3PL Perspectives
Murray Pratt | TAILWIND TRANSPORTATION SOFTWARE
You recall those three-legged races?
Perhaps it was at a picnic, a company ‘team building,’ or a track day in primary school.
You and your race partner had one ankle tied to the adjacent ankle of the other. You first had to decide who was on the left and who was on the right. And it wasn’t ideal because your friend may have been much taller, or much smaller, than you. Then you both started the race in a hurry because you wanted to win – you were competitive. But you moved so quickly and haphazardly that you soon found yourself tripping, sprawled across the grass, with the band twisting around your ankles.
We have all been there – on the school grounds and in the business world as well.
Picking Your Partner
In business, you pick a software vendor. You go through a long due-diligence process. You assemble your team so they can all have a look at the proposed transportation management software solution. And you try to arrive at the ‘most optimal’ decision that you can with a group of people who all may have a different idea or expectation as to what they are buying. It’s software, it’s intangible and it’s symbolic. So, it’s a difficult process no doubt.
And the depth and duration of your due diligence is driven by both the gravity of the decision and also by size. For instance, are you making a $10,000 decision or a $1 million decision?
Why SaaS?
Worldwide, by 2016 more software was purchased in a ‘Software-as-a-Service’ (SaaS) model than the old, traditional client-server model. In fact, SaaS has pretty well become a tech movement. Led primarily by SalesForce and its charismatic leader Marc Benioff, the software industry started to transform in the early part of the century.
It grew exponentially owing to its method of deployment model, and because it became a nexus – a community of applications. It started as a successful application, then became a hub for business improvement, and then a full-on business movement with annual Dreamforce events, not to mention frequent Benioff’s interviews on Jim Cramer’s ‘Mad Money’ show.
What Are the Advantages of SaaS?
- No annual maintenance fees on licenses
- Reduced upfront investment – no licenses
- Usage scaled according to your business cycles
- Reduction, or elimination, of technology investment – no more server upgrades
- No need to secure ‘hard-to-find’ IT personnel
- Accessibility – get to your application on any device, anywhere you have an Internet connection
- The pace, speed, and volume of applications that can be integrated with an online solution. No more ‘custom integration’ fees to secure added capability
- Shared risk/reward through a monthly payment model
It’s really that last point that I want to expand upon.
‘Vendor’ or ‘Partner’?
Running a Software-as-a-Service business means that you are ‘joined at the hip’ with your customer. Customers pay you monthly and you ‘earn your keep’ monthly. It’s a mutually reinforcing relationship. You listen to customers’ feature requests and suggestions, and then make ‘just in time’ improvements to your application.
You are running a three-legged race together – only this time the Transportation Management Software (TMS) provider’s leg is tied to the 3PL’s; you are joined at the hip and running together.
Gone are the days where a TMS provider can simply lay out the potato sacks and have the logistics professional jump in and hop their way to the finish line. In a SaaS-centric world, both players are engaged in a symbiotic relationship.
A SaaS Revolution
All TMS providers are seeing the need to respond. Some, like my company, have fully embraced SaaS and are rapidly growing. Others are coming up with hybrid solutions whereby a third-party hosts their client-server software or gets their customers to invest in servers that reside elsewhere and make the software accessible through a remote desktop. It’s an attempt to mimic an online solution, but it’s really only an interim measure – a solution for a relatively short race.
Over the longer term, transportation management software, like most other software verticals, is going to move almost exclusively to the online world. Perfect for a transportation industry struggling with siloed data, with older expensive technologies that don’t connect to one other, with a demanding regulatory regime and a global economy that is constantly moving and getting increasingly inter-connected.
Murray Pratt is the President & CEO of Tailwind Transportation Software, headquartered in Delta, BC, Canada. Tailwind provides web-based transportation management software. Mr. Pratt may be reached at [email protected] or (604) 583-2266.
