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With logistics offering relatively low margins, investment in software can be difficult. Now that the economy is less stable than it has been in recent years, there’s a need for new solutions and software-as-a-service is an attractive alternative. Teijken reckons this type of service will be a major differentiator for companies.

“Because of fast-changing relationships with business partners, software-as-a-service can be more advantageous because less investment in connectivity is needed – this also is provided as a service so less time and specialist knowledge is needed,” he says. “Other benefits are economy-of-scale, software installation, and database integrity.”

The buy-as-you-go software can work for companies of all sizes. Some small companies have adopted it as a way of reducing internal IT costs for hardware and licences. But Teijken says it has also become an interesting proposition for larger companies who are focusing more on core competencies and realigning investment priorities.

Hiscox points to the logistics market as one in which people tend to buy the software themselves and own their own data. “People can be squeamish about having their data somewhere else, outside of their own capabilities and resources. Buying it as a service can be potentially more expensive in the long run. But it’s handy if a company is cash-strapped.”

He reckons software-as-a-service works better when run for things that are smaller in transactional throughput, less complex, and easier to deploy. “In a warehouse with high transactional throughput operations, high data usage and demands on the databases – it’s more typical for these to be run as non-hosted asp-type models.”

Software-as-a-service can also be a good option for companies that are expanding quickly. Buying-as-a-service as you grow the business can be very effective.

Jackman says software-as-a-service models are common for SCE applications that involve users who access the application from a traditional PC. For example, the primary users of TMS are transport planners who access the TMS through a web browser and a PC.

“Software-as-a-service is a perfect model for these TMS users. Applications that are tied to the real-time operations of warehouse or manufacturing plan are not good candidates for software-as-a-service because they are coupled with warehouse and factory automation systems,” says Jackman.

With the software-as-a-service model you can switch off the parts you don’t use, or pick and choose the parts you need rather that paying for the whole licence. Also, a supplier isn’t obliged to update a piece of software that has been bought, unless it is part of the specific terms and conditions, whereas the software which is bought as a service is kept up to date.

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