Don't Miss The Mobile Computing Uptrend

Uptrend — an upturn, especially in business or economic activity (source: Merriam-Webster's Collegiate Dictionary, Tenth Edition). This word is a key differentiator between a lifestyle VAR that is content earning a little more than is needed to pay the bills and a savvy VAR that strives for double-digit growth. Dennis Scott, president of VAR/manufacturer Surface Systems & Instruments, LLC (SSI), has enjoyed moderate success in the past, selling proprietary measuring instruments (e.g. instruments that measure road surface characteristics) to the construction market. Within the past year, however, SSI responded to an uptrend in the transportation market, which it expects will contribute to 32% projected sales growth this year.

The Transportation Market Needs Mobile Solutions, VAR Help Now
According to research conducted by Panasonic Computer Solutions, one of SSI's primary vendor partners, there are approximately 2.8 million trucks in the United States that are candidates for mobile computing solutions. Nearly 1 million of these vehicles are owned by organizations with more than 500 vehicles, and the vehicles range in type from minivans to full-size tractor-trailers. Regardless of the size of the company, SSI finds there are many similarities among their business needs. "Driver retention is a significant issue that many transportation companies need to solve, and offering drivers even limited Internet access and new ways to communicate is part of the solution," says Scott. "Another challenge they face is thin operating margins, which makes them very open to solutions that can help them schedule and dispatch drivers, as well as track their assets more efficiently."

Scott knows firsthand that consumer-grade mobile PCs/handhelds aren't an option for construction companies. A core part of SSI's business of selling measuring instruments (at a cost of $25,000 to $85,000 per unit) entails integrating the equipment with mobile computers that receive the data from the instruments and use applications to provide construction managers with data to help determine whether a road needs to be repaired or completely overhauled, for example. "In the past, we interfaced consumer-grade mobile PCs with our measuring instruments," says Scott. "In a couple of instances, nearly a week's worth of data was lost after the computer crashed because it wasn't able to handle the environmental conditions such as moisture." SSI now sells rugged Panasonic Toughbook laptops and convertibles (a laptop with a screen that can swivel and fold into a tablet PC) and Getac or Psion Teklogix rugged handhelds. The VAR doesn't consider consumer-grade computing equipment an option for transportation customers, either.

Based on training it received from one of its rugged mobile computing vendors, SSI recognized opportunities to bundle software with rugged mobile computers. VARs can sell software that addresses a specific need such as scheduling, or they can sell suites that address several business needs such as scheduling, dispatching, mapping/navigation, asset tracking, sales, and POD (proof of delivery). Scott is also a proponent of incorporating applications that capitalize on the latest wireless WAN (WWAN), GPS (global positioning system), Wi-Fi, and Bluetooth technologies. "Just about every interstate has good WWAN coverage, which is a fact we use to educate customers about the value of real-time two-way data communication among their drivers and corporate headquarters," he says.

SSI doesn't write its own software programs for transportation applications. Rather, the VAR finds ISVs (independent software vendors) and partners with them. Construction and transportation trade shows (e.g. International Trucking Show, World of Concrete, and CONEXPO-CON/AGG) are primary sources for finding new partners. In 2006, SSI picked up eight new partners for software and peripherals (e.g. bar code scanners, mobile printers, GPS equipment). In several instances, the partners demonstrated their solutions at the trade shows using commercial-grade mobile computers, and Scott began the business relationships by talking to the prospective partners about bundling their software with a rugged form factor. As part of its partnership agreements, SSI bundles one of its partner's software applications with its rugged mobile computers, and its partners recommend SSI's rugged mobile computers when they land new customers. According to Scott, the partnerships are based more often upon a handshake and a verbal commitment rather than a written contract.

Know How To Pitch The Transportation Market
One of the important steps for selling to the transportation market is knowing who to talk to. Unlike some markets where you pitch your services to a C-level executive, Scott finds things work a bit differently with transportation customers. "Mostly, we interact with an equipment manager, who is in charge of the vehicles," says Scott. "In some instances, if the equipment manager doesn't have any computer experience, he'll bring in an IT person, and then they'll make their recommendation to a higher level executive for final approval."

For the most part, transportation companies don't need to be convinced about paying more money for rugged mobile solutions. Occasionally, however, when Scott runs up against a price objection, sharing his personal experience with computer failures in the field is enough to allay a customer's concerns. "These companies have delivery deadlines, and they understand the value of data collection and reliable communication," he says.

Prior to finalizing any deal, SSI makes it a standard practice to provide customers with demo units for two weeks. "We take their credit card information to cover our shipping costs, and the prospect is then free to get a firsthand feel for how the computer, applications, and wireless connectivity work before making their final decision." According to Scott, most of his smaller customers (i.e. those who purchase 10 computers or fewer) often will make their final buying decision before the evaluation period is up. "We ask a lot of questions up front to determine what the customer is currently using, what kinds of data capture problems they are currently experiencing, and which form factor and applications would best solve their business problems," he says.

Wireless Expertise, Rugged Mount Installation Skills Helpful
Another way SSI differentiates itself among VARs is by applying its GPS knowledge. "Many GPSs are not simple plug and play solutions," says Scott. "GPS devices transmit and receive NEMA [National Electrical Manufacturers Association] streams, which need to be configured with the computer and with any mapping/navigation applications before they'll work. Then, the GPS equipment often performs better when matched with a proper antenna."

SSI's wireless experience and its experience installing rugged mounts give it an advantage in the transportation market. One challenge the VAR faces, however, is companies that put SSI in an RFP comparison with an Internet retailer. "Often, an online retailer that claims to have rugged mobile computers like ours, but at a fraction of the price we charge, is unscrupulously peddling nonconforming or defective equipment," he says. Scott does admit that there are rare occasions when he runs up against another VAR that is willing to accept little or no profit margins on the sale of the hardware in order to earn software and/or services revenue. "Resellers that operate like that only end up hurting themselves because they can't afford the necessary resources to educate and support their customers for the long term, which is necessary to sell rugged mobile solutions." Fortunately, however, these situations occur in less than 10% of the deals SSI engages.

Scott says that the way he runs SSI leaves him with few regrets. In fact, looking back over the past year, he has only one regret, and that is that he would have started selling rugged wireless mobile solutions to the transportation market — and capitalized on the uptrend — sooner. SSI expects to earn nearly $60,000 in mobile computing sales this year.