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What’s Next for SaaS and On-Premise TMS Providers

SaaS TMS solutions have reached the point of sustainable viability in recent years. In fact, an argument could be made that sales of SaaS solutions have been propping up the Transportation Management System market in general. As we support our clients in the evaluation and selection of TMS solutions, we no longer see strong bias against SaaS solutions. Rather, it is increasingly common to hear things like “we don’t really have a preference” or “we just want the best TMS for our business”. The application delivery model has now become secondary to features, functions and value. To gauge the impact of SaaS technology, consider the efforts and investment of the Tier 1, traditionally on-premise TMS vendors to provide SaaS options for their customers.

When it comes to a SaaS deployment, the “pure” SaaS players enjoy an architectural head start over the traditional on-premise vendors that designed their solutions to be primarily single tenant. While it could be argued that, for some industries and functional requirements, the legacy on-premise solutions have advantages in breadth and depth of functionality, which gap is easier the close: technology or functionality? In my opinion, it’s the functionality gap.

As hardware and internet bandwidth become more powerful, inexpensive and ubiquitous, functionality like complex optimization is no longer as difficult for SaaS vendors to support. These vendors are focused on closing the functionality/flexibility gap and are steadily broadening and deepening their offerings. There are no inherent limitations to their ability to develop and implement deeper functionality. The most daunting challenge the SaaS providers face is maintaining the multi-tenant, single instance concept that underlies the collaborative potential of their solutions.

Traditionally on-premise solutions, on the other hand, face challenges when it comes to developing true SaaS solutions. In many cases their solution architecture was originally developed without consideration for SaaS needs. This often means that the core code and database is not optimized for true SaaS performance and relies heavily on local processing and large, dedicated hardware stacks. Revamping the fundamental data structures, communication protocols, APIs and other key components is an additional hurdle that pure SaaS vendors do not have to clear.

The great news for the TMS buyer is that this fervent competition of ideas will ultimately result in solutions that combine the best of both worlds, providing real options and strategic flexibility.