The logistics world is full of jargon and sometimes we only have a vague understanding of what certain terms mean, especially when it comes to software. Some of the most confusing ones pop up in conversations about transportation management system (TMS) deployment model options: SaaS, private cloud, or on-premise are common ones. These terms are understandably confusing to the “normal” person who doesn’t live and breathe software every day.
The best model for your organization depends on your situation, but the good news is that these options give you flexibility in how you choose to implement your TMS – and even change the deployment model if your needs change.
Software as a service (SaaS)
SaaS is a software licensing and delivery model in which the software is licensed on a subscription basis and is centrally owned, delivered, and managed by a vendor. It can also be referred to as “on-demand software.” While SaaS receives a lot of attention in the media and the term gets thrown around often, true SaaS means you’re sharing an environment, database, and computing resource with others. When many clients share the same instance of the database, the term “multi-tenant” is used. SaaS can often deliver more strength than a local hosted environment, and some organizations use and promote its power as a sales advantage.
In a shared environment, security measures are in place to protect your data. The vendor takes care of all hosting needs, maintenance, and upgrades. SaaS is traditionally the most inexpensive and rapid way to deploy a TMS, as new clients all log into the same environment. This means they share the costs of the environment, from hosting hardware, database, and other shared third-party fees. Your upgrades are handled by the hosting company, and the timing of those upgrades is based on their schedule.
SaaS can be a very efficient model: Service and support for hardware or internet issues is often faster than other models and generally the vendor monitors their own environment. There’s no need to coordinate between the vendor and hosting company in resolving problems. In addition, bug resolution or fixing is faster because the vendor has access to the environment, whereas there can be lag time when transferring data from on-premise TMS systems.
Dedicated to a single organization, this type of cloud computing delivers similar advantages to a public cloud but the vendor offers a dedicated (not shared) environment. It used to be that SaaS had rapid implementation advantages, but with modern TMS software, private clouds can be spun up very quickly – sometimes in just a few hours. The difference in cost between a private cloud and a SaaS model is also rapidly shrinking.
With a private cloud deployment, customers have the ability to schedule their own upgrades. It’s also easier to do advanced integration projects. You also have the option of using your own report writer.
On-premise is actually better described as “self-hosted,” as organizations use their hosting provider of choice or perhaps even on-premise hardware. Similar to a private cloud environment, an on-premise deployment is a dedicated environment in which the company takes on the management and cost of hosting. Though these deployments often take longer than the other options discussed above, on-premise does give you more control over the software (which may or may not be a benefit depending on your IT resources and skillsets).
If you choose an on-premise or self-hosted model, you alone are responsible for installing security patches, updates, and disaster recovery measures if there were a catastrophic event. Is the server located in a secure location, locked, and under surveillance and regularly backed up? Or is it in a back closet somewhere? Do you have the database skills and can you tune for performance? Also, who is going to monitor the environment and alert others when failures happen? These are big questions you’ll need to answer if on-premise seems right for your company.
No matter which model you choose, look for a TMS vendor that gives you the option you truly need. Many vendors hide costs in hosting, so an understanding of the total cost of ownership of running the software and all the needed third-party costs is important. Be sure to ask who is doing the monitoring of the environment, including data integration and how alerts take place. Also, find out what percentage the vendor has on each deployment model: this will tell you if the TMS offering is real or a bait and switch. You may also be able to change strategies: for instance, start out with SaaS and then move to a private cloud or an on-premise installation. Regardless of your decision, demand the solution that truly fits your model of business.
Chuck oversees all marketing efforts for 3Gtms, with a strong focus on buyer-centric programs that drive opportunity creation and pipeline development. His prior roles include director of product marketing and product management at Identifix and director of product strategy at HighJump. Chuck also served in various marketing leadership positions at Lawson Software (now Infor), McGladrey, and Datatrend Technologies.