Descartes Systems Group Archives

Where SaaS Makes Sense

Cloud/Software-as-a-Service | By Clint Reiser • 11/25/2013

As an ARC Advisory Group enterprise software analyst, I am acutely aware of the promotional activities surrounding the software-as-a-service (SaaS) delivery model. In fact, it sometimes concerns me that the SaaS model is being promoted as the ideal means of application deployment for all customers in all situations. I do not believe it is such a cut and dry argument. Clearly the decision is complex. However, I do believe there are a few key characteristics that determine the suitability of the SaaS model for a given situation and set of requirements.

I have conducted research on a number of enterprise software markets and this process has revealed a wide disparity in SaaS adoption across application types. Possibly the greatest determinant of SaaS adoption is the degree to which the application manages transactions and processes that are internal to an organization, or across organizations. Those applications that support transactions and processes between trading partners have experienced greater SaaS adoption than those applications that serve as an internal corporate platform. For example, SaaS adoption has been robust in the strategic sourcing, transportation management, and global trade management markets. At the same time, SaaS adoption has been limited in the ERP market.

SaaS applications that connect organizations and support trading partner transactions are well positioned to deliver demand-side increasing returns, also known as the “network effect.” Once established, the network increases in value with the number of users. Descartes Systems is one technology provider that is successfully leveraging the combination of network connectivity and SaaS applications to expand its client base and solution footprint.

Descartes’ Global Logistics Network (GLN) has long been the foundation of its technology platform that also includes a broad suite of logistics applications. This messaging network offers capabilities such as connectivity, document exchange services, transformation, and other communication services. More recently, Descartes acquired IES, and incorporated the IES eCellerate product into its expanded vision of a networked community. Descartes eCellerate is a collaborative suite of solutions that enables customers to manage shipments, customs filings, and other disparate transactions on a single web-based platform.

At the 2013 Descartes user conference on November 12-14, they discussed the launch of the Descartes Community and the role of eCellerate in supporting partner collaboration within the community. The Community expands the GLN with improved collaboration tools and a single interface to communications and Descartes applications. It further facilitates multi-party processes, which I believe to be central to the value of a SaaS solution that supports transactions and processes between trading partners. The ability for community members to develop private sub-communities is a feature that I consider to be of great potential. This will allow subsets of Descartes customers to develop their own closed networks with information security levels that promise to encourage greater information sharing among participants. Descartes has also developed a data warehouse of shared and secure Community data on shipment activity that can be accessed and leveraged by participants. The shipment data warehouse also offers graphical display of data for intuitive comparison and analysis.

The Descartes Community further extends the benefits of the Descartes GLN. It offers further value to customers and provides additional tools that can ultimately increase the “network effect” of Descartes solutions. The technology is now in place, with future user adoption now the main determinant of the value that will be realized by customers.

Note: Descartes is a Logistics Viewpoints sponsor.

Guest Commentary: What Logistics Technology Providers Can Learn from Social Media

Guest Commentary | By Chris Jones • 11/12/2013

There is no escaping the social media hype in today’s press. While the platforms are not necessarily geared for logistics, there are important parallels in logistics to what has made the social media market so successful. Taking a look at some of the fundamental challenges in logistics shows how social media-oriented logistics solutions can address some of the most important challenges faced in logistics today.

Logistics is one of the most dynamic industries in the world, whether you are a service provider or someone who uses the services. Agility has become a critical success factor as companies try to exploit the arbitrage that exists in their supply chains.

Logistics is largely a multi-party exercise. Even the big integrated logistics providers and retailers rely on numerous parties to help move goods and “simple” truck load moves require coordination between buyer, supplier and carrier all the while the carrier is juggling other customer’s loads to maximize asset utilization.

There is not one supply chain for any enterprise or role for any company. All companies operate across multiple supply chains, and depending upon where you are, your role is different and the behavior and parties are too.

The logistics world is highly interconnected and at numerous levels. Information is shared ACROSS companies — even competing ones — and it’s more than transactional. Specialists collaborate to serve common customers or to determine how to address new regulations or acts of nature, like a tsunami. Information has to be shared throughout the ecosystems of large retailers and transportation modes to ensure efficient movement of freight.

