SAP sets TMS market to defrost

  For the better part of the past decade transportation management systems (TMS) vendors and consumers have complained about SAP’s ability to “freeze” their market with promises of a new release that never seemed to materialize.
   In June, SAP, the German business software giant, made good on its promise with the long-awaited release of Transportation Management 8.0.
   “SAP TM 8.0 is a full end-to-end solution for transportation management,” said Timothy Motter, solution director, line of business solution management at SAP. “It can integrate to an SAP enterprise resource planning system (ERP), a legacy system, any other ERP or multiple backend systems.”
   SAP makes a point to emphasize its latest release is a standalone application, not dependent on its already prevalent ERP systems that support internal processes of many manufacturers, retailers and logistics providers worldwide.
   “As we further develop beyond the shipper market into the freight forwarder segment with (version) 8.1 and then into the carrier base, those environments become more complex and they need to reside on a standalone TM that has all the functionality and capabilities without relying on an SAP backend,” Motter said.
   “You have to have systems that are not reliant on, but fully integrated with, an ERP landscape because ERPs are very transactional-based, not operational-based like logistics requires,” he explained. “It’s not just transportation; it’s the end-to-end business process.”
   Before TM 8.0’s general release, SAP worked with a small group of users to beta-test the application. “We had over 30 customers apply for ramp-up and we typically only allow for 15 at the max,” Motter said. “Just the demand alone tells me that what we did in this release was right.”
   This is not SAP’s first shot at the TMS market. Earlier versions 6.0 and 7.0 never lived up to high expectations.
   “There were some scenarios we learned with our customers that we could manage in a different way,” said Andres Botero, senior director of supply chain execution for SAP’s solution marketing group. “We had some scalability issues at high volumes we needed to resolve. Rather than ship a product now and a better product later we decided to wait and ship an industrial strength product like the one we’re launching now.”
   “They had a few missteps on earlier releases, but with the release of TM 8.0, SAP has a solution with best-of-breed functionality and a highly scalable architecture,” said Steve Banker, service director for supply chain management at ARC Advisory Group, a research and consulting firm.
   “The architecture and data model for 8.0 is very flexible and simple,” Botero noted. “7.0 was good software but it was a little too complex in terms of the data model.”
   Dwight Klappich, vice president of supply chain research for Gartner, said “when SAP first started down its new TMS path their initial vision, while compelling, was too broad and comprehensive, and they bit off a bit more than they could chew for an initial release of a new solution as complex and with as sophisticated customers as they were targeting for TM.
   “They made the right decision on 8.0 to re-focus the functionality more on core transportation processes, get the basic system to market then develop a road map that will introduce additional functionality over time” Klappich said.
   He encouraged TMS users to evaluate several vendors when looking for a new TMS system and he believes SAP deserves consideration, particularly from existing SAP ERP users.
   “SAP TM should be the ‘no-brainer’ choice for existing SAP customers,” Botero said. “If you have an SAP backend you benefit from integration by design. SAP TM and ERP are designed to work together from the get-go.”
   However, Klappich suggests customers put a priority on other aspects of the software ahead of ease of integration.
   “Certainly SAP offers some integration advantages, but I do not think that integration will or should overshadow things like functional fit, complexity, functional breadth, adaptability, ease of use, implementation complexity, time-to-value and total cost of ownership,” he said.
   Nonetheless, SAP’s large customer base provides fertile ground for the company to sell its new TM offering. There are several industry segments that are said to “run on SAP.”
   “In developing this product, one of their key targets has been the chemical industry,” Banker said. “SAP paid particular attention to providing an end-to-end solution that will meet the needs of that industry.” SAP boasts more than 3,000 customers in the global chemical industry.
   “Chemical companies have some industry-specific functionality,” he added. “Their TMS, plus nice integration to other products in their suite like environment, health and safety and global trade management, differentiates SAP in this area.”
   SAP has also set its sights on the global logistics industry with this and forthcoming releases. “8.1 will be available later this year and 9.0 is planned for the future,” Motter said. Version 8.1 “is 8.0 with a lot more functionality for logistics service providers and specifically freight forwarders.”
   This focus on facilitating international cross-border trade puts a spotlight on a perceived weakness of ERP-based software. Right or wrong the prevailing wisdom in the international logistics market says that ERP-based TM is best suited to manage wholly domestic transportation.
   “Actually starting late has allowed SAP to focus more effort on global TMS, and they are potentially a viable competitor here,” Klappich said. “It is not enough to simply handle an ocean booking, as important as that is. The challenge is managing all the legs of a multileg shipment, allowing access to the shipment for all the parties that might touch the shipment from initial source to final destination.”
   SAP has positioned TM 8.0 as a standalone application that can plug into any network or backend. “TM has to sit in the middle and have the ability to talk to multiple environments,” Motter said.
   The company assures customers that it will continue to support those operating on versions 6.0 and 7.0 and any of their predecessors.
   “If they feel that they want to benefit from TM 8.0 there will be separate implementation,” Botero said. “This is an entirely different system with a different architecture and much broader capabilities; there is no one-button upgrade.”