Make Sure TMS Stands for ‘Time-to-Market Savings’

Broad agreement exists nowadays among logistics managers that Transportation Management Systems (TMS) are a useful—many would say powerful—addition to their arsenal of tools. After all, a good TMS will automate quoting, tendering, billing, and a host of other shipping activities. It will optimize modes, routings, and costs while providing unprecedented visibility to shipment status and exceptions. The technology is there to standardize processes and facilitate collaboration among multiple locations and entities while still allowing a high degree of customization in terms of user access levels and views.

But should you develop your own TMS in house or “rent” one of the many “on-demand” systems available in the marketplace? Our analysis1 suggests that on-demand systems (sometimes called SaaS for “Software as a Service”) tend to be a better choice for most logistics managers, primarily because they allow for much quicker implementation, providing what we call Time-to-Market Savings.

In-house development requires a large staff of expensive programmers, or outside contractors, and, done properly starting with solid user specification, a relatively long development time measured in months, if not years. Outsourcing the programming to China or India can reduce costs dramatically but it doesn’t solve underlying issues like obsolescence of the code, not to mention communication and coordination issues. The fact is that the ever-accelerating velocity of change in the I.T. world makes custom-built systems quickly obsolete, or at least very expensive to maintain and upgrade. Consider for example how social networks (Web 2.0), which only arrived couple of years ago, have become a key model for web application design universally . What is the next such revolution and what will it mean for your in-house TMS?

Meanwhile, companies who are purely in the business of developing on-demand systems are constantly upgrading their applications and benchmarking each other’s best practices, resulting in ever- increasing TMS functionality and adaptability. Why would you want to pay for this expertise yourself when it already exists and is in effect funded by the entire universe of on-demand TMS customers? And why would you not want to retain your ability to make decisions about changes or upgrades to your enterprise system without worrying about their impact on your TMS? (Incidentally, all our points and arguments here are generally the same for on-demand Warehouse Management Systems as well.)

Integrating an on-demand TMS has become much easier with the advent of widely-used web programming standards like .NET and Java. This development has been as revolutionary for programmers today as the WYSIWYG applications like Windows were for users in the 1990s. This is clearly illustrated by the fact that users can now easily build professional looking websites with virtually no involvement by programmers. Now, it is true that these standards have also sped up time-to-market for systems developed in house. However, our experience is that time-to-market is still much faster with on-demand systems. At myFreightWorld, we have achieved several integrations with large clients in six weeks or less—a reduction in time-to-market of at least 75 percent versus in-house development, in their estimation. Clients like 3PL, OHL have told us that being able to complete implementations quickly and efficiently allows them to deliver a significant ROI to their customers.

Our conclusion is that in-house TMS development is neither cost- effective nor necessary for most logistics managers. On-demand systems are preferable primarily because they dramatically reduce time to market. They achieve that by virtually eliminating the need for programming costs, local installation, additional hardware, in-house maintenance, and upgrade costs. The on-demand/SaaS applications easily integrate into your existing system due to the use of standards like web services and other XML base systems. Features like user account access and management and data exchange with partners like carriers come as standard built-in functions. New features and capabilities arrive on a continuous basis and are available to you quickly and cheaply. And you’re not locked in to either your own system or even to a particular on-demand TMS, because it is not that difficult or expensive to make a switch. So when making your own choice, we advise that you ensure TMS also stands for “Time-to-Market Savings.”