If you boil down the previous statements, you start to understand that the critical success factors for logistics-intensive companies are flexibility, collaboration, the ability to connect to multiple parties, share common information, and exist in multiple ecosystems.

While social media has operated in a different dimension, it has demonstrated that technology can be viral, self-organizing, address more than transactions, work horizontally and vertically, and foster relationships that are temporal. However, most logistics applications today do not exhibit any of these paradigms. They are closed, assume static relationships, only handle fixed business models and do not facilitate more free-form or creative collaboration. Sadly, the users of those applications are trapped in their environment and either don’t know or cannot get access to other users to “network”.

Putting existing logistics technology or business processes in the “cloud” or being multi-tenant doesn’t solve this problem. Instead, a new class of community-oriented solutions is needed that provides visibility to all of the participants. The coming generation of solutions will allow groups of logistics organizations to self-assemble into sub-communities to collaborate on opportunities, share information and then evolve or vanish. These solutions need to combine free-form collaboration with structured information (the shortcoming of social networks) for community members to be able to work together and understand how the actions of one affects others.

Another critical dimension for community solutions is the ability for members to act as supply chain “shape shifters” and effectively participate in the many sub-communities where the company operates. For example, a freight forwarder operates in the air cargo industry sub-community to move goods for their customers through various air carriers. At the same time, that forwarder is moving goods into the U.S. and operates in the security filings sub-community to ensure that it is up-to-date with the customs filing regulations to ensure quick clearance and minimal fines. Obviously, the forwarder operates in its customers’ various sub-communities and, depending on how and what kinds of goods it is moving, it has its own sub-communities of partners too. Each sub-community has its own distinct set of members and the type of collaboration between the parties changes. It is a huge challenge for the forwarder to work effectively in all of these sub-communities at the same time – so it takes a specially-designed environment to meet the challenge.

Rather than providing a fixed solution, social media provides a flexible forum. A platform built for change. This is social media’s most fundamental lesson and the rapid adoption results are undeniable. The kind of change social media brought is significant and analogous to taking the keys of the car from the logistics technology vendor and giving it to the users. Are your logistics technology vendors ready to let you drive?

Chris Jones is the Executive Vice President for Marketing and Services at Descartes. He has over 20 years of experience in the supply chain market, holding variety of senior management positions including: Senior Vice President at The Aberdeen Group’s Value Chain Research division, Executive Vice President of Marketing and Corporate Development for SynQuest and Vice President and Research Director for Enterprise Resource Planning Solutions at The Gartner Group.

Guest Commentary: What is the Half-Life of Your Logistics Technology Investments?

Cloud/Software-as-a-Service | By Chris Jones • 07/09/2013

According to Merriam Webster, one of the definitions of half-life is a period of usefulness or popularity preceding decline or obsolescence. It is important to match the half-life of your business processes with the half-life of the technology investments you are making. With the half-life of many business processes dramatically shrinking, the notion that every Logistics IT purchase needs to be a long-term strategic investment as opposed to a short-term tactical one has become bad advice. More than ever the emphasis on solution strategy needs to be on time-to-value, effective utilization period and portfolio management. Here’s why.

The typical IT purchase and install model is predicated on the assumption that the initial upfront investment in software and hardware, installation, training, etc. will be more than offset by some period of business value generated by the solution. With this approach, you get the traditional “hockey stick” return-on-investment profile.

There are several challenges to this approach. It assumes that business conditions will be as anticipated and that the payout period will play out according to the plan. The bigger the upfront investment, the bigger or longer the payout must be. But what is the likelihood both will happen? It’s all about risk. Do you expect that your business processes will be stable and predictable for 3, 5, or even 7 years? Maybe that thinking will work with your financial system implementation. But as you evaluate business processes closer to the customer and trading partners, you find that they are at greatest risk to change in a shorter period of time. This is because there are many factors that are not in your control such as evolving customer preferences and competitors and trading partners with new business models.

The two most critical factors for eliminating risk are minimizing the upfront investment and reducing the time-to-value. These are two important reasons for considering cloud-based logistics solutions. Cloud-based solutions minimize the upfront software and hardware investment because those costs are embedded in the monthly subscription or transaction price. In addition, they reduce the time to implement because they significantly minimize technical training and installation and rely less on scarce internal IT resources. Network-based logistics cloud solutions or Entrusts, further reduce time-to-value because they have many of the trading partners and carriers already pre-connected.

