Executive Briefings

Time-to-Value: Developing a SaaS Equivalent for 3PLs

Time-to-value is among the most important criteria companies look for today when investing in software. It is one of the main reasons why software-as-a service (SaaS) has gained so much traction in recent years, especially in the transportation management systems (TMS) market. And during this recession, as customers have become more risk-adverse and more focused on quick ROI, even traditional enterprise software vendors like SAP have aligned their product offerings and messaging around "easy-to-consume" solutions.

Time-to-value, however, has not caught on as much in the 3PL industry. The 3PL evaluation and selection process often takes many months to complete, sometimes more than a year. And the rollout, in many cases, is no different than a "big-bang" ERP implementation: long, painful, and risky.

Has the time come for the 3PL industry to develop a SaaS equivalent-i.e., an easy-to-consume, quick (less than a year) time-to-value service offering?

In transportation management, such a solution already exists in the form of managed transportation services (MTS), which effectively combines a SaaS TMS with human IP. MTS is an example of a broader trend we identified a few years ago, namely the converging business models of software vendors, consulting firms, IT services companies and logistics service providers. Many manufacturers and retailers are looking at their fragmented supply chains and becoming overwhelmed by their ever-growing complexity. Buying and implementing supply chain software is now the easy part, even though it's still a time-consuming and costly process. The real challenge is finding experienced supply chain experts who can connect all the pieces together (software, process changes, metrics, best practices, continuous improvement, etc.) to create business value. Call it the marriage of software with Knowledge Process Outsourcing.

C.H. Robinson, LeanLogistics, and Transplace (all ARC clients) are among the leading providers of managed transportation services in the market. A couple of weeks ago, I visited with the executive team of TMC, the global division of C.H. Robinson that offers managed transportation services. One of TMC's taglines is "Get You There Faster" which I like a lot because it is all about time-to-value.

What is the opportunity cost-i.e., the amount of cost savings and productivity gains your company will forfeit-by waiting weeks, months, or even years to implement a TMS in-house versus deploying a SaaS solution? This is one of the key questions companies should ask when evaluating TMS options. The same question applies when deciding between creating a load control center in-house versus using a managed transportation service.

If you are a 3PL, ask yourself these questions:

• Do we have service offerings that are "easy to consume" and provide quick time-to-value or is our sole focus on selling big-ticket, large-scope, hand-everything-to-us offerings that are risky and time-consuming to implement? There is still a market for the latter, but the market for quick time-to-value offerings is even greater.

• How can we package together some of our existing IT capabilities, assets, partnerships, and talent to create quick time-to-value service offerings? For example, can we create a service that combines all of these elements, priced in a subscription model, to help companies gain greater control and visibility of their inbound operations?

• If we are increasingly competing against software vendors, and we sell to the same audience, what is our response to their time-to-value proposition?

Time is the new currency for achieving competitive differentiation. Don't waste it.

To view this post on ARC's Logistics Viewpoints, visit: http://logisticsviewpoints.com/2010/06/23/time-to-value-developing-a-saas-equivalent-for-3pls/ 

Source: ARC Advisory Group

Time-to-value is among the most important criteria companies look for today when investing in software. It is one of the main reasons why software-as-a service (SaaS) has gained so much traction in recent years, especially in the transportation management systems (TMS) market. And during this recession, as customers have become more risk-adverse and more focused on quick ROI, even traditional enterprise software vendors like SAP have aligned their product offerings and messaging around "easy-to-consume" solutions.

Time-to-value, however, has not caught on as much in the 3PL industry. The 3PL evaluation and selection process often takes many months to complete, sometimes more than a year. And the rollout, in many cases, is no different than a "big-bang" ERP implementation: long, painful, and risky.

Has the time come for the 3PL industry to develop a SaaS equivalent-i.e., an easy-to-consume, quick (less than a year) time-to-value service offering?

In transportation management, such a solution already exists in the form of managed transportation services (MTS), which effectively combines a SaaS TMS with human IP. MTS is an example of a broader trend we identified a few years ago, namely the converging business models of software vendors, consulting firms, IT services companies and logistics service providers. Many manufacturers and retailers are looking at their fragmented supply chains and becoming overwhelmed by their ever-growing complexity. Buying and implementing supply chain software is now the easy part, even though it's still a time-consuming and costly process. The real challenge is finding experienced supply chain experts who can connect all the pieces together (software, process changes, metrics, best practices, continuous improvement, etc.) to create business value. Call it the marriage of software with Knowledge Process Outsourcing.

C.H. Robinson, LeanLogistics, and Transplace (all ARC clients) are among the leading providers of managed transportation services in the market. A couple of weeks ago, I visited with the executive team of TMC, the global division of C.H. Robinson that offers managed transportation services. One of TMC's taglines is "Get You There Faster" which I like a lot because it is all about time-to-value.

What is the opportunity cost-i.e., the amount of cost savings and productivity gains your company will forfeit-by waiting weeks, months, or even years to implement a TMS in-house versus deploying a SaaS solution? This is one of the key questions companies should ask when evaluating TMS options. The same question applies when deciding between creating a load control center in-house versus using a managed transportation service.

If you are a 3PL, ask yourself these questions:

• Do we have service offerings that are "easy to consume" and provide quick time-to-value or is our sole focus on selling big-ticket, large-scope, hand-everything-to-us offerings that are risky and time-consuming to implement? There is still a market for the latter, but the market for quick time-to-value offerings is even greater.

• How can we package together some of our existing IT capabilities, assets, partnerships, and talent to create quick time-to-value service offerings? For example, can we create a service that combines all of these elements, priced in a subscription model, to help companies gain greater control and visibility of their inbound operations?

• If we are increasingly competing against software vendors, and we sell to the same audience, what is our response to their time-to-value proposition?

Time is the new currency for achieving competitive differentiation. Don't waste it.

To view this post on ARC's Logistics Viewpoints, visit: http://logisticsviewpoints.com/2010/06/23/time-to-value-developing-a-saas-equivalent-for-3pls/ 

Source: ARC Advisory Group