Keeping up with fast-changing technology presents a challenge for public refrigerated warehouses. Computer installation is expensive, and so are upgrades and support service fees, said Doug Bailey, regional sales manager for Provia Software in Grand Rapids, Michigan. He spoke at the IARW meeting held in Boca Raton, Florida, May 5 to 10, 2001.
As an option to purchasing and maintaining computer systems, Provia offers software as an application service provider on a monthly subscription that allows users access with an Internet connection instead of purchasing a complete package. The subscription fee includes upgrades and support services. Provia's ASP model was launched about a year ago.
A subsidiary of Viastore, a German supplier of automated sorter-retriever-conveyor systems, Provia specializes in software for third-party logistics providers and public warehouses. Some of the largest warehousing and logistics companies are Provia clients. Provia software packages include warehouse, transportation, and yard management systems. Beyond these, Provia software also provides messaging services by fax, e-mail, or pager.
“Our software is tailored to the refrigerated warehouse industry and is compatible with radio frequency systems,” Bailey said. “We are successful because of the way we handle public warehouse inventory — taking into account production dates, receipt dates, and expiration dates, as well as billing. When warehouses have to do blast freezing or other value-added services, our systems account for it based on how individual warehouses operate.”
Provia offers three software products: ViaWare, an execution fulfillment program that handles warehouse, transportation, yard management, and third-party logistics management; ViaView, a collaboration fulfillment system with enhancements to ViaWare; and ViaHost, a centrally hosted subscription service.
ViaView allows warehouses to notify clients of specific events, he said. For instance, a client may want to be informed whether an important shipment has moved. The ViaView notification can be sent by pager, fax, or e-mail.
“ASP is a method of delivering software differently than it has been done in the past,” Bailey said. “Recently developed technology enablers have made it attractive and economical to subscribe to software instead of purchasing it. Using broadband communications, servers are scalable, and Internet access has become secure. It's now technologically feasible for different companies to share software while maintaining complete data security. As a subscription software provider, we offer the same kind of services that warehouses have offered for years with their own expensive internal systems. We are essentially a third-party logistics management provider to public warehouses.”
Public warehouses find software subscription attractive because it breaks information technology costs into monthly segments, Bailey said. It eliminates paying for internal information technology staff, since Provia maintains and upgrades the data center. Provia's service turns information management into a monthly operating expense instead of a capital expenditure. Thus, the computer system would be much more an operating expense versus a fixed purchase.
“A traditional software purchase includes a server that costs $20,000 to $100,000, and programs that can cost $50,000 to $100,000,” he said. “Other expenses include maintenance and support fees. Besides the internal expense of information technology staff, companies also typically pay for system upgrades every five years or so. The price of an upgrade may be nearly as high as the initial purchase.”
Software subscription costs, however, can be broken down into two parts, Bailey said. The first is a monthly hosting fee for the connection to Provia servers with their staff and technical support. The second part is the monthly fee for the software usage. This also covers call center support and upgrades.
Provia has a total of 170 employees at its Grand Rapids center, with 24 working in ViaHost, Bailey added. ViaHost clients have shared access to servers and communication networks. Each client has a dedicated database for complete security.
“We've had our transportation management system for third-party logistics providers available on subscription for about five years,” he said. “We recently rolled out our second offering, called 3pl2deliver.com. This service allows logistics companies a 30-day termination option. Software access charges are invoiced on a monthly basis. Subscription fees are based on the number of users. For instance, a warehouse may have 50 users during the peak frozen turkey season, but only 10 users the next month. Provia's rates vary each month, depending on the number of users.”