When choosing a transportation management software application, as well as considering functional fit, an important factor to consider is whether the software is offered on-premise or on the ‘Cloud’.
What is the difference between Cloud-based and On-premise?
The key differences between the two options are the way the software is hosted and data stored and the typical pricing models involved with each option.
Storage and Hosting
How are on-premise solutions stored and hosted?
On-premise software is stored and hosted on servers that are physically owned by the business and usually located in their main office. Once a business has purchased a licence for the software from the vendor, the software would be installed and maintained on the business’ own servers. While the business may have more ownership over the software they have purchased, they also have the responsibility to either maintain and manage those servers or outsource the maintenance costs.
How are Cloud-based solutions stored and hosted?
Cloud-based software, however, is hosted by the vendor and accessed via a browser. The business typically pays a small upfront fee for setup costs, and then essentially ‘rents’ the software from the vendor on a monthly or annual basis. The business has full access to the software with the flexibility to scale up and down as required. This puts the onus of support, maintenance and upgrades on the vendor, and usually requires lower internal training and infrastructure costs than the on-premise model.
Typical Pricing Model
How are on-premise solutions normally priced?
On-premise software usually requires a hefty upfront cost, which will cover the software licence, as well ashardware and infrastructure costs associated with hosting the software on your own servers. There is usually a higher cost for initial implementation and deployment, as there are typically more complex processes required to set up the system and make it compatible with your business model.
Additionally, there will likely be ongoing support and maintenance costs, which usually are a percentage of the initial licence costs.
Some businesses may need to hire additional IT support staff to maintain and support the infrastructure and, in some cases, the software itself.
How are Cloud-based software normally priced?
Cloud-based solutions tend to work on a subscription model. The software is paid for on an ongoing monthly (or annual) basis.
The monthly subscription cost typically include upgrades, maintenance and support. While Cloud-based software usually requires a small upfront fee for implementation and training, this tends to be less than for on-premise models. Hardware costs are usually minimal-to-none, as cloud-based software, such as Stream can be accessed via a web browser.
For example, Stream is priced on a per vehicle, per month basis.
Other than that, there are many differences between on-premise and cloud-based SaaS transport management software. In the next section, we’re looking at some of those differences, and at the pros and cons of each option. Skip to an overview of on-premise software or to an overview of cloud-based software as a service.
On-premise transport management software
Pros of an on-premise transport management software solution:
- Much of the cost is upfront, so there is no monthly subscription to pay out – once you have a licence to the software you own it indefinitely though their tends to be an annual maintenance and support fee.
- As you essentially ‘own’ the system once you have paid for it so there may be more options for customisation by expert developers.
- Vendors offering on-premise solutions are likely to be more established in the market, making them theoretically more reliable (and, in the case where they did shut down, the business would be able to continue using any software hosted on their own servers for a period of time without support from the vendor). The risks associated with this are, however, greatly mitigated so long as the SaaS vendor is established and reliable. Stream, for example, has been live since 2011 and has many established users. Additionally, Stream is developed by an established software business, Proximity, which has been developing and maintaining software for the transport and logistics industry for over a decade.
Cons of on-premise transport management software solution:
- The cost of installation and set-up of on-premise solutions is generally higher than for Cloud-based models. This can make the investment prohibitive for SMEs or businesses without a lot of capital to invest in a system.
- Once a licence has been purchased, businesses only hold that specific iteration of the software. For a growing and dynamic business, the cost of maintaining, updating and making changes to the system (for example, adding more vehicles and drivers as the business grows, or adding business-specific functionality as it becomes available) can also be high, as well as unpredictable.
- Extensive training and/or specialist knowledge is usually required to implement, maintain and use on-premise systems. Once you have purchased a licence of the software and deployed it on your own hardware infrastructure, it is essentially your responsibility to maintain it, integrate it with any existing systems, import your existing data, etc. This can be costly and time-consuming, and often requires you to either employ someone internally or outsource to the vendor.
- Unexpected costs can be high, even if you’re paying a support contract. If something goes badly wrong, or a major upgrade is required, the support and maintenance cost for on-premise software increases on an ad-hoc basis.
- Responsibility for infrastructure and upgrades rests on your IT staff. Even beside the cost of a dedicated IT person or a support and maintenance contract, the risk of mistakes while maintaining and updating the system in-house can mean that businesses must go back to the vendor to safely install updates anyway.
- Likelihood of becoming ‘version locked’ – as you have only paid for and installed one specific version of the software, and the cost of upgrading to the latest version can be high, businesses business may end up in a situation where they are working on outdated versions of the software.
- On-premise software has a higher toll on the environment than cloud-based solutions. Research from Microsoft has estimated that, for small businesses, “energy use and emissions can be reduced by more than 90 percent with a shared cloud service.
