SaaS Model Saves the TMS Market

Despite a severe worldwide recession that caused most enterprise software markets to shrink by double digits, the impact on the transportation management system (TMS) market was much less substantial, according to Steve Banker, service director for supply chain management with analyst firm ARC Advisory Group.

ARC defines TMS broadly: Transportation management systems are software solutions that facilitate the procurement of transportation services; the short-term planning and optimization of transportation activities, assets and resources; and the execution of transportation plans on a regional or global basis. They address all modes of transportation, including ocean, air, rail, truckload, less-than-truckload (LTL), parcel and private fleet.Thus ARC’s definition includes planning and execution, fleet management, global trade management, parcel management and carrier solutions.

“Between 2007 and 2009, TMS sold on a traditional software model declined at a double digit rate,” Banker notes. “If it had not been for solutions sold in a software-as-a-service (SaaS) model, which continued to have good growth, the market would be in far worse shape.”

The SaaS sales model consists of solutions sold in a leasing model. These revenues can be associated with one instance of software being used by multiple customers, traditional hosting where each customer has their own instance of software that is hosted by the vendor, or it may involve the customer leasing software they host on their own servers.