In today's lean and mean transportation logistics markets, many companies are fueling their supply chains and transportation management systems with some form of software-as-a-service (SaaS), or cloud-computing software platforms. But how do you know what's right for your organization? And will the choice you make today be suitable long term as your business needs change due to acquisitions, expansion or contraction? Let's take a look at the three transportation logistics technology solutions currently available in the marketplace and the pros and cons of each:
• On-premise - software hosted in-house by your IT organization; requires greater upfront investment, but delivers more customized flexibility.
• Public cloud - SaaS model built on a shared infrastructure accessed via the internet; reduces initial costs but offers less extensibility. This option is also known as a Hosted Multi-Tenant/Single Instance cloud-computing model.
• Private cloud - combines the lower upfront capital expenditure of a public SaaS or cloud-computing solution with the flexibility of on-premise. This option can also be referred to as a Hosted Single Tenant/Single Instance cloud-computing model.
Check Under the Hood First
Industry pundits have tried to qualify whether a deployment is appropriate for SaaS versus on-premise based on company size. But the right solution has less to do with revenue or size, and more to do with the maturity or complexity of your overall transportation logistics operation.
For example, a multibillion-dollar food manufacturer may find that its transportation logistics and management needs are actually relatively simple in spite of the fact that it has significant annual revenues. A much smaller firm, such as a designer shoe company, may have more complex transportation logistics needs.
As you examine the various TMS solutions at your disposal, consider the following strengths and weaknesses associated with each option and think about what's important to your organization:
• Upfront cost
• Point product vs. leverages an integrated platform
• Speed to benefit; faster return on investment
• Depth of functionality
• Control and access
Many transportation logistics and supply chain solution vendors identify themselves as either an on-premise or SaaS vendor, offering varying degrees of cost, functionality and flexibility. SaaS has become very popular due to the lower initial cost and faster speed to benefit, especially in view of the recent economic climate. With any logistics solution, keep in mind that it takes time for deployment strategies to deliver benefits, and that operational and economic factors will impact how quickly results occur.
Understanding Your Options Puts You in the Driver's Seat
With a comprehensive understanding of the transportation logistics options available in today's marketplace, you'll be able to select a solution that works best for your organization.
• An on-premise deployment strategy provides maximum flexibility and control for your company, but all the IT headaches are yours. You have to host the software on your hardware, but you have unlimited flexibility in configuring the solution to the unique needs of your transportation operation. An on-premise deployment strategy, however, typically requires a greater upfront investment in time and money.
• Using a public cloud (Hosted Multi-Tenant/Single Instance) deployment scenario provides lower upfront costs and faster ROI by leveraging an existing implementation that is preconfigured and ready to use. But it's not as flexible in terms of configuring and/or customizing the software. However, less mature or complex operations may find this option entirely adequate for their needs.
• Opting for a private cloud (Hosted Single Tenant/Single Instance) deployment strategy combines the flexibility of an on-premise option with lower up-front capital expenditures available from an existing SaaS operational environment. This provides maximum flexibility and control with a more favorable pricing model and speed to value.
Regardless of what technology model you decide is best for your organization, choose a transportation logistics and management solution and supply chain partner that offers flexible deployment options that can adapt over time to changing business and market factors.
Source: Manhattan Associates
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