TMS in the Cloud: Some Lingering Misconceptions

I’ve been researching the Transportation Management Systems (TMS) market for over 18 years and obviously a lot has changed over that time period. What’s interesting is that even though there’s a lot of buzz and attention on cloud solutions today, TMS was actually one of the first enterprise software segments that went to the cloud more than 15 years ago, and although we’ve used different terminology over the years — such as “software-as-a-service” or “on demand” — the reality is that TMS in the cloud is well established. In fact, based on my conversations with TMS vendors that only offered on-premise deployments years ago, the vast majority of their TMS deals and deployments today are in the cloud.

That doesn’t mean, however, that the architecture and capabilities of today’s cloud TMS solutions are the same as they were 15 years ago. And there are still lingering misconceptions about cloud TMS, especially as they relate to on-premise applications.

For example, some companies still view cloud TMS solutions as…

Being one-size-fits-all: That is, they believe the solutions are not configurable, so they would have to change their transportation processes to conform with the software’s way of doing things. The reality is that cloud solutions are highly configurable, including the user interfaces, business rules and constraints, and reporting. And through advancements in system architectures, companies are able to extend the solutions with their own development.

Not being as feature rich as on-premise solutions: In other words, they view cloud TMS as being a stripped-down version of on-premise solutions. In the early days of cloud TMS, there was some element of truth to this, mainly because those early versions lacked optimization capabilities, but that’s no longer the case, which brings us to the next misconception.

Having weak planning/optimization capabilities: This was perhaps the biggest limitation of cloud TMS solutions in the past, but thanks to advancements in optimization algorithms, along with the rapid rise of cloud computing that effectively provides companies with near-infinite processing power, cloud TMS solutions are able to solve complex optimization problems relatively quickly.

Performing slower than on-premise applications: This was a valid concern years ago, when dial-up and DSL internet access was still common. But with broadband internet access more widespread and affordable today, there is little discernable difference in performance between cloud and on-premise TMS.

Being more challenging to integrate with on-premise apps: TMS solutions do not operate in a vacuum; they are often integrated, for example, with order management and warehouse management systems. Integrating different enterprise applications is still not plug-and-play, but the process is certainly less painful and time consuming today than it was years ago, thanks to vendors doing away with proprietary architectures and the rise of web services and APIs.

I shared these thoughts in a recent webcast hosted by MercuryGate. I was joined by Ryan Bloor, Director of Global Services at Celestica, who shared the process Celestica went through in selecting a cloud TMS solution, and Karen Sage, CMO at MercuryGate (a Talking Logistics sponsor) who shed some light on the current capabilities of cloud TMS solutions and addressed some of the questions and misconceptions companies still have about cloud TMS.

In light of the misconceptions outlined above, I asked Ryan if Celestica went into the TMS evaluation process with a preference or bias toward on-premise versus cloud. Did the company have any questions or concerns with either model? Here’s an excerpt of his response:

There were a number of stakeholders involved when we initially started looking at cloud vs. on-premise TMS. Certainly, folks closer to the project were biased toward the cloud option, but there were some folks in the IT community who were biased toward on-premise. At the end of the day, we went with the cloud solution and the key [deciding factors] were flexibility and configurability — that is, our ability to ensure that regular updates were done, and the cloud solution was the winner in that regard. When we initially went down this road, we did a full quantitative and qualitative analysis and the ability to upgrade on a more regular basis was definitely one of the benefits.

Access to data was another consideration. There was a perception with cloud that we would lose control of our data or our ability to access it on a regular basis, but we haven’t experienced that through the many years we have used the solution.

And lastly, we also evaluated on-premise versus cloud with regard to integrating with our ERP and all of our trading partners, particularly on an ongoing basis as we made changes to the ERP and added new trading partners.

I encourage you to watch the full webcast below to learn more about Celestica’s TMS journey, including the factors that led the company to look for an enterprise TMS; it’s goals and objectives; and what ultimately made it select a cloud-based TMS. Then post a question or comment and share your perspective on this topic!