March 2006 | Commentary | IT Matters

The New Reality of Hosted Solutions: Less Can Be More

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Technological complexity, rapid change, and escalating IT costs are forcing fleet managers to examine the way they collect and manage driver, vehicle, and delivery information. As a result, a new fleet management model is emerging.

Increasing numbers of small and mid-size businesses are evaluating the benefits of using a hosted solution to ease the headaches caused by complex fleet management software. Companies are becoming more receptive to using an application service provider (ASP), which delivers a fleet management solution they can use any time, anywhere, over the Internet.

No longer must fleets bear the brunt of major technology risks associated with large IT investments. Web-based fleet management lets companies deploy applications that benefit the business faster, at a lower total cost than traditional software. Hosted solutions let companies focus on their core business, while ensuring they pay only for fleet management services they need, when they need them.

Is using a hosted solution right for your fleet? To help you decide, consider the following reasons, benefits, and challenges of switching to a hosted solution.

Reasons For a Hosted Solution

Some top reasons why your company should consider an ASP approach are as follows:

Fast growth. Your company is growing so fast you can't keep up with rapidly changing software application requirements.

Geographic expansion. You don't want to replicate your IT environment in multiple locations across the country.

Cost savings. You can't afford the upfront costs of implementing an in-house fleet management system, but you need the service and can afford ongoing usage fees.

A lack of IT depth or skills. You don't currently have the right IT skills in-house, and can't afford to acquire and retain the necessary talent.

Youth. You know you need the capabilities of fleet management software, but your business is too young to have a plan or vision to get there anytime soon.

Ease of use. Purchased software is hard to return if it doesn't work out. By their nature, ASP solutions must be easy to use because of their month-to-month approach.

Benefits of a Hosted Solution

Here are the key benefits of using a hosted solution for fleet management:

Lower upfront costs. Because the ASP operates and maintains the application, and has invested in the back-end hardware needed to run it, users don't have to buy expensive new hardware or software licenses. Depending on the application, a company can save up to hundreds of thousands of dollars in upfront costs.

Lower ongoing costs. ASPs eliminate the need for internal IT personnel to support and maintain a fleet management application. The only technology involved may be a web browser and dial-up or broadband IT connection; fleet management applications require onboard truck units. The use of an ASP changes IT from a large capital investment to a monthly expense—scaled to actual usage.

Faster application deployment. In addition to lower costs, a hosted and managed application can be deployed in much less time than an internal application. "Deployment" for the business user may simply be a matter of setting up and activating an account. Upgrades to the host software are implemented automatically as well, because they are delivered over the Internet.

Reliability and security. Established ASPs maintain Tier One data centers—technologically sophisticated facilities that provide more application reliability and data security than businesses can typically afford on their own. Moreover, Tier One centers are staffed by personnel whose sole job is to protect, maintain, and back up data. Due to their sophisticated IT infrastructures, ASPs commonly maintain more than 99 percent uptime.

Anytime-anywhere access. ASP customers can access their fleet management applications and data 24/7 from any web browser. Because the application interface is a browser, deployment to additional users requires no additional hardware investment. Moreover, the web browser is a familiar, cross-platform interface, so training is simplified and access is universal.

Lower total cost of ownership. When the total cost of application ownership is calculated, the ASP model is usually less expensive than traditional software. Small or non-existent upfront equipment costs; fees based on usage or transaction, rather than dedicated software licenses; lower ongoing support and maintenance costs; and faster deployment, including upgrades and patches, all combine to keep costs low.

Challenges to Evaluating a Hosted Solution

Evaluating a vendor's hosted solution is challenging. Drilling down on the following key issues will help ensure you make the right decision.

Security. Data ownership and security are the primary fears many companies have about hosted models. Most ASPs have more security, firewalls, and processes in place to protect your data than you ever could, but make sure you check into the details.

Integration. Integrating the ASP with your back-office systems is straightforward in many cases, but every business has unique requirements. Determine your needs and run a test.

Industry-specific capabilities. Make sure the features offered are tailored to your needs and specific enough to meet your requirements.

Is it really an ASP? Is the hosted solution you are considering built from the ground up to work and run on the web? Many vendors simply host existing client/server software.

Process. In order to be productive, you will need to spend time defining processes, validating data, and documenting workflows. See how and when your vendor will help.

Light features. Many hosted solutions offer great features for beginners, but don't offer the advanced features you will need as you gain experience.

Realistic costs. ASP does not mean free; long-term costs can catch you off guard if you don't do your homework.

The business objective for using a hosted solution is to move past simple automation to a higher level of business intelligence without the cost, complexity, and concerns sometimes associated with software. The bottom line is that you can gain quick results through fast implementation of basic hosted solutions.

But fleets must realize that, in the long term, they need to pay just as much attention to evaluating and using ASPs as they do to software purchases and other IT projects.

ASPs allow small- to medium-sized businesses access to sophisticated, full-featured, and tightly integrated business applications that would normally be cost prohibitive. They also enable businesses to precisely control their total cost of technology ownership and to focus on their core competencies.

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