Effective utilization of logistics IT solutions is not well understood because of the “strategic” mindset of IT procurement. But, when the discussion turns to trucks and forklifts, it is well known that they have limited lifespans and their effectiveness diminishes over time to the point where they hurt, as oppose to help, the business. Yet, how many times have you heard about an ERP, WMS or TMS solution constraining or “killing” the business, but the plan to replace it are as painful as the original implementation? Logistics IT seems to be the land of the walking dead, because companies do not have technical or financial exit strategies for their existing solutions. Or worse, they are holding on to those solutions because they haven’t gotten the anticipated payback!

That is why companies need to embrace the concept of a portfolio strategy for logistics technology investments. Some logistics IT solutions will be around for a number of years and others need to address short-term business challenges and opportunities and then go away. The difference in how many IT professionals look at portfolio strategy and this approach is that the goal is to maximize business value as opposed to IT value. The fact that some aging IT investment doesn’t cost much to run has nothing to do with its value to the business. The financial metric return-on-net-assets (RONA) is a failed concept for measuring IT value. Instead, the focus needs to be on value creation like enabling revenue and profit growth or lowering total costs and improving customer service. That’s where cloud-based logistics IT solutions become a more important part of the portfolio. Cloud-based logistics solutions are better designed to be plugged and unplugged in a portfolio strategy where time-to-value is critical to maximizing the potential business value and competitiveness.

All good things — even logistics IT — run their useful course. The notion that logistics IT is more temporal is much more in-line with reality, and cloud-based logistics solutions are a better fit for increasingly greater percentage of logistics IT deployments. In fact, cloud-based logistics solutions have even more upside than making the most of your approach to optimizing technology half-life.

This Week in Logistics News (May 27-31, 2013)

Logistics Service Providers | By Adrian Gonzalez • 05/31/2013

After a cold and wet holiday weekend, summer has arrived with a vengeance, with temperatures in the 90s yesterday, today, and tomorrow. Time to put away the turtlenecks and find my bathing suit.

It was a relatively quiet week for news, but here’s what caught my attention:

Descartes reported Q1 FY14 results this week. Revenues increased 14 percent and net income increased 8 percent compared to Q1 FY13. The company has achieved 34 consecutive quarters of profitability, and it has more than 146,000 parties connected to its Logistics Technology Platform exchanging more than 4.5 billion messages each year — a statistic that underscores the ongoing rise of supply chain operating networks.

On the 3PL front, Greenbriar Equity Group LLC acquired Transplace from an affiliate of CI Capital Partners, who together with Transplace’s management team bought the company from its original owners in 2009. Terms of the transaction were not disclosed. Under CI Capital Partners, Transplace made several acquisitions to grow its business and service footprint, including Celtic International, SCO Logistics, and Torus Freight Systems (now Transplace Canada). I assume we can expect more of the same with the new owners, based on the following quote from Jill Raker, Managing Director at Greenbriar:

“Transplace has an outstanding executive leadership team, an excellent customer base, and a differentiated set of logistics solutions. By partnering with Tom Sanderson, George Abernathy, Rich Hyland and Steve Golich, along with the rest of the Transplace management team, we expect to further grow the company across the full range of its service offerings to continue providing value to existing and new customers [emphasis mine].”

In technology news, Supply Vision has partnered with FindMyFreight.com, a web-based shipment tracking aggregator. According to the press release, “FindMyFreight.com will augment Supply Vision’s existing Transportation Management Systems though a simple API, allowing Supply Vision’s customers to track shipments from multiple carriers through their existing customer portal.”

The U.S. Department of Transportation’s National Highway Traffic Safety Administration (NHTSA) announced this week “a new policy concerning vehicle automation, including its plans for research on related safety issues and recommendations for states related to the testing, licensing, and regulation of ‘autonomous’ or ‘self-driving’ vehicles.” According to the press release, NHTSA’s policy addresses:

An explanation of the many areas of vehicle innovation and types of automation that offer significant potential for enormous reductions in highway crashes and deaths;
A summary of the research NHTSA has planned or has begun to help ensure that all safety issues related to vehicle automation are explored and addressed; and
Recommendations to states that have authorized operation of self-driving vehicles, for test purposes, on how best to ensure safe operation as these new concepts are being tested on highways.

