It’s been almost a year since I wrote “A Beginner’s Guide to Software-as-a Service (SaaS)” in response to the many questions I was getting on the topic. Back then I was surprised that so many people were still unfamiliar with SaaS (aka “on demand”) despite all the coverage this topic was getting by the press and analysts (search for SaaS on Google and you’ll get 232 million hits). A year later, I’m still getting a lot of questions, including the basic ones I answered in last year’s posting. I won’t rehash those questions again today. Instead, I want to underscore what I believe is the “hidden value” of software-as-a-service, particularly Transportation Management Systems, where the SaaS model continues to gain traction.
First, a quick disclaimer: I am a big and long-time supporter of the SaaS model, and several ARC vendor clients offer SaaS solutions, so you can say I’m a bit biased. But here are a couple of reasons why I think the model makes a lot of sense for transportation management, as well as global trade management.
Companies should not view SaaS only as a software deployment and pricing option; they should also view it as a platform for benchmarking and continuous improvement. By default, a software-as-a-service TMS creates a “connectivity network” of shippers, carriers, suppliers, consignees, and other trading partners, executing millions of transactions through a single system. All of this data enables network-level benchmarking, so companies can compare, for example, their rates and performance against an external benchmark and quickly pinpoint problem areas. The ability to identify and bring on new carriers, either as part of a strategic procurement engagement or a spot buy, is greatly facilitated by being part of a network. And if “collaborative transportation processes” are ever to take hold in the industry (see “Innovating the Way Shippers and Carriers Work Together“), I believe SaaS TMS networks will play an important role.
But here is the most important reason why I support the SaaS model: it’s a step towards addressing the data quality problems that continue to plague supply chain and logistics processes. I’ve been on this soap box for several years, but the problem only seems to be getting worse. Simply put, I believe companies should get out of the connectivity business-i.e., stop building and maintaining their own one-to-one links with their countless and ever-changing trading partners. The ugly truth is that many companies still struggle with data quality issues (i.e., late, inaccurate, and/or incomplete data), even though they invest a lot of time, money, and resources to scale their electronic communication capabilities (see “Economic Impact of Inadequate Infrastructure for Supply Chain Integration” published by NIST in 2004).
In short, I believe “supply chain connectivity” should be a utility service, like telephone service or electricity, offered by third parties who’s core business models are focused on ensuring high data quality. In my opinion, when it comes to transportation, SaaS TMS providers are a step in this direction.
And the same is true for global trade management, where many SaaS solutions also exist. As I wrote about in November (“10+2: A Beacon of Hope for Software Vendors and Freight Forwarders”), if there is ever a business process that lends itself perfectly to a network-based solution, it has to be “10+2” compliance. This is really a data collection and connectivity challenge, and freight forwarders and network-based solution providers are in the best position to address it. What you do with the data is less important (and easier) than getting the data (timely, accurate, and complete) in the first place.
Well, I’m guessing this piece will probably raise more questions than answer them. But that’s the whole point of these postings, isn’t it?
Enjoy the weekend.