Is SaaS beneficial for fleet management?

Managing software is complex, expensive, and constantly changing. Software-as-a-service can be more agile and cost-effective than the traditional on-premise model. But how does it benefit fleets?

“There is long-term value, and there is short-term economic value. It’s less labor, less management, less headaches,” Jay Delaney, director of product management for trucking SaaS provider Magnus Technologies, told FleetOwner. “It’s just easier for companies to consume in a SaaS model than your traditional on-prem world.”

In SaaS, the provider manages most of the operations and expenses of sophisticated software management. Fleets can pay for their usage rather than directly and separately for the hardware, software, management, and infrastructure. The arrangement has clear benefits—but can come with setbacks.

Economic advantages

Traditional on-premise software requires companies to manage all aspects of the software and infrastructure themselves—an expensive and complex undertaking. SaaS helps reduce that investment and complexity into regular service for a simple recurring fee.

“You no longer have to manage, purchase, and maintain the hardware necessary to run the application,” Delaney said. “All of that hardware, the management and maintaining of that, plus any networking costs and infrastructure costs are all managed and handled by the software provider.”

With cloud-hosted platforms, carriers don’t have to hire someone to manage a transportation management system, purchase commercial-grade communication and computation equipment, manage a property to host the infrastructure, or regularly replace equipment and personnel.

See also: Fleets Explained: What is a TMS?

“Especially for smaller and midsized companies, that can be a big savings in cost,” Delaney said. “It’s very expensive to manage and maintain that equipment month over month.”

Cloud-based solutions also have easier scaling. As the business grows or shrinks, acquiring the necessary hardware to scale up an application becomes simpler.

“In a traditional software on-premise type of solution, if your business grows, you have to add more hardware and more people,” Delaney said.

A cloud-hosted SaaS provider likely already has the space, hardware, and personnel to expand service, allowing a carrier to easily expand its infrastructure footprint for smaller up-front costs. A similar benefit comes when a carrier needs to shrink its operations.

“In a traditional on-prem world, you’ve already purchased all that equipment; it’s a sunk cost for you,” Delaney said.

Easier updates

Financing the personnel and equipment is only the beginning; software solutions need regular updates.

Old software is a cybersecurity risk

Updating software for security patches is one of the most important steps in maintaining good cybersecurity posture. As cybersecurity engineer Ben Wilkens wrote in FleetOwner in January, a key cybersecurity mantra is: “Patch, patch, and then patch again.”

According to 2017 research by Bitsight, 20-35% of global companies used outdated, vulnerable operating systems. According to research by Kaspersky in 2020, outdated technology made a company significantly more susceptible to data breaches and made the breaches significantly more costly.

When it comes to life cycle management and updating, the opposite of software-as-a-service is a perpetual access license for software. Fleets pursuing perpetual access can make a one-time purchase of the software and features that they want and install them to their hardware.

However, pursuing a one-time purchase means updating or upgrading the software often costs money and labor. The fleet would need to manage countless dependencies across solutions and implement quality assurance testing.

“You have to do the upgrade; you have to manage and maintain it; you have to test it; and you have to make sure you have the infrastructure to support it,” Delaney said. “And that is very expensive to do in time, resources, and money.”

Because of the labor involved in changing their purchased software, Delaney said, companies tend to let the applications remain untouched. The outdated software falls behind cutting-edge features and, more dangerously, allows a greater risk of cyberattacks.

The farther old software falls from the latest version, the more problematic updating can be. Larger updates introduce more opportunities for errors, problems, and failed tests.

The updating process is easier when a dedicated company is frequently handling the dependencies, hardware, and testing. Security patches and new features can enter carriers’ software systems smoothly and quickly.

“In a SaaS world, those features and capabilities are presented to you on a very regular basis,” Delaney said. “You get the current software because your software is running in the cloud, being managed by the software provider. … It’s part of the service.”

Magnus puts new releases with new features out to its users about eight or more times a year, Delaney said. Some of the major updates from Magnus in 2024 introduced AI-powered load planning forecasts, Trimble MAPS integration, and a driver app redesign.

“All of our customers now have that capability set, and it didn’t cost them anything,” Delaney said.

Delaney said that SaaS providers like Magnus also have a greater vested interest in providing regular updates and services. Customers can leave a monthly SaaS subscription more easily than replacing sunk-cost, on-premise software.

SaaS is not perfect

In transportation and consumer spaces alike, anything can become a subscription. From trucks-as-a-service to trailers-as-a-service—even heated seats in passenger vehicles—businesses are offering more subscriptions in place of one-time purchases.

In addition to its benefits, subscriptions can come with setbacks. Many of these details might be clear when the carrier and provider negotiate their SaaS agreements.

Subscriptions can be cheaper when measuring initial operational costs but aren’t always the more affordable option. The recurring costs over time can exceed the prices of hardware, software, property, and personnel. Providers may also choose to increase their rates at any moment.

Another issue is vendor dependence. While leaving a monthly SaaS subscription can be easier than perpetual-license software, it isn’t guaranteed to be easy.

A carrier might want to consider how its SaaS agreement could affect operations:

If the customer wants all of its historical operational data for a specific platform, would its software provider be able to (and willing to) quickly distribute the several terabytes of data?
If a provider goes bankrupt, can its customers quickly migrate to a different platform?
Is the software's data easy to translate for use in another platform?
Is the provider going to manage its user data responsibly?