Choosing Enterprise vs. Software-as-a-Service TMS

Q: What platform options are available to companies investing in transportation management systems?

A: Transportation management systems (TMS) come in two essential forms. The traditional form is enterprise software—applications installed on servers that you buy and maintain. The more recent—though hardly new—form is Software-as-a-Service (SaaS), which is provided and maintained by a vendor on the vendor’s servers, and made available to you over the Internet.

Although software users see little or no difference between the two, enterprise and SaaS TMS solutions are very different. In fact, choosing the right system can be the most important decision you make.

Q: What are some of the financial considerations when choosing a TMS?

A: Enterprise software represents a serious upfront investment, whether accounted for as an operating or a capital expenditure. Either way, it is money out of your pocket. If it is borrowed, there is interest to pay. With SaaS, however, you pay as you go, with virtually no major investment upfront. You pay for it like electricity: as you use it. Cost should always relate directly to business activity and thus to revenue.

Equipment costs are another consideration. For SaaS, you only need local computers for your employees to access the Internet. For enterprise, you must also buy and maintain expensive server hardware, which should be replaced every three years.

Q: What do SaaS and enterprise TMS require of a company’s workforce?

A: Enterprise software often entails a disruptive, on-site installation and testing period. SaaS is already up and running, so your employees are ready to work in a fraction of the time.

Maintenance can be an issue, too. At a minimum, enterprise software requires someone to manage anti-virus and security measures. It may even require a full-time IT person. SaaS has no such requirements.

Support and training are always concerns when implementing new technology. The Internet-savvy companies that provide SaaS solutions often offer online webinars and tutorials on demand. That may not be the case with enterprise software providers—especially those who rely on traditional, location-specific training sessions, which can be anything but convenient.

Q: What other technical issues are involved with implementing a TMS?

A: Companies are responsible for backing up their own enterprise system data. This represents an additional expense that might not be obvious initially. But it must be done professionally, or you will have inferior backups. SaaS vendors, however, typically back up data as part of their service.

Upgrades are another important consideration. When you buy enterprise software, you only get today’s version—you will pay for tomorrow’s version in upgrades as time goes on. Enterprise upgrades are saved up to reduce the costs of installation and distribution, while SaaS upgrades are usually free and transparent, coming online as they are ready for implementation.

SaaS also has the advantage in limiting downtime and securing data, which keeps your business running without interruption.


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