Visit Our Sponsors
What will happen to the TMS market in 2009? First, the good news: the TMS market continues to exceed ARC's expectations. As reported in our recently published Transportation Management Systems Worldwide Outlook study, the TMS market grew almost 10 percent in 2007 to almost $1.2bn. Last year should end on a positive note as well when all the figures are in, and the long-term outlook for the TMS market remains positive. ARC forecasts the market to reach $1.6bn by 2012.
Nevertheless, the market will be tested in 2009 (and possibly 2010) in light of the global economic downturn. In a word, the outlook for 2009 is "uncertain." On the one hand, companies often look for ways to reduce costs during weak economic times in order to boost their net income and earnings per share. Transportation is a natural target because, despite its strategic value, most C-level executives still view it as a "cost center" and a "low-hanging-fruit" opportunity to add hundreds of thousands of dollars, or even millions of dollars, to the bottom line. Therefore, from this perspective, the economic environment could benefit the TMS market.
On the other hand, companies also have a tendency to delay IT investments during tough economic times. Manhattan Associates, for example, reported disappointing results for Q3 2008. Manhattan's president and CEO Pete Sinisgalli said, "Due to downward pressure on economies worldwide, we saw a significant number of software license deals we expected to close in the third quarter slip to the fourth quarter, and possibly later." Other vendors, however, report that they're not seeing any negative impact at the moment, but they're taking a cautious outlook nonetheless.
The bottom line: it's too soon to know which path customers will ultimately take in 2009-whether they'll continue to invest in TMS to reduce costs and improve their margins, or scale back investments until the economy improves. The main objective for TMS vendors is to convince the executive team of a prospective client to adopt Warren Buffet's investment philosophy: invest when others are fearful.
Enjoy curated articles directly to your inbox.