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Feb 5

Understand the Pros and Cons of Cloud-based TMS and What To Ask a Potential Provider Before Signing the Contract

As the business side of a company faces logistics challenges associated with rising freight costs and transportation capacity constraints, demands are also placed on the IT side to cut costs while continuing to maintain data security and provide innovative solutions.  Because of this dynamic, the cloud is gaining popularity as a platform for transportation management systems that offers market-leading capabilities for optimizing supply chain operations while reducing the implementation and maintenance costs typically associated with a TMS solution.

In many cases, a cloud-based TMS offers all of the same functionality as an on-premise version.  The key difference is: the cloud version offers a TMS application on a recurring subscription basis while the on-premise solution is typically sold as a perpetual license that requires a large one-time upfront cost. Because of the reduced upfront hardware requirements and costs, cloud TMS subscriptions open the door to best-in-class transportation capabilities that had previously been out of reach for many small- to mid-sized companies while helping to reduce IT administrative burdens and capital costs for larger companies managing viagra femme france video an on-premise TMS.

While promising the tools to optimize and centralize your logistics operations, the cloud TMS deployment model opens a new set of questions.  Before moving to or selecting a cloud option, companies should consider the pros and cons of this deployment model and understand the parameters of working with a cloud TMS provider.

Advantages

If you’ve read about cloud TMS, you’ve heard how it can help companies reduce costs and provide a faster return on investment.  Also consider the following lesser known advantages that can positively impact supply chain operations and bottom line costs.

Ease of Ownership

Cloud-computing takes some of the burden of TMS ownership off of the user because the software provider is responsible for provisioning, hosting, maintaining the underlying infrastructure and ensuring the reliability, availability and security of the application.  In most cases, disaster recovery and additional data security measures are offered and managed by the TMS provider.

With an on-premise TMS, a company can quickly overburden its internal IT staff in supporting the application.  Data backup and infrastructure security also can be expensive and cumbersome.  With a 3rd party taking care of all these tasks, a cloud TMS solution can free IT resources to do more value-added tasks while reducing operational costs.

More Predictable Costs

As companies essentially pay rent for the opportunity to utilize the functionality inherent in a cloud TMS, upfront capital expenditures related to hardware and software are eliminated.  Businesses also gain a better understanding of the costs associated with utilizing an application while eliminating the need to employ an internal IT staff dedicated to maintaining and troubleshooting the tool.

Innovation

As a cloud TMS is enhanced with new features and functionality, these updates become readily available to users through application upgrades, offering subscribers the opportunity to adopt new innovative functionality should it provide value to one’s operation.  Companies with on-premise TMS deployments tend to upgrade the application less frequently because of the time and costs associated with installing and testing the

new version.  While some level of regression testing is required during an application upgrade associated with a cloud TMS, the level of support required by IT is not nearly as intensive when compared to supporting an in-house application upgrade.

Disadvantages

Because the software and infrastructure of the cloud TMS are controlled by the provider, some disadvantages may exist when subscribing to the service.

Security

Even as many companies heighten the need for data security, many cloud TMS applications utilize a multitenant architecture where a single version of the software runs on a server that is shared by multiple customers.  This type of architecture opens the possibility for users to view another subscriber’s data, jeopardizing not only data security, but a business’ competitive position in the market.  For instance, if one shipper gained access to the carrier rates of another shipper, that information could be used to negotiate for needed capacity or better rates with those carriers.

Along similar lines, a TMS solution layered with technology (hardware, software, servers) purchased from different 3rd party vendors could mean that multiple handlers are involved in supporting the infrastructure.  The more parties having access to the technology increases the security risk.

While data security is essential, a common tactic used to protect data in cloud applications is to simply restrict access to the database at the backend.  Users converting to or implementing a cloud TMS must determine if they can accept any data access limitations.

Minimal System Flexibility

Should a cloud TMS provider only offer a cloud deployment option, a subscriber is locked into the cloud and will not have an opportunity to transition to an on-premise version of the application if the need becomes apparent.

