Magic Quadrant for Transportation Management Systems

This document was revised on 25 September 2012. The document you are viewing is the corrected version. For more information, see the Corrections page on gartner.com.

Multimodal transportation management systems (TMSs) generically refer to the category of software that deals with the planning and execution of the physical movement of goods across the supply chain. This research focuses on multimodal, shipper-/non-asset-based, third-party logistics (3PL)-focused transportation management, where users support a variety of shipping modes, including truck for hire, fleet, rail, intermodal, air and ocean. At a minimum, shipper companies use TMSs to manage freight sourcing, planning, execution and settlement. Multiple subcomponents make up a comprehensive TMS across planning (for example, load consolidation, routing, mode selection and carrier selection) and execution (for example, tendering loads to carriers, shipment track and trace, and freight audit and payment).

In addition, TMS suites have been extended to include all transportation management functions — from strategic planning and strategic freight sourcing and freight procurement, through visibility and performance management to freight payment services and audit capabilities. With the expansion of global supply chains, TMSs also embrace global logistics functions and features. This research covers multiple TMS delivery and implementation approaches, including on-premises, hosted, on-demand/software as a service (SaaS) and TMS-managed services, which are subject to the inclusion criteria outlined below.

The focus of this research is on non-asset-based shipping enterprises, but does include shippers that support for-hire and fleet. It does not focus on specialized solutions targeted only at private fleets. Enterprises that are focused exclusively on asset-based transportation capabilities, such as owned fleets, require additional functionality (for example, capacity planning and yield management), which is not the focus of this research. However, fleet is considered under the vendor's ability to support multiple modes, including fleet and others. Additionally, although parcel labeling and manifesting solutions can be included in a multimodal TMS, stand-alone parcel manifesting solutions are not included in this research.

Multiple subcomponents make up comprehensive multimodal TMS solutions across sourcing, planning/optimization, execution, audit and settlement, track and trace/visibility, and performance management. In this Magic Quadrant, we evaluate the following product capabilities:

• Strategic network design and planning
• Freight sourcing and bid optimization
• Tactical planning
• Operational transportation planning and optimization
• Transportation execution and carrier communication/collaboration
• Trading partner (carrier, supplier and customer) network/community management
• 3D load design/building
• Freight rating and contract management
• Multicarrier parcel shipping
• Rail and intermodal shipping planning and execution
• Multileg/multimodal international planning and execution
• Asset- or fleet-based routing, scheduling and dispatching
• Freight audit, payment and settlement
• Visibility and event management/business activity monitoring
• Analytics, performance management, scorecards and management dashboards
• Globalization for international deployment (language, currency, local rules and geographic data)
• Technology architecture, adaptability, flexibility, usability and deployment options

Source: Gartner (August 2012)

Vendor Strengths and Cautions

C.H. Robinson Worldwide

C.H. Robinson Worldwide, headquartered in Eden Prairie, Minnesota, is one of the largest 3PL companies in the world with global operations. C.H. Robinson is best known as one of the largest freight brokerage service providers, but it has expanded its offerings to include TMS as a managed service. It has long developed strong technology for use in its own transportation operations, and this has evolved into its Managed TMS offering, which is deployed by TMC, a division of C.H. Robinson. This is the only C.H. Robinson vendor offering we cover in this TMS market evaluation. Although Managed TMS is a separate business, it benefits from the vendor's deep transportation domain expertise and applied transportation management technologies, as well as the ability to plug into its very large carrier network. C.H. Robinson qualifies for the TMS Magic Quadrant based on its position in the transportation marketplace and growing user interest in sourcing TMS as a managed service. The vendor has a modest but reasonable number of TMC customers (around 80).

Strengths

• C.H. Robinson is a very large company — with more than $10 billion in revenue and 37,000 customers across its various businesses, which are focused almost exclusively on various transportation management services, including Managed TMS. At this time, the managed service business is modestly sized in terms of numbers of customers (Gartner estimates this at 80); however, it benefits from the breadth and depth of expertise of the overall organization, as well as strong business and product viability.
• The Managed TMS offering builds on its deep experience using TMS technologies internally. Functionality is broad and deep. C.H. Robinson's Managed TMS is staffed and operated on behalf of clients that need additional domain expertise and transportation skills.
• Because of its heritage in freight brokerage, Managed TMS can access the largest carrier network of any TMS provider, with more than 53,000 carriers. Managed TMS supports about 25,000 carriers directly through electronic data interchange (EDI) or the Web, but it can access the far larger brokerage network when needed.
• The vendor has strong expertise and TMS capabilities to support complex global freight operations.
• Its solution provides strong constraint-based bid optimization, plus spot bid management.
• It can manage inbound and outbound freight for its clients, and contains tools designed to accelerate the implementation of inbound programs.
• The vendor is doing some intriguing work to enhance usability, such as a capability it calls "persistent filtering," which is part of its business intelligence (BI) and analytics offering. This enables users' selected information, such as carrier, location and shipment, to persist across other selection tabs.

