“Whether it’s freight forwarding, customs brokerage, transport management, warehousing, hauling liquids, livestock or automobiles, knowing your niche in the logistics industry means knowing exactly how to identify an opportunity, and track the economic and regulatory changes in your area of expertise,” says Moller. While all of these companies recognize the challenges of their own particular area of expertise, and recognize that it would be ludicrous for a transport company to build its own trucks or for a shipping line to attempt to manufacture freighters, he says it remains quite common for many companies to attempt to build their own software.
“Everyone in the industry intuitively knows it is insanely costly to build your own equipment, and that they would end up with something inferior compared to what they can buy today,” he says. “While it’s obvious to most everyone in the supply chain and logistics industry that engineering and manufacturing of equipment is a specialized skill; this same logic is rarely applied to software design and engineering or IT services more broadly.
“Some of the larger logistics and transport companies support massive IT departments to create and support internally-built software solutions which are ostensibly out of date and only hold back the company’s progress,” he continues. “No one can be certain which technology will become the new standard; how legislation will change or how a change in communications or computing costs may benefit their competitors. The one certainty is that your software will need to constantly change in unexpected ways.”
To illustrate, Moller points to the rapid changes in mobile communications, internet use and mobile devices over the last decade. The demise of Blackberry and Nokia and subsequent popularity of iPhones, iPads, Android and Windows devices has witnessed many corporate IT departments having to write off extensive and costly development projects because the software was simply out of date by the time it was delivered.
“Chances are that the next generation of mobile operating systems and platforms will come from a company we’ve not yet heard of. We have heard about logistics and transport companies that embarked on their own software development just a few years ago, which are now writing off much of their investment and starting over again,” Moller says. “This rate of change is the only constant in the realm of information technology. If your software is developed and maintained internally, then you’ll need to build a fix for every one of these changes, and every one of these ‘fixes’ will increase the complexity and cost of your IT systems.”
According to Moller, not only are these systems costly to maintain, they also end up being patched together with complex interfaces; and as such suffer from multiple points of failure; when something goes wrong it can be hard to figure out where the problem lies.
“Unlike fixed assets, which can be bought, amortized and sold again, you can’t simply resell a software disaster. In fact, a lot of the time it will be cheaper to write off the project and start again, rather than continue to throw good money after bad,” Moller summarizes. “Next time you’re frustrated with internally-built IT systems, try to apply the same logic you do when you’re looking to upgrade your equipment: don’t risk your business, and waste your money on DIY when the alternatives are better, more reliable and cost much less to run.”