"Multitenant solutions that leverage the network remain a key growth driver for this market," said Steve Banker, service director for supply chain management at the ARC Advisory Group. Banker is the principal author of ARC's "Transportation Management Systems Worldwide Outlook: Market Analysis and Forecast through 2015."
Planning and Execution Is Key
ARC segments the TMS market into three application areas. "Planning & Execution" solutions are end-to-end transportation systems used by shippers who utilize carriers to move their freight. "Fleet Management" is an end-to-end solution for shippers/carriers that own transportation assets and need to manage those assets efficiently and effectively. "Point Solutions" include any systems that cover only a part of the end-to-end transportation process.
Many people think of planning and execution systems when they think of TMS. This, indeed, is the largest and fastest growing part of the market.
Leverage the Network
Transportation is inherently a multi-partner collaborative endeavor, and ARC notes that networked-style solutions, particularly software-as-a-service (SaaS) solutions based on a multi-tenant architecture, facilitate:
- High quality electronic communication with partners. Many shippers find the data cleansing associated with EDI a burdensome task they are eager to outsource.
- Quicker onboarding of new partners. Preferred suppliers on a lane may not be executing properly, or they may be turning down too many tender requests. Shippers may need to quickly add new carriers to that lane. In a networked solution this is far easier.
- Enabling efficiencies in transportation procurement. Carriers who enter data into procurement bid optimization engines often have many data that are identical to those which they would provide a different shipper in a bidding opportunity. A networked solution can prevent them from having to rekey common data.
- Improvement in freight audit and pay. Once a bid has been accepted, a third-party network can provide a neutral location for contract data to be hosted and thus facilitate a freight audit and pay process with fewer discrepancies.
- The ability to leverage data from the network to provide benchmarking data. Most suppliers agreed that providing reports on whether capacity on a lane is getting tighter or not is viable. Some suppliers argue that average costs per lane can be provided. Others say that benchmark data on average costs per lane are still not viable, because the average lane costs do not represent apples-to-apples comparisons. Increasingly, TMS suppliers will need to sign contracts allowing them to use their customer's data as long as the source of the data is kept confidential.
There is some level of disagreement upon whether it is possible for a multitenant solution to be as functionally rich as traditional behind the firewall solutions. Most suppliers of networked TMS agree, tacitly or openly, that their solution is not as functionally rich as solutions from the leading behind-the-firewall planning and execution solutions. However, at least two significant suppliers argue their networked solutions are just as functionally rich, according to ARC. Both say their architecture allows this.
Meanwhile some of the leading suppliers in the market offer functionally rich solutions based on a single-tenant architecture. Some of these large suppliers, such as Oracle, have partnered with network providers to allow execution to be based on a network solution provider, while planning will still reside behind the firewall. Oracle's network partner is E2open.
More information on this study is available at www.arcweb.com/res/tms.