Increase profit opportunities. The profit potential in transportation, as with other asset-based businesses like airlines and hotels, is derived from our ability to run more revenue over a fixed set of assets. Technology provides the raw computational power to help Schneider associates monitor the status and location of 14,000 truck tractors and 40,000 trailers across tens of thousands of locations throughout North America. To improve the real-time decision support capabilities of our customer service associates, we are deploying a technology application we call Network Value Engine (NVE), which is designed to help manage the inherent complexity of determining when, where and how to shift trucks into a market depending on our customers' immediate and long-term shipping requirements.
Create new revenue streams. In most nontechnology businesses, the IT department is not generally mandated with creating new software applications that can generate standalone revenue. However, many companies - including American Airlines with Sabre, its reservations technology (Sabre was spun off in 2000), and Cendant with its reservations technology spinoff, Apollo - have created successful businesses based on technology that was pioneered for use in-house. These opportunities should not be overlooked. During the past 10 years, Schneider developed a suite of transportation and supply chain management applications used by our logistics group to manage outsourced freight operations and collaborate with customers' suppliers. By offering these same applications to customers, and even to some traditional competitors in third-party logistics, on a hosted basis via the Internet, we have created a new market opportunity and revenue stream for what was once merely viewed as a necessary IT cost.
Enhance the customers' ease of doing business. From initial contact through ordering, confirmation, service delivery, billing and payment to third parties, technology is the cornerstone of customer service that simplifies the process and delivers measurable value to the customer. Every day, our 600 customer service associates manage thousands of pick-ups and deliveries for customers - a process that is deeply dependent on technology. Our customers judge us on each and every interaction. Because customers tend to gravitate toward those partners with whom it is easiest to do business, technology plays an important role in developing and maintaining our relationship with them. While EDI remains a widely deployed communications standard, for many small companies it's costly and complex to implement and maintain. The Internet now allows us to expand the power of our network by facilitating fast, low-cost connections to our trading partners.
For many years, IT was viewed as a back-office function and attracted little management attention. In today's environment, poor IT decisions can have a significant and long-lasting impact on a company's market position. While some companies still view IT solely as a cost centre, many others are beginning to recognise that IT can be the source of competitive advantage. It's not only an enabler of current business processes but also an engine for capturing new markets and business opportunities. The responsibility for making the right IT decisions should not fall to the CIO alone. Every member of the management team must be engaged in the process and willing to spend the time necessary to understand, support and ultimately drive the development of the right IT strategy.
Chris Lofgren is president and CEO of Schneider National, a $US2.4 billion provider of transportation and logistics solutions.
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