The NHTSA has also defined five levels of vehicle automation (starting with Level 0), with the highest level being Full Self-Driving Automation (Level 4), defined as, “The vehicle is designed to perform all safety-critical driving functions and monitor roadway conditions for an entire trip. Such a design anticipates that the driver will provide destination or navigation input, but is not expected to be available for control at any time during the trip. This includes both occupied and unoccupied vehicles.”

Click here to download a copy of the NHTSA’s statement of policy on automated vehicles. The bottom line is that this announcement points to a big reality in the market: the development and testing of “self-driving” vehicles is progressing very quickly, and while industry executives expect fully-autonomous vehicles to be widely available by 2025, I’m betting it will happen sooner. For related commentary, see “Beware, Driverless Cars are Everywhere!”

Finally, an article in the Wall Street Journal this week poses an interesting question: Is it better to cut ties with a supplier that doesn’t meet expectations — whether it’s safety standards, quality metrics, or other important factors — or is it better to work with them to improve? The answer is “It depends,” like so many other things related to supply chain management. Food for thought for a future posting, but I’d welcome your thoughts on the question, so post a comment and share your viewpoint.

Have a happy weekend!

Song of the Week: “This Ladder is Ours” by The Joy Formidable

Note: Descartes and Transplace are Logistics Viewpoints sponsors.

Seinfeld and Last Mile Logistics

Logistics Technologies | By Steve Banker • 04/22/2013

One of the funniest episodes of Seinfeld was “The Pool Guy,” where Kramer’s phone number is very similar to Moviefone’s, the movie listing service, and he gets many calls from people wanting show times. In the end, Kramer decides to just play along and he makes himself sound like an automated messaging system. For those with a sadistic sense of humor, the laughs come from the irritation he causes the callers.

I hate automated calling systems, which is why I can’t believe I’m saying this, but I was actually introduced to a place where Interactive Voice Activation (IVR) — the fancy name for automated messaging systems — makes sense in logistics.

At last year’s Descartes User Conference, one of its carrier customers spoke about how they used an IVR solution to improve performance. This carrier specializes in final mile delivery, such as delivering large appliances for retail customers.

In last mile logistics, “not at homes” is a big problem because deliveries can’t be made. This carrier, at best, is only able to charge the retailer half of its usual delivery fee. In the meantime, a driver’s time has been wasted, while fuel and equipment depreciation costs have been incurred.

The IVR solution is also useful in situations where a large storm will make it impossible to make deliveries. In this case, the trucking firm might be faced with calling as many as 1,000 customers to cancel appointments. Using people to do this would be very costly.

The automated calling system is used to confirm that a person will be home during the scheduled delivery time; the IVR is integrated with Descartes’ On-Demand routing solution to get the delivery window data into the system. The IVR is also used to make sure the delivery address is correct. The IVR script also asks whether special delivery instructions are needed. In some cases, an address is only a proximate location and further instructions are needed, for example, so that the delivery person can find the particular apartment or condominium. If the customer needs to provide special instructions, or another exception arises, the system defaults to a human customer service representative.

These calls are often made the night before the delivery. The calls could be made very quickly, but Descartes’ customer paces the rate at which the calls are made so that when exceptions are found, they have time to reroute deliveries.

The system can also be used to improve customer service. The system, for example, can ask a customer whether they received a delivery confirmation at the time the sale was made. The carrier also uses the IVR to call back 30 minutes after the delivery is made to make sure the delivery team comported themselves professionally.

If I was getting a delivery, would I prefer to talk to a human? Usually, but not always. Not all human customer service representatives are easy to understand, or even particularly polite. However, when the presenter at the conference played actual recordings of SmartAction, the IVR system that they were using, it sounded pretty good. It was conversational, responded to “yes” and “no” verbal responses and the decision tree logic seemed to make sense.

Descartes’ customer achieved some great results from using this system. They gradually improved delivery confirmations from about 50 percent of deliveries with human CSRs to over 85 percent using the automated system. They did not mention what the ROI associated with this improvement was, but “not home” deliveries are very expensive. Further, now that delivery teams know that their performance is being monitored more closely, customer satisfaction scores have increased.

