October 29, 2014
By Milt Petersen
Special to Savannah Morning News
In our increasingly interconnected world, technology is constantly providing new tools and new opportunities, creating business models that were almost unthinkable only a few years earlier. Many of these new tools involve the use of “software-as-a-service” (or SaaS), in which a vendor or service-provider makes a software application available for widespread use through an Internet site or mobile app. While SaaS is a concept that has been evolving for quite a number of years now, the near-universality of mobile devices and wireless or broadband communications is now enabling SaaS to transform how we conduct both our lives and our businesses.
For example, eBay first started connecting buyers and sellers online in 1995, enabling individuals and businesses to easily purchase items from, or sell items to, a vast number of other parties throughout the world. For a number of years now, both personal and business travelers have been using online services like Yelp or OpenTable to discover new restaurants, whether across town, across the country, or across the globe. Today’s travelers are now using services like Uber and Lyft to obtain transportation, and services like Airbnb to find temporary housing, whether for personal or business use, in previously unconventional ways. Through widespread, mobile computing devices and high-speed communications, SaaS is removing barriers to entry, expanding markets, increasing competition, and connecting buyers and sellers in ways that previously were impracticable.
By reducing the required up-front investment and the need for technological infrastructure and expertise, SaaS is driving transformation in virtually every sector of the economy, including with regard to logistics, an industry that represents a vital 7.8 percent of Georgia’s gross domestic product.
Broadly speaking, logistics is the management of the flow of materials through an organization, from raw materials through to finished goods, ultimately to the point of sale. And regardless of whether you are moving raw materials (like cotton, produce, grain, iron ore, or steel) or finished products (like office supplies, mobile phones, refrigerators, or automobiles), complex information technology (IT) systems are just as important in moving freight efficiently across the global economy as are planes, trains, trucks, and cargo ships.
As in our personal lives, the proliferation of mobile devices, high-speed communications, and SaaS are combining to drive changes in logistics. As an example, Efreightsolutions, a startup company based in Atlanta that touts itself as “eBay for shipping,” utilizes SaaS to function as a marketplace for shipping carriers, helping smaller or startup companies compete with larger, more established firms. By providing a platform for shipping customers to connect with distributors of all sizes, and by providing an automated process for ordering and tracking shipments, Efreightsolutions aims to level the playing field. The $2.5 million in venture capital that Efreightsolutions has raised is an indicator of the high-level of interest in innovation regarding logistics.
In addition to startup companies and new or previously unconventional concepts, many well-known software companies are now making their software products available in a SaaS model. This often helps change the economics, significantly lowering the required upfront investment and eliminating the need for acquiring and maintaining technological infrastructure and expertise, thereby bringing sophisticated IT systems that can help solve complex logistical problems within the reach of a much broader range of companies.
For example, many sophisticated enterprise resource planning (ERP) systems are now available online in a SaaS model (typically in return for a monthly fee and a greatly reduced upfront investment). Many ERP systems contain logistics modules that, combined with mobile devices, other technology, and wireless communications, can help provide companies with previously unimaginable control over their shipments. For example, some logistics software systems can monitor and adjust the climate in a plane’s cargo hold while it is in the air thousands of miles away, monitor a truck fleet’s fuel consumption in real time, or optimize the loading and routing of railcars to maximize the efficiency of a distribution network.
Creative new SaaS applications for the logistics industry are being developed every day, helping make cutting-edge technology available to companies of every size. While SaaS has its own set of challenges and risks, the potential for SaaS to help streamline logistics is impressive. And given the opportunities and advantages that SaaS offers, you can be sure that it is a trend that will continue.
Milt Petersen is a partner in the information technology and outsourcing practice group at HunterMaclean. He can be reached at 912.236.0261 or mpetersen@HunterMaclean.com.
