A particularly good example of how cloud service providers can become the glue, not just for linking partner businesses technologically but as a core part of ongoing business management and the creator of new business opportunities, can be found in NetDespatch.
The company is also something of an object lesson in why exploiting cloud services has far less to do with any technology and everything to do with identifying where the real major business advantages lie.
The company provides a SaaS logistics management service for the parcels courier services world, or as CEO Becky Clark puts it: “we provide the data stream underpinning all their activities. We facilitate the process by providing all the back office functions that are required.”
This may at first seem a rather mundane marketplace but, as Clark points out, it is in fact huge, and global, with estimated total world revenues of $1.2 trillion last year.
“We now manage the shipment of millions of parcels a month, and currently have 130,000 retailers worldwide using it for free,” she said.
That last observation is the key to the issue of identifying the real marketplace for any cloud service, for it is not always the obvious target. It would be easy to assume that it would be the retailers that have the most vested interest in signing up for such a service, as they are the ones who need to organise the physical link between themselves and their customers. But, in practice, NetDespatch identified that the real target market for its services are the couriers, the owners of the millions of vans and lorries scampering around, 24 hours a day.
By using NetDespatch, they not only get a centralised logistics management service, but also get the chance to add services provided by NetDespatch that they can sell on to retail customers as value-adds to their core offerings. And, as it is a cloud service, the costs are minimal and on a pay-per-use model.
The core NetDespatch service, therefore, can also act as the backbone of a service aggregation environment that the couriers can build up and offer to their retail customers. It provides a full end-to-end logistics management service, but also comes with a variety of client services.
The company has also already formed partnerships with many of the leading SaaS front office and business management providers, such as Netsuite and Salesforce.
“This is the obvious route to take,” said Clark, “each providing their core skill, especially when it comes to omnichannel marketing, which is now becoming a key tool for retailers. Why should we try and learn to build systems they already provide? Using the cloud makes this very easy.”
It is also a service that is equally at home with small carriers and some of the largest: Royal Mail’s ParcelForce, for example, is a user. Straddling the small and large carrier divide is another customer, APC in the UK, which is, in fact, a cooperative of 120 individual courier companies across the country.
“That would be impossible to do without the cloud,” Clarke observed.
The cloud even allows the company to work with some unusual business models. For example, the smallest start up courier will pay the most, though that is still only 25 pence per parcel. As such companies grow, however, the cost per parcel comes down.
“We want to push our customers towards growth,” Clark said, observing that the cloud is such a good environment for start-up businesses that the top price NetDespatch charges per parcel is still very low. In addition, as a pure-play SaaS provider, starting up a new customer on the service can be achieved in as little as 10 minutes.
The company is now looking at additional services it can provide for its customers. For example, it has now accumulated some 10 years’ worth of data on parcel deliveries and is now looking at ways this can be exploited. So Clark is now starting a SaaS-delivered analytics service for couriers and retailers. This will look at such areas as consumer purchasing patterns and aim to model them so that customers can identify and plan for future business opportunities.
In this way the company is something of an object lesson on how SaaS can be a core part of entire industries and the glue that holds them together. It provides companies, whose core business is far removed from IT or the glitzy financial, media, or knowledge industries, with the underlying skills and services they require, plus additional services that extend their 'stickiness' to retail customers.
And as the wealth of data generated mounts up, the ability to sell analytics services based on it becomes another revenue stream to exploit.