Logistics technology: ARC says SaaS sales helped overall TMS market growth

By Jeff Berman, Group News Editor
May 25, 2010 - LM Editorial

While the effects of the global recession took its toll on enterprise software markets to a large degree in the form of a double-digit revenue reduction, it does not appear that damage to the Transportation Management System (TMS) market was nearly as severe, according to research from ARC Advisory Group.

As defined by ARC, TMS are software services that facilitate the procurement of transportation services, including: the short-term planning and optimization of transportation activities, assets, and resources; and the execution of transportation plans on a regional or global basis for all modes of freight transportation and parcel management.

Dr. Steve Banker, service director of supply chain management at ARC said in a statement that even though TMS sold on a traditional software model declined at a double digit rate between 2007 and 2009, those losses were quelled by TMS services sold as part of a SaaS (software-as-a-service) model, which is comprised of services packaged as part of a leasing model and are hosted online.

“When people think of SaaS, they think of lower costs and not spending [hundreds of thousands of dollars] to implement, along with paying a lower monthly rental fee to get payback more quickly,” said Banker in an interview. “TMS falls into that model.”

Another reason for TMS in a SaaS model hanging tough during the recession, according to Banker, is that is it well-suited to be sold in a network model. The reason being that with SaaS, it is viewed as a single-instance, multi-echelon, multi-tenant solution based on a single piece of code running from the software vendor to multiple shippers.

These shippers are all working off of the same piece of code, which provides myriad advantages in the transportation sector, said Banker.

“Shippers typically have preferred carriers,” said Banker. “But if a carrier is for some reason unable to move a load it needs to be tendered to other carriers. It is not unusual for shippers to have 40 or 50 carriers that they work with on an ad-hoc basis for a particular lane. But the problem there is that it is generally based on EDI (electronic data interchange) messaging, which many carriers and 3PLs use as their own dialect.”

In a traditional TMS, picking up EDI messages and effectively making use of them is not easy or straightforward, Banker noted. And data cleansing is not something which is preferred by any shipper, whereas they want to buy an application and have it work.

Going forward, ARC expects TMS sales to rise between 2010 and 2014, but company officials would not provide specific figures regarding projected sales growth and percentages.



About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).


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Article Topics

News · TMS · Software · Picking · Procurement · Transportation · All topics

About the Author

Jeff Berman, News Editor
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman.

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