The Keys to Estimating TMS Implementation Duration and Budget

When it comes to implementing a transportation management system (TMS), a critical mistake many shippers make is setting the implementation budget and timeline based on a software vendors’ average implementation duration estimates. From there, many shippers will end up compounding the impact of this mistake by moving directly into implementation execution without a well-formed planning process. 

Proper implementation planning can be complicated, but it does not typically consume a great deal of time or resources (money, labor, etc.) to complete. As a general rule, we can typically begin and conclude a comprehensive implementation planning effort in less time than it takes for the software vendor’s contract to go through legal review. 

The objectives of this effort are critical to ensuring successful implementation outcomes, in addition to preserving your current political aspirations within your organization. We understand that your own professional reputation is at stake – so it’s befuddling for us to witness the ‘Ready, Fire, Aim’ approach to implementing your TMS. 

Among other basic planning items, the questions you should answer before you begin any implementation include:

  • How long will the project take?
  • Where are the risks, and complications – and how can I mitigate these? 
  • When are other project dependencies happening?
  •  How many internal resources (both business and IT) will I need, and when will I need them?
  • What external support resources will I need, and what are they responsible for?
  • What are my objectives (preferably prioritized)?
  • How will I define and measure success?
  • What is the overall scope?
  • Will this be a big-bang or a phased rollout?
  • What implementation methodology will be utilized?
  • What deliverables are required for success?
  • Are there any organizational changes I need to make prior to starting (e.g., centralized vs decentralized planning)?

Most of these questions are seeking to convert “What we’re doing” and “Why we’re doing it” into “Who does it? When will it happen? And how do we approach this?” However, far too often we see implementations begin without answers to most of these key questions. Furthermore, we have not even touched “How much will this cost?” as the implementation cost is an output based on the answers to those (and other) questions. 

This is why I (mentally) chuckle when I get the question “How much does a TMS implementation cost?” So, let’s breakdown the key drivers I look for and how I usually frame the response.

#1 – Function & Process Scope

Fundamentally, I need to understand what you are trying to accomplish operationally with a TMS, in addition to highlighting the overall business process and integration scope. If you’ve completed a blueprint with a supporting conceptual design already, then you’re way ahead of the game. In nearly every TMS implementation I’ve been a part of in the past 30 years, the quantity of integrations is the #1 driver of implementation duration and cost.

  • How many distinct ERP systems do you have? Multiple ERPs and warehouse management systems (WMS) are quite common and represent a big “multiplier” to implementation effort.
  • What processes are in scope (e.g., Inbound, Outbound, Freight Audit/Pay, Import, Export, etc.)?
  • What specific vendor “modules” will you be purchasing? While purchased vendor modules can be helpful to understand relative to scope, they should not be the primary driver of implementation cost.

#2 – Organization and Geographic Scope

This discovery is critical to understanding you as a shipper, and what your objectives are relative to the capability deployment expected out of your TMS implementation. Outlier responses in this category can easily add 2-4x duration to a baseline implementation estimate, so approach this thoughtfully. The biggest cost and duration drivers in this section tend to be:

  • Are you a centralized planning & execution, centralized planning & decentralized execution, or a completely decentralized operation? Note: decentralized gets a heavy ‘penalty’ as each entity could have a completely unique design.
  • Are any of the processes and/or functions in scope handled by a third party (e.g., a 3PL for warehouse operations)?
  • Global or multinational operations: are we planning for a “global design template” with little regional customization or are we allowing each region to operate using an independent design?
  • Is the freight network in scope “cross-border” or is it “intra-regional” or both?
  • Will there be a phased rollout strategy or will all locations go live at the same time?

#3 – Staffing and Sequencing

Staffing and implementation sequencing are typically the most difficult variables to define and plan. In addition to the “facts,” we also have to consider a client’s maturity as well as their appetite for change and pace of change thresholds. Trying to do too much, too quickly tends to increase the probability of failure. Staffing and sequencing are also correlated – making changes to sequencing will have impacts on staffing. As such, we typically start with desired implementation sequencing and then determine if our staffing can support it.

  • Do you have specific financial objectives (i.e., ROI) that should be considered when we create the draft project sequence? Example: if your business case is driven from an $X return on outbound freight cost by Y date, then that is a constraint we use to help sequence.
  • When is “Peak Season” and any associated blackout dates?
  • When are other projects that may currently be, or become dependencies starting and/or concluding? Note: we tend to focus on major ERP initiatives as they quickly consume critical resources.
  • Will any of our TMS “Source and Target” systems (e.g., ERP, WMS, etc.) have an upgrade or go-live during our implementation? Note:  this is a big driver of duration, cost and design complexity.
  • What is your Enterprise Integration strategy, and when are those resources available?
  • What program roles do you want to take, and what roles do you want the System Integrator to take? 
  • What roles do you want the software vendor to take?
  • When are the parties available to start?
  •  Is your business team aware of the time required and ready to make that commitment?

Based on the output of this discovery, we then “rough out” a few implementation options and continue to refine prior to a formal acceptance. While it may sound like a heavy lift, the effort is a small fraction of the overall implementation duration and cost. Furthermore, laying this all out prior to the implementation kickoff is miniscule in comparison to the efforts of course-correcting a project mid-stream due to a lack of answering, or having lack of leadership alignment on, these basic planning questions.

Brad Forester is CEO of JBF Consulting.