Does “on demand” or “software-as-a-service” make sense for all types of software solutions? I’m asked this question a lot, and my standard answer is that software-as-a-service makes the most sense for business processes that are inherently network-centric. In other words, business processes that involves exchanging information and documents with many different external parties. Transportation management fits this criterion nicely, so does global trade management, which is why software-as-a-service has gained so much traction in these markets.
In global trade management, there’s another reason why this deployment model is powerful. A GTM software solution is essentially worthless without trade content, the database of rules and regulations, duties and tariffs, restricted party lists, preferential trade agreements, and other information that companies must incorporate into their import and export processes to stay in compliance with trade regulations. Trade content is continuously changing, and if your GTM system is using outdated information, your trade processes can come to a halt and you can be exposed to hefty fines or legal action. GTM vendors like Management Dynamics have a team of people that gather, update, and maintain trade content from various countries around the world, and their customers access this information in near real-time via web services. It sure beats receiving a CD in the mail every other day and having someone on your IT staff upload the changes!
In other words, software-as-a-service and web services are also a good fit for business processes that depend on dynamic content. And content is the core of SMC3‘s business model, which is why their decision to adopt a common service-oriented architecture (SOA) platform for its solutions and leverage web services makes so much sense to me. In case you’re not familiar with SMC3, the company has been around since 1935 and they’re best known for CzarLite, a market-based price list of LTL rates that shippers, carriers, and logistics service providers use as baseline for negotiating contracts. According to the company, over one-third of LTL freight in the US uses CzarLite pricing. Most of the leading TMS and WMS vendors leverage SMC3 in their solutions.
The briefing I had last week focused on RateWare XL, the SOA-based solution the company launched earlier this year. The rate structures currently supported by RateWare XL include LTL and density. Support of truckload and small package/parcel rates is planned for late 2009.
If you look at the traditional way SMC3 solutions interface with TMS, WMS, and other enterprise systems, it is the classic “spaghetti chart” of multiple interfaces crossing each other. In some cases, some of these interfaces are custom developed, which result in longer implementation times and higher costs. By taking a web services approach, as the chart at this link shows, the integration is more straightforward and extensible.
SMC3 says that logistics service providers (49 of the top 50 are clients) are the most excited with this delivery model, and for good reason. Many LSPs have a heterogeneous IT environment that includes multiple TMS and WMS systems. Instead of building and maintaining separate interfaces for each of these applications, they can access the content via a single web services interface.
The web services model also aligns well with a trend in the TMS industry that I’ve highlighted many times before. Simply stated, TMS users are no longer just the handful of people in the transportation department; the value of transportation-related information extends across the enterprise to customer service, finance, sourcing, and other business functions, as well as externally to suppliers and customers. The ability for a customer service representative, for example, to execute a rate inquiry from his desktop, without having to put a customer on hold while he calls down to transportation, is one of the benefits customers expect from a TMS today, and this capability is made possible (easier) by web services.
As mentioned earlier, software alliance partners are an important component of SMC3‘s go-to-market strategy. A key partner is SAP, particularly with RateWare XL and CarrierConnect XL (available for general release in Q2 2009). SMC3 is a Certified Content Partner of SAP, as well as an Independent Software Vendor with Certified Integration partner. The companies have been involved in joint development, and RateWare XL and CarrierConnect XL are integrated with SAP TM 7.0 RateWare XL reportedly processes up to 80,000 LTL rates per second, and CarrierConnect provides access to LTL points of service and transit times. A key capability is the ability for SAP TM 7.0 users to manage LTL discounts within the system.
I’m a long-time proponent of software-as-a-service solutions, so I readily admit that I’m a bit biased when it comes to solutions that align nicely with this model. I haven’t had a chance yet to speak with SMC3‘s software alliance partners to get their perspectives on these SOA solutions. Since most of these partners are SOA-based themselves, my guess is that they favor the new approach. But I wouldn’t be surprised if they (as well as their end users) also provide some constructive criticism. SOA and web services certainly improve the integration process, but they’re not silver bullets either. Obtaining these other perspectives is something that I’ll follow up on. In the meantime, let me know what you think. If you’re an existing SMC3 user, is the direction the company is heading the right one for you?
