Oracle builds connections for cloud OTM

OTM, which also encompasses its sister global trade management module, has been eagerly awaited by the transportation and trade community.    What do you do if you’re a transportation management software developer with a household name and your product delivery model diverges from the trend?
   Well, if you’re Oracle, you release a cloud-based version of your popular Oracle Transportation Management (OTM) software in the hopes that it will reach even more users.
   Oracle’s cloud release for OTM, which also encompasses its sister global trade management module, has been eagerly awaited by the transportation and trade community. Many Oracle OTM and GTM users have seen the rise of cloud-based platforms and wondered if they were being somehow fenced in by Oracle’s on-premise deployment.
   As he does each year, Oracle’s transportation management software svengali Derek Gittoes got in front of a room of Oracle users at the independent event the user group holds annually in Philadelphia in August. This time, Gittoes took the time primarily to explain how the cloud-based OTM would affect them.
   First, he said, the cloud-based OTM would not have any different features or functions than the on-premise version.
   “We are not offering a ‘light’ version via the cloud,” said Gittoes, vice president of value chain execution product strategy. “The cloud products will be the same products we’ve been delivering. Cloud’s already a big business for us and getting bigger.”
   He also said present customers could switch to the cloud version, using the money they pay for support of their product today for a three-year subscription. If they don’t like the cloud version, they can switch back to on-premise after that three-year period.
   But more interestingly, what Oracle won’t be doing with its cloud transportation management offering is taking the same path as other cloud-delivered, software-as-a-service (SaaS)-priced competitors.
   “One of the benefits of SaaS is the network model for bringing in carriers,” he said. “We’re taking a different approach. We’re working with the best B2B (business-to-business) partners for connectivity. We started with E2open and we’re continuing on with other partners.”
   This is a really crucial distinction. Most browser-based transportation management tools aim to enable connectivity to carriers through a quasi-LinkedIn effect. The philosophy goes like this: I bring all my carriers to the network, and the other users of the same transportation management system (TMS) bring their carriers.
   Some of those carriers may overlap, but many are likely to be new to the other user. Once a carrier is brought onto the TMS network, they’re brought on for all users, and thus every user reaps the benefits of the other carriers brought on to the network.
   In this scenario, the onus is on the users of the system to build the network of carriers (as well as logistics services providers and other partners likely to be involved in a freight move).
   Oracle, as Gittoes said, is going about connecting carriers in a different way, mostly out of necessity. By using E2open and other B2B platforms, Oracle is in effect doing the connecting for the user. The downside to this approach is those connections will be limited to what the user brings or what Oracle’s connectivity partners bring. But bear in mind, that’s likely to be a long list of carriers and other service partners.
   The necessity part comes into play because Oracle’s cloud offering is not multi-tenant. It is essentially hosting each customer’s version of OTM independently, in what Gittoes called separate “pods” (more on this topic to come in future columns, incidentally).
   So, a customer whose OTM platform is hosted via the cloud (instead of on-premise) can’t really “connect to the network” in the same way that a user of a browser-based, multi-tenant, cloud-deployed TMS could.
   This is not to say that one way is better than the other. The folks who develop multi-tenant, LinkedIn-style TMS and visibility platforms will argue until they’re blue in the face that the network model is the easiest to scale and can synchronize more fluently with modern supply chains.
   But if we’re talking about the issue of carrier and partner connectivity – that is, are my carriers and LSPs able to provide and extract the necessary data easily from my TMS – then it’s hard to envision Oracle and its vast ecosystem of B2B partners and integration partners failing to enable that.
   E2open, for instance, has been working with Oracle for nearly five years on connectivity.
   “[Oracle] can neutralize that problem of losing business because they couldn’t quickly integrate to a network of suppliers,” Ian Hedges, vice president of platform for E2open, told me in a conversation this past summer. “That means we can on-board the connections between an OTM customer and carrier in minutes. We’re directly connecting to carriers, with no cost impact to our customers whether the carrier is on the network or not. We invest in adding any carrier.”
   Hedges explained that E2open essentially provides the connective “plumbing” through its cloud platform.
   “We do not go to market as providing any TMS capability,” he said. “We don’t plan routes or which carrier to use. We have a natural relationship with Oracle OTM—their capability and our cloud-based capability.”
   Oracle’s massive reach on the enterprise resource planning side enables it to leverage relationships with partners like E2open and others to provide similar connectivity as shippers using a network model system might achieve. It’s like taking two different roads to get to the same end point.
   Which road is right for your company? Well, that depends on whether you use Oracle today, for ERP or OTM. It also depends on whether your company necessitates using only single-tenant cloud platforms, or whether you can use multi-tenant tools.
   And it depends on whether you think you’ll get the same level of instant connectivity to your transportation partners and suppliers (not to mention future partners and suppliers) by leaving it to Oracle and its network of B2B platforms, or whether you think it’s the job of a system’s users to build that connected base.

This column was published in the October 2014 issue of American Shipper.