Beware of cloud TMS solutions that offer limited configurability or require configuration that can only be completed by the vendor itself.  Vendor configurations could come with a price tag.  Also, it is important to understand if one’s requirements can be met within the boundaries of the application’s out-of-box functionality.  Due to the access restrictions inherent in cloud-based solutions, customizations and extensions to the base product most likely will not be an option.

Forced Upgrades

While upgrades are an important element of innovation, many cloud TMS providers force upgrades that can stifle an operation if imposed at the wrong time, such as during a seasonal business high.  Regardless of how the application upgrade process works and when it takes place, a level of regression testing should be completed by internal resources, in a non-production environment, to ensure current processes are not negatively impacted by the newly installed version.

TMS users also must stay abreast of the new content within the software upgrade with the goal of capitalizing on the specific features that apply to one’s business process.  To fully take advantage of enhancements, a system integrator, involved with the initial TMS implementation, can provide guidance on how to best take advantage of applicable product enhancements.

Layers of Risk

When discussing risk, most companies think about data security first, but vendor viability is important.  Will the TMS provider be around in the future or will another company buy them out?  Is this a new venture for them or do they have established technology?  Look at the history of the company and how long its products have been used.  Does the provider have a solid portfolio? See if you will be in good company with other customers.

Also determine if the company owns the technology or if it is purchased from someone else. A TMS infrastructure layered with technology from different vendors is at risk to performing sub-optimally if the provider does not fully understand or cannot support the technology on their own.

The type of hardware supporting the TMS application can also determine the performance of the applications.  Should a provider invest in commodity hardware instead of a strong infrastructure that offers high processing speeds right out of the gate, companies may find that they need to upgrade hardware at their own cost to achieve more acceptable results.

What You Should Know About Your Cloud TMS Provider

Still interested in the cloud?  Now it’s time to find out more about your TMS provider’s policies and modes of operation.  Here are some questions that a buyer of a cloud TMS should ask the vendor before signing on the dotted line.

  1. What is the metric used to determine the recurring subscription price?

Cloud TMS providers apply different cost structures to subscription prices based on usage, modules required to utilize the required functionality, freight under management, revenue and contract length.

Subscription costs, however, may not be the bottom line price.  Functional support fees, 3rd party software licenses for complementary products that work in conjunction with the TMS, implementation costs, integration services and other charges added to subscription prices will ultimately determine the total cost of ownership.

  1. What is the vendor’s system uptime objective?

As part of the data processing agreement, a provider should guarantee a targeted availability objective.  The industry standard is typically above 99%.

  1. How does maintenance work?

When and how often the provider conducts application maintenance may impact the ability to utilize the application, especially if using the application in a global arena with users scattered across the world in different time zones.

  1. What happens if a disaster occurs at the datacenter where your environment is being hosted?

As extended downtime can cripple this mission-critical application, TMS users must consider vulnerabilities associated with any 3rd party hosting situation.  What type of disaster recovery and/or backup plan does the provider have to restore operations?   Do they have duplicate datacenters at distant locations to avoid simultaneous disruption due to a weather condition or natural disaster?  What is the guaranteed recovery time when you will be back on line and the data recovery point objective?

  1. Is the solution multitenant or single tenant?  Are services shared?

As previously discussed, a multitenant architecture could increase the chance of a security breach should other users view your data.  In a single tenant environment, each customer is provided a dedicated environment, where the security risk is diminished.

  1. What types of data access restrictions exist?

A cloud TMS deployment model bears data access restrictions different than an on-premise deployment model.  For example, should a business utilize a standalone Business Intelligence tool to perform analysis against data from multiple applications, a potential move to cloud TMS could restrict the ability to perform this analysis.  If so, can you live without this tool?

  1. Can I extend the product?

A cloud TMS deployment model restricts customization to some level when compared to an on-premise deployment model.  Even the most configurable off-the-shelf applications can’t possibly meet every customer requirement.  When choosing a cloud TMS, companies must be prepared to work within the boundaries of the application’s capabilities.

