How much does it cost to set up a transport management system? How long do the projects last?
ARC has just completed a study on the market for the integration of transport management systems. We previously made a transportation management systems (TMS) market research and Transport Execution and Visibility Systems Markets, and interviewed TMS vendors. Finally, we surveyed and interviewed TMS customers. Interviews with system integrators (SIs) who implement the different types of transportation software solutions allowed us to complete our 360 degree review of freight transportation software technologies.
Systems integrators serving this market knew better, or perhaps more directly, the costs of implementing a transport solution, and the time it would take, than suppliers or users.
The costs of an implementation depend on the fees of the integrator, the duration of the implementation and the number of consultants involved.
System integration fees
The fee structure is different depending on whether the software vendor or a system integrator is implementing the solution. It also depends on whether the system integrator is a global IS with billions in revenue and a large and expansive consulting practice, or a much smaller boutique consultant more narrowly focused on chain transport and runtime software associated supplies.
Software vendors and global consulting firms have the highest rates. Hal Feuchtwanger, director of transportation at 4Sight Supply Chain Group, reports that large TMS vendors charge $250 per hour.
The cost of a boutique consultant, according to Davison Shopmeyer, executive managing partner at enVista, can run up to $200 or even more. More commonly, a boutique’s fees would be in the mid-hundreds. The cost charged by a boutique depends a lot on its consultants. Some stores have consultants who previously worked on implementations or product development for major TMS vendors. These shops can charge a higher price and often avoid having to make discounts to close a deal.
Global systems integrators can charge even more. According to Joel Garcia, senior vice president of supply chain at Spinnaker SCA, global ISs can charge up to $300 per hour despite having multiple consultants on the offshore project, usually in India, and a salary. much lower than that of the United States. or Europe.
In some cases, a global IS or TMS vendor doesn’t have enough resources, and they turn around and outsource some of the work to an IS. When an IS is hired as a subcontractor, they’re typically paid half or less of the rate the vendor gets, according to 4Sight’s Mr. Feuchtwanger.
But companies with an offshore presence may find outsourcing fees perfectly acceptable. Business Transformation Consulting (BTC) is a Mexico City-based company with a Blue Yonder TMS implementation practice. They have several consultants who have received certifications from Blue Yonder for successfully completing their Blue Yonder TMS implementation training. Mexico, of course, has lower wages than the United States or Western Europe. But Blas Trevino, a partner at Business Transformation Consulting, is quick to point out that they are taking the lead in their own TMS implementations. Also, you have to be careful not to assume that offshore means less talented. BTC has a transmission network design practice based on the Blue Yonder solution. Network design requires a talented team.
How long does an implementation take?
A fully integrated TMS, with moderate complexity, will take about 4-5 months according to Shopmeyer. According to Amit Nagar, practice leader for transportation and logistics at HCL, cloud solutions can be implemented faster, in as little as 3-6 months. But on-premises implementations, or implementations involving complex migration from a legacy application, can take up to 9-12 months.
Other consultants do not think cloud implementations are faster. Frank Camean, Managing Director of FOURSIGHT Supply Chain Group, says, “Our belief is generally that public cloud vs. private cloud vs. on-premises cloud has less of an overall impact on total TMS implementation time than the size and complexity of the customer network being enabled, and the simplicity versus sophistication of the intended deployment. »
How many consultants are involved?
According to enVista, there are generally 3 full-time equivalent (FTE) resources of the IS. There is a director who directs the design and management of the project. This leader is full or part time depending on the phase of the project. Then there is also a developer and an architect working full time throughout the project. If there is a strong integration or a modeling lift, another part-time specialist will come to support this area, which usually consists of around 40 hours of work spread over 2-3 weeks.
Brad Forrester, CEO of JBF Consulting, agrees that there are typically 3 FTEs who will put in a total of around 5-6,000 hours. These consultants will be supported by client FTEs. “In a typical implementation, there will be 3 customer FTEs spending approximately 6,000 hours on a complex implementation. They will be supported by around 10 part-time SMEs who will invest around 4,000 additional hours in the project.
It sounds like a lot of hours of consultation between SI and the client. But compared to a WMS implementation, it’s child’s play. Many ISs in this market also have WMS practices. And WMS practices are usually at least twice as important as TMS practice.
Chris Riemann, managing director of supply chain and network optimization at Deloitte, reports that they implemented both warehouse management and transportation management for one of the largest retailers in the world. There were twice as many consulting hours around the warehouse management system (WMS). “The WMS required 15 to 20 integrations. The TMS much less.
Do agile implementations speed up implementations?
Agile is characterized by rapid learning and decision-making cycles. The genesis of Agile was in software product development where code was developed in faster cycles and shared more frequently with users to ensure development was on track, in a way that would generate value for users. Virtually every IS today reports that they use an agile implementation methodology and that this project methodology can accelerate enterprise software implementations while helping to ensure that customers get the solution they want. they wish.
The traditional implementation methodology is a more sequential process called cascading. Spinnaker’s Garcia says that while every IS boasts of being agile, an implementation can have many dependencies that will lead to large parts of the implementation relying on the traditional waterfall methodology. In practice, almost all implementations are hybrid involving an agile part and a waterfall part. In a request for proposal to a consulting firm, the sender should ask which parts of the implementation will be agile and which will be waterfall. And when a detailed project methodology is posted, senders should realize that the implementation methodology probably cannot be followed exactly as presented.