Scott Pagan, President and COO of Descartes, kicked off the conference with a welcome and acknowledgment to customers, especially the Descartes User Group’s steering committee, for all their hard work during the year, as well as helping to shape and organize the event. This, unlike many conferences we attend, was a conference by users - for users, and therefore there was a refreshing shortage of marketing hype. Detailed product roadmaps were a key feature of this event. Having attended Evolution before, we get to attend the meetings with customers—between and with Descartes—issues and all. This approach helps customers (as well as analysts) really understand the thinking of a software firm—who they are , the products, as well as how they approach problem solving.
Ken Wood, Senior Vice President of Product Strategy at Descartes, provided an update on the products—where they’ve been and where they are going. Ken emphasized that Descartes is not just an acquirer of technology, but has spent resources (person power and cash) on organic development of new functionality, as well as integrating many of the acquisitions onto the platform. Ken talked about Descartes’ platform strategy, which provides flexibility to their customers. The applications sit on top of, rather than inside the network, so each customer can have the kind of approach that works for their firm, yet have interoperability amongst Descartes applications. Logistics, he emphasized, is complex, traversing many segments, industries and borders, which have different technical and business requirements. They don’t want to attempt to force customers into a single approach.
However, Descartes has been rationalizing many of the portfolio areas and presented the road maps for where they are taking the combined or layered applications in the future.
The sessions (over the two and half days) delved into the platform and the many changes in the current and future versions. For example, the Routing, Mobile and Telematics Portfolios are getting a makeover. Specifically, the mobile and telematics solutions are getting a big facelift. Plans are in process for a rollout over the next few releases that leverage the Airclic and other Descartes applications into a more powerful, more functional and easier to use (i.e., modern GUI) application ‘suite.’ (See Figure 1)
Figure 1: Mobile and Telematics Strategy
Another investment area for Descartes will continue to be enhancing route planning. Descartes has several route planning applications which are richly functional. Descartes has tuned the key route planners to suit specific customer audiences—carriers vs. shippers—regionals vs. long haul—for example.1 Unifying route planning with Mobile and Telematics for a seamless transportation solution for carriers provides an important dimension to Descartes’ business going forward. More often, organizations want to purchase more ‘suite-like’ solutions vs. applications to manage operations, and gain value from the rich data for smarter optimization and analytics which standalone applications may not provide.2 In addition, many carriers (and shippers) have complex ‘multi-method’ outbound processes, shipping pallet-size wholesale orders vs. ‘one each’ consumer order for home or office, all coming from the same warehouse and managed by the same transportation team. The solutions have to be ultra-smart to sense what kind of order it is and how it could be shipped, the routes, the pricing options and so on.
Beyond route planning, Descartes has a parcel shipping solution used by over one thousand customers. This parcel software reflects the new challenges companies are under—especially wholesalers and ecommerce providers—to optimize their outbound shipments and find the best rate options for each.3
Global Trade is a newer area for Descartes and they have made several critical acquisitions in the last year (such as Customs Info, eCustoms and Impatex, toname a few) that have given them trade data for 152 countries and theability to handle major customs filings. Descartes has provided real leadership in their customers’ journey to ACE (Automatic Commercial Environment), which is being implemented by US Customs for all importers as we speak.4 Not only have they been providing tutorials and webinars online, but the conference had a whole track on such topics for users to share. Descartes sits on several committees that various government customs organizations host, in order to get feedback, and they share the latest updates with the community.
From the Top
Ed Ryan, CEO, kicked off day two with a strategic view of Descartes’ mission, direction and what they call their ‘Quest.’ Every decision Descartes makes, they test against the principles within these statements. How will this investment, initiative and so on support Our Quest?
Figure 2: Descartes’ Mission, Direction and ‘Quest’
Descartes’ scale allows them to do things that other technology firms in the transportation market may not. With over 10 thousand customers, 4.5B transactions per year, and over 140,000 companies in their network, they run the largest supply chain network in the world. Along with their drive to include more countries’ customs and filings, global logistics transactions, and knowledge management and content for their customers, they will continue to add many more users into the network. The network supports the growth of a dynamic and thriving community where trading partners can learn from and about each other. Since logistics is a web of interconnected processes and organizations this structure is a natural for the industry. It creates a strong foundation for collaboration, visibility and control.
