The transition to cloud-based computing in the trucking industry is accelerating as carriers realize the cost savings and operational efficiencies that can be achieved, technology experts said.
That migration to the cloud — which refers to using remote servers hosted on the internet to store and process data — will continue as younger generations who grew up on smartphones and social media move into management ranks, they predicted.
Concerns about data security persist, but moving to a cloud environment actually could reduce that risk, according to some vendors.
Charles Craigmile, CEO of transportation management software provider Revenova, said companies that worry about cybersecurity sometimes say they prefer to keep the data they “hold dearest” in on-premises computer systems.
“That’s a bit like saying that stuffing your mattress with cash is safer than putting it in the bank,” Craigmile said. “The more sensitive your data, the more you should be putting it on a professionally hosted platform, not on two servers in your server room — that’s precisely what’s most insecure.”
Trucking is coming to recognize the virtues of cloud-based computing for a range of reasons, Craigmile and others said, among them being the means to share “the latest and greatest information” via transportation management systems that allow customers to “self-serve” by helping themselves to data such as the status of their shipments.
“They don’t have to call a human being; they can look it up,” Craigmile said, citing “the Amazon effect.” The shopping experience provided by the online retail giant is “probably the best example that people have … of the transparency and real-time information that’s possible through cloud computing,” he said.
JA Frate, a carrier and freight broker based in Crystal Lake, Ill., is one transportation company that has successfully implemented a cloud-based TMS.
“More of our customers are utilizing the web tools where they can go online and enter their own pickups and get quotes and book their shipments,” said JA Frate’s office manager, Kathleen Anderson, who has a computer background in AS/400 mainframes and served as project manager for the implementation.
JA Frate had an on-premises TMS for 14 years and updated that system periodically, Anderson said, but each update required extra effort and scheduling to avoid disrupting business.
“It was hosted on our server here, so we had to maintain the hardware — and we do not have an IT department,” Anderson said. “We had to try and figure out how to schedule [updates] on off hours and get our outside IT person in to help.”
JA Frate wanted to triple in size in 10 years but the company found that it couldn’t realize that goal with its existing TMS, Anderson said, in large part because the system contained two databases, one for the company’s less-than-truckload and truckload divisions, and another for its brokerage division.
To help support its growth plans, JA Frate implemented FACTS, a cloud-based freight management system provided by Carrier Logistics Inc.
“Without a single software solution that could manage the different service offerings and product offerings they had, they were forced to manage accounts receivable multiple times for the same customer,” said Ben Wiesen, vice president of products and services for CLI.
“If they wanted to find out how much someone owed them, they had to look in three different places,” Wiesen said. “It was very time-consuming. It was not efficient. And it actually exposed them to risk because someone could run up a huge bill in one division and unless another division noticed that or was made aware of that, it could continue accepting and moving new loads and then get further behind from an accounts receivable perspective.”
JA Frate also has implemented a cloud-based warehouse management system that exports accounts receivable information into CLI’s system.
The move to cloud-based computing also has freed JA Frate from the need to maintain and update on-site computer equipment.
“We didn’t want to have to buy more servers and maintain all that hardware and software,” Anderson said. “We’d rather have it in the cloud so that somebody else can take care of that and worry about it and do the updates behind the scenes without interfering with our day-to-day business. Being a small company, we don’t have the budget to have a big IT department, so it just makes a lot of sense for us.”
Cloud computing can be implemented across an entire enterprise or for specific applications, as JA Frate did.
Companies have tended to choose “specific products to put in the cloud,” said Ben Barnes, chief information security officer for McLeod Software, which offers enterprisewide transportation software.
McLeod often implements pieces or components of its software for customers who don’t want to go whole hog.
“For the most part [cloud computing] means you’re asking somebody else to manage the hardware components and infrastructure to run a solution for you,” Barnes said. “Whether you own that solution or the provider owns that solution — that’s where a lot of the differences come in.”
Some trucking companies choose to run enterprise-level applications on the cloud while others pick specific functions to move to the cloud, sometimes “as simple as email,” he said.
To get out of managing, securing and backing up email they could opt to use Office 365, a cloud-based system. A company that operates part of its IT system on its own equipment and part on the cloud is taking what’s called a hybrid approach, Barnes said.
The move to the cloud is accelerating, vendors said.
“I see the adoption of cloud environments being easier for smaller companies and more appealing to them because they don’t have the cash flow to afford equipment,” said Ray West, senior vice president and general manager of TMW Systems, another TMS provider. “Somebody is providing software as a service,” saving costs on IT staff, West said.
In September, TMW’s parent company, Trimble, acquired 10-4 Systems, which provides a cloud-based TMS for smaller carriers.
Trucking companies historically have been slow to adopt newer technologies compared to other markets, several vendors said.
“I think they’re very IT savvy — and cautious,” said TMW’s West. “I don’t think they have undue concerns. Security is a concern for everybody these days. I’ve been with some trucking companies that have the best security there is and they’re looking for opportunities to become more secure — perhaps through cloud environments that have a better architecture than they do.”
Despite her computer background, JA Frate’s Anderson said she was “a little hesitant” about moving the company’s data into the cloud, “but it’s worked out very nicely.”
Cloud-based computing has become pervasive in the consumer market, said Dick Hyatt, CEO of Decisiv Inc., which offers a cloud-based software platform to help companies better manage truck maintenance.
“We’re all used to it,” he said. “We do it every day off of our phones, off of our browsers.”
Marketers of cloud computing are currently targeting small businesses, but “the cloud” is a frequently misused term, Hyatt said. “Today everybody refers to anything you get from a browser as the cloud.”
A common practice is to put a client-server application on a server in a rented building and provide a browser address to enable use of the application, Hyatt said.
“Some people would consider that use of the cloud,” he said. “We think of the cloud as a fundamental architectural change to the way you build and deliver applications.”