no way SaaS vendors can operate profitably at the prices they are offering. SaaS vendors respond by saying that traditional software vendors just don’t understand the SaaS business model and their economies of scale.
After a webcast I participated in recently, where I talked about software-as-a-service TMS, I received an email from a consultant friend who is extremely knowledgeable about transportation management systems, having implemented countless systems over the past 20 years or so. Here is part of what he wrote: “I moved over a few years ago [from using a traditional TMS to SaaS] and still do not believe that most ‘old’ TMS hands get that SaaS is, so to speak, a shift in the cost curve, not a movement along it [emphasis mine]. In a few years time I think people will wonder why anyone went with a non-SaaS TMS after about 2007 or even 2005.”
Software-as-a-(Self)-Service represents yet another potential shift in the cost curve. And in the time-to-value curve too.
Stay tuned.
Hi Adrian-
You are providing interesting perspective as always…
I am working on an article focused on SaaS and thought I’d share a portion of it as a quick overview on what the general benefits of SaaS can be. It’s not logistics specific but I think the concepts still apply.
Benefits of SaaS (Software as a Service)
In the old way of thinking, companies were used to buying, building,
and maintaining their IT infrastructures despite exponential costs. SaaS gives companies an alternative. Now, they can plug in and subscribe to services built on shared infrastructure via the Internet. The SaaS model has gained popularity in recent years because of the many benefits it offers to businesses of all sizes and types.
The main benefits that are attracting businesses customers to take advantage of SaaS solutions:
High Adoption: SaaS applications are easily accessible from any computer or any device—anytime, anywhere. Because most people are familiar with using the Internet to find what they need, SaaS apps tend to have high adoption rates, with a lower learning curve.
Lower Initial Costs and Easier IT Implementation: SaaS applications are typically subscription based. No license fees mean lower initial costs. Having the SaaS provider manage the IT infrastructure means lower IT costs for hardware, software, and the people needed to manage it all.
Automatic Upgrades: Because the SaaS provider manages all updates and upgrades, there are no patches for customers to download or install. The SaaS provider also manages availability, so there’s no need for customers to add hardware, software, or bandwidth as the user base grows.
Seamless Integration: SaaS vendors with true multitenant architectures can scale indefinitely to meet customer demand. Many SaaS providers also offer customization capabilities to meet specific needs. Plus, many provide APIs that let you integrate with existing ERP systems or other business productivity systems.
Kenneth Kowal
eROUTINGguide