When software providers offer their products for “free,” it may be because they are after data, but it could be a worthwhile tradeoff, as long as the user of the free or low-cost software is aware of the situation and knows what their data is worth.
There’s an oft-repeated mantra in the tech world: if you’re getting software for free, you’re not getting a product. You are the product.
That, of course, is an insinuation that a software provider offering something for free is really not after your business, but rather your data. I’ve referred to this recently as the “Data Land Grab.” In other words, there’s a race going on right now to get access to as much supply chain data as possible.
If you’re a shipper or a 3PL using data-oriented technology, you need to think about this from a couple different dimensions. First, how much are you paying for the software you use? Is it too much, too little, or just about right for the value it provides you?
Second, and this one is important, does it matter if the software provider is getting access to your data? Are you satisfied with them using your data if they provide you value in some other fashion? Or if they connect you to a network that drives value to your supply chain?
This second question is vital because you might think that access to your data is a bad thing. But it’s not necessarily a negative if the giver does it with eyes wide open. If a shipper or LSP knows its data is being used, and is given access to systems or services that benefits it, that can be a worthwhile trade-off.
Think of freight procurement groups, like Chainalytics’ Freight Market Intelligence Consortium, or the crowdsourced rate benchmarking platform Xeneta. Part of the deal is giving up data in return for something valuable.
In those situations, the data-for-value trade is pretty apparent. But it’s less obvious in situations like when a company offers a free piece of software to get you in their network. For instance, some transportation management system (TMS) providers over the past few years have begun offering free versions of their systems, particularly targeting small and midsized shippers who can’t afford a full rollout of a TMS.
The benefit to those shippers having even a scaled-back tool is pretty clear, but the benefit to the TMS provider in such a scenario should be just as clear: grow the size of the network and get access to more data.
“You go to Travelocity, you want to book a hotel,” said Dan Clark, founder and president of the TMS provider Kuebix, which started offering a free version of its product in 2017. “You need a tool to do it, but no one is charging for the actual tool. You give away the platform. We’re just a platform for people to connect with.”
Clark said his company focuses its sales efforts on enterprise business. Those sales cycles become more productive as Kuebix builds its network (and the integrations to that network) and leverages the data it oversees from that pool of smaller shippers using the free TMS.
Data is truly the most in-demand commodity of the 21st century. It powers machine learning (the engine behind predictive and prescriptive tools), which tends to be very data-hungry. The deeper and broader the historical data, the more successful a machine learning algorithm can be.
It powers visibility. As more shippers and LSPs are added to a network, the more direct access there is to carriers. And the more access to carriers, the better the chances of getting accurate data feeds on everything from production status to in-transit cargo availability to final-mile delivery.
Data also powers the bedrock analytics engines that most software providers and LSPs are offering, to some degree, today. These primarily provide a “how have we done?” look, but are nonetheless vital building blocks.
To put a finer point on this, data is the fuel for almost any modern innovation in logistics. So, there should be an assumption that every software provider, LSP, and carrier wants access to as much data as a shipper or 3PL will give them. When the software or service is free, the assumption should be that much stronger.
This business of data being the product came into sharper mainstream focus in March, when it was revealed that Facebook had long made its users’ data available via third-party applications. What was widely known in tech circles was not widely known among consumers, even Facebook’s own “customers.”
When a consumer buys a plane ticket on Travelocity or instructs Alexa to order more cat food, they are getting a free service in exchange for their data. Business consumers of supply chain software should expect the same rules of engagement to apply.
Again, this is not a bad thing as long as the user of the free or low-cost software (the product) is aware of the situation. Know what you’re getting into, but more importantly, know what your data is worth. It’s probably more than you even realize.
CIO Insight: No free lunch
