This month’s acquisition of mapping, routing and navigation software company ALK Technologies adds more to Trimble’s transportation portfolio than a new selection of products, technological expertise or an additional stream of revenue. The purchase will help the $1.6 billion positioning and productivity technology company plot a more direct route to global shippers and third-party logistics operators, as well as U.S. trucking companies, truck freight brokers and domestic truck and rail shippers.
In ALK, Trimble acquired a software company whose products are integrated with the applications of dozens of other companies, including Trimble subsidiaries TMW Systems and PeopleNet. ALK also brings global mapping capabilities to the drawing board and inroads with large shippers and 3PLs that use its PC*Miler routing, mileage and mapping system to plan shipments and set truck pricing.
The acquisition supports the trend toward consolidation among technology players as companies such as Trimble look for the tools they need to build end-to-end solutions for customers who in turn require a seemingly endless series of unique combinations of products and platforms. Carriers, 3PLs and shippers increasingly want mobile solutions incorporating tablets and smartphones, and they want systems with global reach, if not global uniformity, as they expand into international markets.
“Customers like having diversity, and they like having choices,” said Norm Ellis, vice president of sales, services and marketing at Qualcomm Enterprise Services, a partner of ALK and TMW and a PeopleNet competitor. “We want to bring our customers as many options as possible,” Ellis said. “They appreciate the ability to buy different types of applications — whether ALK or Rand McNally.”
Carriers and shippers increasingly want different solutions for different segments of their businesses — different fleet management systems for company drivers and owner-operators, for example, Ellis said. “They want different apps or platforms that will all integrate nicely in the back end,” he said.
“We’re trying to assemble an end-to-end solution with the most compelling and strongest business offerings in the market,” said David Wangler, CEO of TMW Systems, the transportation management system arm of Trimble’s logistics business. “There’s an opportunity for us to come to market with solutions that are more compelling than if they have been built separately and then integrated.”
There’s debate within the transportation software sector about the level of demand for vertical integration.
“I’m not hearing from our customers that they want to see a lot of vertical integration,” said Tom McLeod, president of McLeod Software, TMW’s primary rival on trucking software. “Because of the wide variety of operations within the trucking industry,” from owner-operator to employee driver fleets and companies hauling all types of commodities, “we’re serving a pretty diverse market. There’s lots of different requirements.” That does mean more “horizontal” integration in all types of directions with a variety of partners, including emerging developers of mobile apps for trucking and logistics.
“Looking around the ATA Management Conference exhibit floor last October, I took note of how many new players there were,” McLeod said. With the rapid spread of wireless networks and the proliferation of mobile apps, “Suddenly, it’s pretty cheap and easy to enter that space.” Both small entrepreneurial companies and commercial software giants are eyeing the lucrative transportation market, he said.
Although much of that focus has been on the North American market, transportation software will follow its customers, which increasingly aim to secure freight or ship products in international trade lanes by multiple modes and in multiple regional markets.
“Trimble recognizes they have to think about global markets when looking for growth opportunities in the next 10 to 20 years,” Wangler said. “ALK is already a ‘global store’: Co-Pilot (ALK’s business and consumer navigation product) has done extremely well in the EU, not just with freight companies but with service and delivery fleets.”
Developing more global, multimodal technology is one of ALK’s goals, said Barry Glick, CEO of the Princeton, N.J.-based company, which got its start in the late 1970s analyzing rail networks. “We do have a worldwide product that global shippers use,” he said.
The key is to develop a platform that offers customers global visibility but interfaces with local applications that handle operations in countries or regions where requirements and conditions can vary widely. That requires a broad strategic view of the supply chain coupled with the ability to deploy tactical software addressing specific customer requirements, regardless of who or where the customer may be.
“We see a convergence of carriers and brokers and 3PLs and shippers,” Wangler said. “All of this plays together. Having all these capabilities and working together will only support our mission.”