- Reduced flexibility – when software is installed on your own servers, staff may require a VPN and/or specialist equipment to access it off-site, wheres cloud-based SaaS solutions can be accessed via a browser from any location and device (provided it has in internet connection).
Cloud-based transport management software
A Cloud-based transport management software application is hosted by the vendor, accessed through the Cloud via a browser, and paid for on a regular subscription basis. The business doesn’t own the software in the way that they would with on-premise solutions, but the subscription model means that upgrades, maintenance, support and infrastructure are all taken care of by the vendor. Cloud software is usually more flexible and agile than old-fashioned on-premise solutions, too.
Pros of cloud-based transport management software:
- Minimal upfront hardware and infrastructure costs. As the software is available via a browser, and, in the case of Stream: the mobile App can be used on any mobile device, so businesses are able to use existing hardware like office PCs and driver’s smartphones to access Stream. Even if new hardware is required, there is no requirement for specialist equipment – normal laptop or desktop computers, Android or iOS phones, and an internet connection, are all you need to access Stream from anywhere.
- Cost of upgrades is also minimised. Stream, for instance, is constantly evolving and new iterations are released all the time and are included in the subscription cost.
- Maintenance costs remain consistent. Any issues or upgrades are included in the subscription cost, so there are no unexpected costs and surprise bills.
- A flexible pricing model makes Cloud-based solutions scalable too. It is easy to easy to adjust the subscription according to business needs. Easily add and remove users (as Stream is priced per vehicle, it is easy to adjust the numbers with seasonal demand or business growth) or functionality.
- Typically a smaller upfront fee covers deployment, implementation and training on the software, so you don’t need any specialist knowledge to get up and running. As with a lot of Cloud-based software, we refer to this process as ‘onboarding’.
- Cloud-based solutions are generally more user-friendly than on-premise, and Stream is no exception.The system is straightforward and easy-to-use, so back-office staff and drivers will confident to use it with just a quick overview – no extensive training necessary. As Stream uses interfaces that are familiar (including Google maps, Android and iOS applications and browser-based access to the software) it is easy for staff to pick up and use out-of-the-box.
- As the software is accessed via a browser, you and your staff are able to use Stream at any time, from any location, using any device with a browser and an internet connection. Even if you don’t generally offer remote working options this added flexibility can be useful to keep your business up and running. If the person who normally plans routes is offsite at a meeting, or has an emergency that prevents them from coming to the office, their job can still be done. Out-of-hours emergencies can also be dealt with faster and more easily with remote, browser-based access.
- Cloud-based systems are automatically backed up in real-time, so your data will never be lost – even if your internet connection is. This minimises the risk of business disruption thanks to hardware failure.
- Improved security. Contrary to popular belief (that anything stored outside an organisation is automatically riskier), cloud-based software is secure. If you’re concerned, ask the software vendor to provide details on their security measures.
Cons of cloud-based transport management software:
- The business doesn’t own the software indefinitely. They must continue to pay subscription costs in order to access the software. However, while a licence for on-premise software means that the business owns that iteration of it, there will be a cost associated with maintaining and upgrading it over the years.
- As Cloud-based software is constantly maintained and upgraded by the vendor, the business doesn’t really need any tech know-how to keep the system up and running.
- As the back-office system is browser-based, staff will need an internet connection to plan routes. In any modern-day office or work environment, this shouldn’t be a problem, it just means that the system wouldn’t update when offline (equally, an on-premise solution wouldn’t be able to communicate with drivers or customers offline either).
Why is cloud-based a better solution for transport management software?
While there are pros and cons to both on-premise and cloud-based solutions, for companies looking for a dynamic, cost-effective transport management system, a cloud-based solution is the obvious choice.
- Quickly solve transport and logistics management challenges – no hardware to install means that deployment of software to solve specific business issues is fast and seamless
- Keep costs down – with no hardware or infrastructure required, capital expenditure and maintenance costs are kept to a minimum
- Easily scale – Cloud-based systems are agile and flexible enough to scale with business demands. Stream can scale up cover peak periods (how many extra deliveries are made in the run-up to Christmas?) and then scale back again, making it easy to run a leaner business.
- Stay up-to-date – Stream is constantly evolving and growing, with new functionality being added, and existing functionality being improved upon as new use-cases come to the forefront. Your subscription includes regular updates, to your transport management software will always be at the cutting edge of the industry.
- Be assured of a high-quality service – the Cloud-based software model is based on a subscription, instead of a one-off payment. That essentially gives users a guarantee that the software will continue to improve and to maintain high-quality systems and support.
Stream is a Cloud-based transport management software application, that helps businesses to manage logistics and deliveries more efficiently and effectively. While on-premise software can be a viable solution for some businesses, Stream Go and Stream Check both offer greater flexibility, efficiency, and agility on a cost-effective and sustainable subscription model.
