Our team recently completed and published the latest Magic Quadrant for Transportation Management Systems. This was my fifth year as one of the authors of this research and I thought it would be interesting to reflect on a few of the biggest changes to the market over the last few years.
The first significant change has been the near complete shift to cloud-based TMS solutions. I started covering the TMS market with Gartner in 2017. Back then we still would hear questions from end users about on-premise applications, but it was becoming very clear where things were headed. Fast forward to the present and it’s very rare for an organization to be exploring anything but a cloud-based TMS solution. Many vendors now have 100% of their customers using cloud-based solutions while those vendors with on-premise customers continue to steadily migrate them.
As the market made the transition to cloud, the pricing models became another significant shift. The historical license models were replaced with tiered-subscription models. These were, and still are, typically based on the end-user organization’s annual freight under management. Some TMS vendors use the subscription model, but the pricing is built around shipment or transaction volumes. This is the area that organizations are struggling with the most. This model often dictates a higher total cost of ownership than end users are used to based on the historical pricing models of the past. However, the providers continue to push these companies to cloud by reducing or eliminating support and by no longer providing new features and functionality to on-premise solutions.
The second change is represented by the shifts in the vendor landscape over the last five years. We have seen vendors BluJay Solutions and Cloud Logistics acquired by e2open. Transplace was acquired by Uber Freight. Trimble acquired Kuebix and Transporeon. Panasonic completed the acquisition of Blue Yonder. Since 2018, five previous or current TMS Magic Quadrant vendors were acquired.
Just as some TMS vendors were acquired, others have joined the market. Newer TMS vendors such as Shipwell, Princeton TMX, BlueRock TMS, 3G, Shipsy and TMSfirst joined the market in the past decade and have started to become significant players during the past five years. The market still offers companies a lot of greenfield opportunities as many organizations, particularly small and mid-sized companies, are investing in TMS for the very first time.
The third major change is the increased focus on, and importance of, visibility. Organizations were asking about improving transportation visibility in the past, but the degree of importance has increased significantly. This has only continued to accelerate as major supply chain disruptions increase in frequency. We ask companies that speak to us about TMS solutions why they are looking to invest in a new or replacement solution. Visibility is one of the three most common responses we hear and is often at the top.
TMS visibility has traditionally been centered around milestone activities such as pickup and delivery notifications. However, for organizations with no TMS application they provide a major step forward in terms of transportation visibility. In addition, TMS vendors have responded to this increased focus on visibility in some instances by partnering with real-time transportation visibility platforms. In these relationships, they extend visibility from these partners and provide it as part of the TMS deployment. Other TMS vendors have been increasing their work and focus on providing enhanced ETA calculations and predictions along with other features such over-the-map visualization, event management and track and trace functionality.
What Happens Next?
The past few years have seen a lot of changes in TMS solutions, the market and the needs of organizations. But where do TMS technology and solutions go next? We already see some significant developments on the horizon that will shape the market over the next five years.
Ecosystem: TMS vendors will increase their relationships and partnerships with complimentary technologies and services to provide deeper functionality or additional capabilities to TMS buyers. This includes areas visibility, parcel and last-mile solutions and implementation partners.
All miles: More organizations are starting to look beyond just the typical outbound use case for a TMS. Companies are increasingly look for a TMS to help support inbound, intra-company, direct-to-consumer and return shipments. In short, the TMS will evolve to support all modes and first, middle and final miles.
AI/ML: The use of artificial intelligence and machine learning will continue to increase within TMS applications. They will enable increased capabilities for predictive analytics, automation and forecasting.
Sustainability: As the focus on sustainability continues to grow, TMS vendors are responding with embedded emissions calculations and reporting capabilities. The need for functionality will only increase as regulations change, alternative fuel sources become more common and autonomous vehicles plans are made.
Senior Principal Analyst
Gartner Supply Chain
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Source: Gartner Hybrid Cloud