Transportation Management Platforms: the high growth segment of the Supply Chain Market.
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Transportation Management technology, or TMS, is the fastest growing segment of the supply chain technology market, with most companies posting better than 20% growth rates for 2011 and having similar expectations for 2012.
Once the stepchild of the supply chain market, TMS has emerged as the grist of the global supply chain with global integrated platforms linking trading partners and services around the globe. And TMS and Global Trade Management (GTM) software partnerships can provide a seamless experience for global logistics users.
Where once we segmented by modes—Ocean, Ground, Rail, Air—these categories often don’t strictly apply anymore, with TMS providers coding or procuring the missing components. But it is never enough. Older architecture gives way to new web capabilities, and therefore, new players have entered the market.
Enterprise software firms (ERPs), long ignoring TMS, have competitive offerings to support enterprise-side planning and financial management. And partner logistics applications such as Warehouse Management (WMS) or mobility/track and trace, can be offered by many of these providers.
In this article we will provide some insights and also evaluate the more than seventeen solution providers—from on-demand/single-instance players to the license, on-premise providers in the market.
So what do we mean by a TMS solution? Obviously many organizations, based on their role—shipper, service provider, carrier, or customer—will see the picture differently. So in Figure 1, we have attempted to depict this complex world.
Figure 1 - Different Views
On the upper left of Figure 1 is the world of the shipper's view; on the upper right is the customer's view. And coming up from the bottom is the view of service providers and carriers. But they all share in common the architectural or platform needs (within the central part of the diagram) that are the foundation of all these systems. (You can read more on platforms for the supply chain here.)
TMS Is a Have It Your Way Market
TMS providers have embraced the web in a variety of ways to the benefit of their customers. Surely the track and trace/visibility capabilities lend themselves naturally to the inter-enterprise/event management platforms on the web. But in addition, many users are getting comfortable with transporting their transportation planning to the cloud. Our research shows that more end-users will consider cloud for enterprise solutions in 2012. Understanding cloud architecture (read about cloud here) can help a great deal in sorting out the benefits and trade-offs in these solutions.
It gets a bit confusing, though, when solutions providers, in the desire to let the customer ‘have it their way’ provide hybrid offerings and pricing. Remember, however, it’s what you wanted.
Over the course of this series, we will walk through a few hypothetical use cases and pricing scenarios for you to see how these play out.
Figure 2 - Delivery Model
Right out of the gate we want to draw your attention to a few critical differentiators in the solutions that providers offer (column one in Figure 2)—On Premise/License. Immediately, it is clear that the on-demand and on-site providers are taking their ‘stand’ in the market. The purest—on premise vs. the strictly multi-tenant single instance—are rare. But what they do is clear cut.
From that point forward it becomes hazier. Will you host or won’t you? Will you port your SaaS solution to a one-customer-only environment? Some On-Demand providers such as GT Nexus or One Network, who told us, “We strongly discourage on premise,” don’t install software onsite; others, who are mostly single instance (or one-customer licensing) SaaS providers might—at a cost to you. This might make it a challenge to sort out the offerings and the permutations of price and support.
Although there are the economic benefits to both the technology firm and, ultimately, the end-user for the single instance software platform, many super-large organizations just want to be (and often are) the center of their own universe. Such an organization might be the government, Walmart or other Fortune 100 or defense suppliers (who might have ultra-security concerns, for example). They may opt for hosting.
Many companies do have their own ‘private hubs.’ Often (but not always), these are portals that sit on top of the technology provider’s multi-tenant architecture.
As you move along to the variants in SaaS you see the varieties of SaaS models. Many end-users had the major goal of ridding themselves of the responsibilities of data centers, hardware, and 24/7 tech support. Yet they wanted their own version of the software. Well, the solution providers have responded and users now have their way.
The TMS, though, ultimately has a web service component as shippers select carriers, secure dock reservations, and trace shipments. These trading partner integrations across the web are most often managed by your on-premise software provider, like Logility and JDA. So users have access to the web world of multi-carrier relationships, and yet can manage a cohesive corporate supply chain database that may have other functions such as procurement or warehouse tightly coupled.
Helping you to sort your way through the complexities and alternatives will be the objective of this, and the subsequent series on WMS, Mobility and Supply Chain platforms that we will continue to write about.
To view other articles from this issue of the brief, click here.