(Note: Descartes is a Logistics Viewpoints sponsor)

This Week in Logistics News (November 26-30, 2012)

Cloud/Software-as-a-Service | By Adrian Gonzalez • 11/30/2012

I didn’t win the $585 million PowerBall jackpot this week, which is not surprising, because when it comes to lotteries, taking shortcuts through town when I’m late, and picking the fastest checkout lines, I’m like Hemingway’s old man: “salao, which is the worst form of unlucky.”

On to the news, which is dominated this week by transportation management technology.

Almost three years ago I envisioned an app store for logistics software, and the news from LeanLogistics this week is another step in that direction. The company announced the On-Demand TMS® SuiteApp, built using NetSuite’s SuiteCloud Computing Platform. Think of SuiteApp as an app store where customers shop for apps to extend their NetSuite cloud-based ERP system, similar to Salesforce.com’s AppExchange. According to the press release, “NetSuite customers can leverage industry leading transportation management technology with a low cost, plug and play solution built into NetSuite ERP for quicker ROI compared to traditional TMS software.”

The “app store” model, especially one linked to an enterprise system with a relatively large customer base, is another avenue for TMS vendors to reach small and midsized companies, a segment of the market where managing transportation with spreadsheets and fax machines is still the norm.

In other TMS news, Precision Software announced that it has achieved Oracle Validated Integration of Precision Software Transportation Management System (TMS) Parcel v2012 with Oracle Transportation Management 6.2. According to the press release, “Precision Software TMS extends the functionality of Oracle Transportation Management by making it easier for customers to consider parcel carrier services during rate analysis and planning.”

Simply put, manufacturers and retailers today are looking for TMS solutions that go beyond truckload and less-than-truckload capabilities. Parcel shipping, fleet management, and global trade capabilities (ocean and air, plus customs compliance) are moving from the “wish list” to the “must have” list.

Last year, in “The IT Dilemma for 3PLs,” I raised the following question: Should 3PLs continue to develop their own IT systems in-house or should they implement third-party solutions instead? There are good arguments for both approaches, as the comments readers posted illustrate. A 3PL that invests significantly in its own solutions is CH Robinson. The company announced the latest update to its Navisphere technology platform, which is used globally by employees, customers, and service providers. Enhancements to the platform include “a modernized user interface, streamlined access to business-critical data, and customization to support customer requirements across global workflows.”

The platform also addresses a critical, but often overlooked, component of transportation management systems: network connectivity. Via Navisphere, customers “gain access to a centralized network of more than 100,000 supply chain partners, without the need to integrate with each provider individually.”

I’ve been saying it for years and I’ll say it again: when it comes to enabling supply chain and logistics processes, software is not enough; you also need B2B connectivity, and I believe companies should access it as a service, just like electricity or any other utility.

In another example of how smartphones and mobile devices are playing a bigger role in transportation management, Roadnet Technologies launched its MobileCast vehicle GPS tracking software on the Android™ smartphone operating system. Here are some excerpts from the press release:

The Roadnet Technologies MobileCast vehicle GPS tracking software enables companies to see a fleet’s transportation routes in real-time, combined with the ability to make changes to particular routes based on occurring events or conditions, such as traffic or the needs of customers.

The mobile application allows drivers to review their daily routes, complete stop surveys, examine stop information, record arrival and departure times, complete stop reconciliation, add delivery receipt information and mark stops as undeliverable. Roadnet has also taken advantage of integrating other Google Android technology such as voice navigation and traffic in order to provide a complete solution for delivery.

And finally, in another example of how innovations in packaging can result in transportation and warehousing operational efficiencies, Staples announced “the launch of new packaging technology nationwide that customizes delivery box sizes to each order.” Among the benefits cited in the press release: “Customized box sizes allow more shipments to fit on each line haul and more orders in each delivery truck. In addition, just-in-time packaging with Smart-size reduces costs and warehouse space from storing delivery boxes.” For related commentary, see “Del Monte Foods: Packaging, Transportation, and Sustainability” and “The Importance of Packaging in Supply Chain Management.”

And with that, goodbye November, hello December. Have a great weekend!

Song of the Week: “Wishing I Was Lucky” by Wet Wet Wet.

(Note: CH Robinson, Descartes, LeanLogistics, and Precision Software are Logistics Viewpoints sponsors).

A complete analysis of logistics trends, technologies, and services

Archives

Login