TMS
technologyreview
fear factor
Despite a lackluster economy,
sales of transportation
management software remain
surprisingly strong. But it’s not
optimism that’s fueling the
growth; it’s fear of the future.
IN A SLUGGISH ECONOMY, YOU MIGHT
expect software sales to be languishing along
with everything else. But that’s not the case with transportation management software (TMS) applications. Sales
of these systems, which help shippers manage their freight
movements and expenditures, remain brisk and are expected to
maintain their momentum throughout the year.
What’s driving the growth? Fear of the future, according to one prominent supply chain software analyst. “A lot of clients recognize that right now,
As for what that will mean for the market, Gartner’s forecast calls for TMS sales to increase 7 percent in 2010 on a year-over-year basis. The firm projects sales of the software will reach $610 million
this year, up from an estimated $565 million in 2009.
Gartner’s projections align nicely with those of ARC Advisory Group, a Dedham, Mass.-based
research and consulting firm. ARC predicts that TMS sales will grow an average 7 percent annually
over the next five years, based on estimated 2009 sales of $1.2 billion. It should be noted that ARC’s
TMS market projections include sales of global trade management (GTM) software along with traditional transportation management systems.
Apples to oranges
But these aggregate sales figures tell only part of the story, according to Klappich. That’s because in contrast to past practice, shippers today don’t necessarily buy the software they need. Instead, many opt to
“rent” their transportation management software under the software-as-a-service (SaaS) or “on demand”
model. Under this type of arrangement, the vendor typically hosts the application on its own servers,
maintaining and updating the software as part of its service plan. The shipper then accesses the application online and pays a monthly or yearly usage fee. Among other advantages, the shipper can avoid a huge
up-front capital outlay for a software license as well as the hassles of software implementation.