The world—and Descartes—is a different place pre- and post-9/11, Ed discussed. In the early days, Descartes, a few attendees remembered, had a bit of routing software (Road Show) and then began developing the network and taking advantage of the .com trend, which really handled basic B2B communications, EDI/HTML.
The continued drive of countries to add to regulations and security filings, as well as other trade regulations, continues to drive a great deal of Descartes—and the customer base—forward, seeking additional technology solutions. Ed mentioned that the customers often turn to them when they have these challenges and say, “Why don’t you do this?”; or “Here is a company Descartes should consider acquiring,” since they handle a component of the customers’ operations. Some of these operations, trade regions, etc., may not always be big money makers for Descartes. But, as Ed stated, Descartes’ attitude is, in essence, that some of these ideas are worth the effort since they support the customers and the Quest for a more comprehensive global platform.
But, as Ed pointed out, there is a lot more to Descartes, and they have taken a leadership position in the big market trends that drive their customers’ businesses. The other big trends are:
Omni-channel/Last Mile/Home Delivery: Ed highlighted that this is a key trend that continues to drive Descartes forward. In fact, Descartes has a growing list of retailers and other organizations that do home delivery. Home Depot, Sears, Sleepy’s, and HH Gregg are some examples in the US,5 as well as the newest case, Woolworths Australia. We saw a great video on grocery home delivery services featuring Woolworths Online. I spoke to several customers on the side, who said Descartes’ ideas, support and solutions, are instrumental and essential in their home delivery success.
Fleet and for Hire: Ed mentioned that Descartes really shines in this area. Even when firms have their own fleets, they still turn to for hire carriers to save costs, become more efficient, or leverage expertise in a category or region. They need to coordinate, manage and optimize6 these operations and often need visibility by order of the for hire carrier they entrust. There continues to be an opportunity to make money in backhaul leveraging of the fleet to potentially carry another company’s freight, helping to avoid costly entry miles.
In managing these deft operations—my fleet or your fleet and when—technology plays a vital role. Not just route planning/TMS integration, but integration/visibility to the equipment in motion (telematics and/or mobile) so a truck, for example, can be notified to route and pick up a shipment ‘on the way home.’ Shippers save money due to available capacity for hire, and with today’s capacity challenges and increasing freight costs, organizations need to deploy options like this.
Freight Forwarder/Customs Broker Market. Descartes has a big share of this market. In spite of the hype on technology replacing forwarders, the work is challenging, complex and does require extensive expertise. In today’s world, forwarders have new opportunities to grow their business and play a bigger role for their customers who do not see Supply Chain as a core competency. Of course, complex global trade and security filings (as we mentioned above) are big issues for firms. They don’t want to leave import/export and security filings to chance. Thus, the Broker/Forwarder is a critical partner in the enterprise global logistics operations.
There were several sessions where executives from these firms spoke—from all modes: international or experts in one lane. They shared their thinking strategies with us. Today forwarders are also experts in technology as many of their customers turn to them to operate, not just their freight execution, but more and more to provide the technology solution for their customers. Beyond that, their knowledge of the countries in which they operate allows them to be an advisor on overall supply chain strategy.
Figure 3: Descartes’ Foundation
Close on the heels of the user conference was the announcement of Descartes’ quarterly financial results. As a public company, these are especially important ‘events’ for investors. The same confidence in Descartes seemed to be reflected in this audience, as well. Having known Descartes since the late 90s, the ‘you’ve come a long way baby’ phrase definitely comes to my mind.
Descartes’ financial results and growth reflect that same energy we witnessed at the conference. Growth and cash matter—they allow you to do things that others can’t.
More on Descartes’ products and roadmap in upcoming issues of the brief.