14th December 2022
Keith Hawker, Managing Director for Civica Transport talks about different procurement, financing and implementation models for fleet management software.
What are the benefits of Opex vs. Capex procurements?
Opex procurements allow more flexibility and accurate annual budgeting for IT project expenditures. With a subscription model for fleet management software, i.e. spread monthly costs over a term rather than upfront capex costs allows organisations to invest in technology more frequently. Having fixed IT spending means managers do not have to go ‘cap in hand’ to get a budget for new technology or upgrade to the latest version. This model gives the supplier flexibility to develop new features, implement service capabilities and respond to customer and market changes more readily. Fundamentally, the organisation pays for what they need – removing shelf-life software they no longer want or use – clearly demonstrating the value.
What innovative procurement models are available to fleet operators?
Traditionally, most procurement models are based on the number of licensed ‘seats’ or named users required. But many have moved to volume-based licensing, such as fleet sizes which gives more flexibility to the organisation. Today Civica offers SaaS – a subscription offer based on evolving software bundles, with different service packages that align with customer needs and budgets. In the cloud, SaaS software allows fleet organisations to quickly access and implement software with tweaking configuration for individual needs. Opting for a subscription model allows fleet operators to further invest in technology, at a known annual or monthly fee, removing the need to find a new budget to buy new features or modules.
What factors determine on-premise vs. cloud implementations?
Factors that determine on-previse vs cloud/hosted implementations are often operational rather than technical, for example:
- Recent investment in on-premise data centres and has not yet received value or depreciation on them.
- Invested in skills and people to manage an on-premise operation.
- Might want to retain some susceptible data systems on-premise to ringfence their security.
Other technical considerations may include existing software that is not cloud-ready, integration limitations with third-party software, lack of network compatibility, or a hybrid model of on-premise backups from the cloud.
How can fleet operators use better procurement and new financing models to make their IT budgets go further?
A subscription model based on software bundles offers organisations a credible and efficient procurement option as each supplier provides clear service descriptions and pricing options. Different service packages allows organisations to easily tailor their solutions and helps them to spend time choosing the right solution for their business, rather than focussing on the technicalities of procurement.
Generally, SaaS is more efficient than on-premise models. A monthly or annual subscription model allows IT expenditure to be accurately budgeted. It enables customers to foresee organisational change and allows ongoing planned investment. Implementing cloud software is quicker, which means fleet operators can realise the benefits faster. It also saves significant time and money which could be re-invested.
Could a fleet operator move to a 'per user, per period' model for its core business applications?
Yes, fleet operators could move to a subscription model for their core business applications, and some software providers already offer this. Paying a regular fee based on their fleet asset volume while delivering new capabilities and continuous development of new technologies provides more value in the long term.
Find out more about TranSend, our fleet management cloud software.