Xata's Growth Vehicle

Good Idea, Outmoded Model

Xata’s fleet management software operates via an on-board computer, automatically recording and monitoring the movement and location of each truck as well as the vehicle’s fuel economy, the operator’s driving behavior, and compliance with regulations regarding hours of driving and state-line crossings. This information is sent to Xata’s secure servers, where fleet managers can access it with an Internet browser. Drivers log in and out of the system at the beginning and end of their trips; except for confirming deliveries and providing information on fuel purchases in some versions of the software, they don’t need to enter any information themselves.

The data are sent wirelessly to the trucking company on a real-time basis. The kinds of data that Xata’s system records are essential for legal reasons as well as efficiency improvements: Federal regulations require that truckers not drive too many hours; and fuel taxes can vary from state to state.

On becoming CEO, Coughlan set up meetings with Xata customers so he could hear firsthand what they needed. Fleet owners consistently cited regulatory compliance, driver data (such as how long they idle their vehicles and time spent at stops), and fuel costs as their chief concerns. To Coughlan, it seemed clear that what his customers wanted was more information—in other words, more capabilities from their software.

Therein lay the problem. Xata had positioned itself as a hardware company. It provided the onboard information devices that were installed in trucks to track fleet data, as well as the software that ran the devices. Given Coughlan’s software background, he decided to give this model a cold, hard look.

Although Xata had begun selling a software-as-a-service product—which trucking firms could use as needed, rather than paying an upfront fee—it was still committed to selling its own hardware along with this new software. “It didn’t take a rocket scientist to see that where we were losing most of our money was in the hardware end of the business,” Coughlan recalls.

Refocusing Xata on software has kept income flat (so far), while sales have revved up.