  1. How many instances do I get with my subscription?

With an on-premise TMS application, a user can standup as many instances of the application that can be internally managed, maintained and supported.   In the cloud version, as the provider manages the application and its instances for multiple users, customers are allocated a certain number of instances associated with their subscription to limit the amount of work and required resources to support activities.

Typically, three instances of a TMS are required: one for Development, one for Testing and one for Production.  Businesses used to having three instances of a TMS application should consider whether the transportation program can be run with less than that.

  1. How do upgrades work?  Can I defer upgrades for a certain period of time?

Upgrades bring product enhancements but can disturb normal business activities during installation.  Some cloud TMS providers require that subscribers accept upgrades on a specific date without regard to business activities, while others allow companies to plan for them during an ideal time period.  Understand the provider’s upgrade process and schedule to account for potential disruptions to business activities.

  1. How do I interact with support?

Regardless of the delivery model, every user at one time will interact with the application’s support team.  It is important to know the protocol when identifying an issue with the product.

Additional interactions beyond application troubleshooting might be required when requesting support such as filing requests for environment refreshes as well as understanding upgrade schedules and uptime statistics.

  1. How is my data secured?

A cloud TMS provider should offer multiple approaches to secure data integrity.  Consider the following when evaluating this area:

  • How secure is the datacenter where my data will reside?
  • Does the provider offer features like white listing that allows only certain IP addresses to access the application?
  • When conducting backups, is the data encrypted before moved to an offsite facility for storage?
  • Is there a vulnerability management program that periodically monitors and tests the networks involved?

Read through the provider’s hosting documentation to determine the information security policies.

  1. Is the application sitting on commodity hardware?  Is there an upcharge to use non-commodity hardware?

As previously discussed, some cloud TMS providers utilize commodity hardware because of its relatively low cost.  While functional, commodity hardware may not offer the optimal performance one might expect.  Users may be allowed to upgrade hardware but at their own expense.  If performance is an important issue, some of the major TMS players offer their own high-end technology that provides fast performance for optimal results.

  1. Are there data volume thresholds?  What happens if I breach that threshold?

With a cloud deployment, the number of allowed objects or transactions is typically specified in a subscription agreement.  The provider sets these thresholds to limit data storage requirements.  Understand what objects are factored into the count and attempt to project whether or not your business will approach that threshold.  If your business might approach that count, determine the costs associated with surpassing it.

  1. Can you integrate a current portfolio of applications?

A business might have an established portfolio of applications or interfaces related to supply chain management that they would like to maintain.  For example, a company might like to use its own Order Management System with the new TMS. Determine if an important application in your portfolio can interface with the TMS to ensure you can still use it should you move to the cloud. If not, can you do without it?

  1. Will my data be purged after a specific period of time?

In the same vein as defining object thresholds, cloud providers dictate when data created within a customer’s environment is deleted from the database.  Again, the provider establishes these thresholds to limit data storage requirements.   Find out how the data purge process lines up with your corporate compliance policies.  Some companies might need to consider employing a data archiving process to fill the gap between the vendor’s data purging timeframe and their own compliance needs.

Understanding the pros and cons of a cloud TMS deployment, along with your own corporate objectives and capabilities, is imperative to finding the right solution that supports your ongoing supply chain operations and provides the best return on your investment.



 

Thomas

Thomas A. Deakins is Vice President viagra sans ordonnance of Global Business Development at MavenWire. Thomas has over two decades of experience in the field of Supply Chain Management, functioning in many capacities to include sales, design, product management, product marketing, and client relationship management. Thomas has worked for several distinguished companies including TMW Systems, Oracle Corporation, G-Log, SAP, Chep, and JB Hunt Transport. Thomas is a graduate of the University of Tennessee-Knoxville (Logistics & Transportation). Thomas and his family reside in Farragut, TN.

 

 

Joseph Callan is Manager of Cloud Solutions at MavenWire. Joseph has a diverse background spanning more than fifteen years in the Supply Chain Management and Logistics industry, serving in operational and consulting roles.

 
 
 
 

 

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