Cautions

• Managed TMS offers optimization, but only a fraction (about one-third) of its customers use optimization, while the majority of customers focus on execution and more basic planning approaches.
• Managed TMS is not a pure-play application that users would ever likely take control of on their own, so users should factor this into long-term planning considerations if there is potential that they might want to take over the TMS.
• C.H. Robinson partners with a third party for its optimization engine.
• Long-term total cost of ownership (TCO) can be higher than comparable software-only solutions, largely because of transaction-based pricing, which bundles operational services into the price. However, users should be cautious to not view pricing as an apples-to-apples comparison, given the additional services included with Managed TMS.
• Pricing is typically variable and is based on a fee per executed shipment billed monthly, which works well for users with stable freight demand; however, users need to recognize that costs can vary from month to month. It can also offer a flat-fee structure for clients that prefer this method.
• TMC is a small business within C.H. Robinson. Although TMS technology is core to its business, selling TMS technology is not the parent's primary focus.

inet-logistics

Headquartered in Dornbirn, Austria, inet-logistics is an emerging European-based and focused TMS provider. The vendor has been in business for several years, but is only recently becoming better known in the TMS market. It is the only pure SaaS TMS that is well-positioned in the European marketplace. It offers a broad portfolio of transportation capabilities, with a strong focus on international multimodal logistics, in addition to strong competency in the intricacies of European logistics.

Strengths

• The vendor has a strong offering and domain expertise in European transportation management, which has unique differences from North America.
• Because of its roots in Europe, it built the appropriate architecture to support multimodal international shipping, which can be a requirement for companies in the European region, as well as for global shipping.
• Inet-logistics offers the only pure SaaS TMS based in Europe that is designed to address the specific needs of European transportation, but the solution is not limited to Europe.
• The vendor offers very broad TMS functionality across planning, execution, control and performance management. However, the vendor partners with 4flow — a strong vendor of transportation planning and optimization that is also based in Europe.
• Inet-logistics offers strong multimodal, multileg, for-hire transportation capabilities across over the road, intermodal, ocean and parcel, with strong support for international shipping requirements.
• The vendor has preintegrated its solution with key freight networks, such as Inttra and GT Nexus for ocean, and Champ Cargosystems for air freight, and it is directly integrated for rail.
• Inet-logistics has one of the largest European-based TMS customer bases.

Cautions

• Inet-logistics is a small vendor with a small number of employees. Continued growth could stress its limited resources.
• The vendor partners with 4flow for strategic through operational optimization. Although the 4flow solution is a powerful optimization engine, this introduces another small vendor to work with, and this relationship should be addressed in agreements.
• Customer references generally liked inet-logistics and its functionality, but several noted resource constraints, such as consulting resources, because of its size and growth. The vendor is supplementing its own resources with resources from 4flow to add consulting capacity. Prospective users should focus on resource planning as part of the evaluation.
• Although the breadth of its application and the number of partnerships it has are impressive, this could stress a vendor of its size.
• Its European customers have deployed its solutions globally, but, until recently, it primarily focused on European-based companies. However, the vendor is expanding sales and consulting internationally — first in Asia — with other geographies under consideration.
• Companies looking to use planning and optimization, and wanting to plug into carrier networks, must understand that inet-logistics partners for these capabilities. Companies should consider provisions for these third-party relationships during contract finalization.

IBM-Sterling Commerce

IBM's Sterling Transportation Management System (Sterling TMS) is a SaaS-based multimodal TMS that covers core transportation capabilities of planning, optimization, execution, freight audit and payment, carrier collaboration, collaborative inbound freight management, and analytics. Sterling TMS is a component of the Commerce family of solutions from IBM, which covers multichannel selling, fulfillment and logistics management. Prior to the acquisition, logistics was not top of mind under Sterling; however, IBM renewed its focus and energy around transportation management as part of its Smarter Commerce initiative.

Sterling TMS remains best-suited to North American shippers of modest complexity, but IBM is investing to make the product more global. Progress toward globalization remains a work in progress; however, IBM is investing in global expansion, and there are a few customers now outside North America. Prior to the IBM acquisition, Sterling had formed a partnership with IBM Ilog to add more-advanced planning and optimization capabilities. Now, these two capabilities are part of the same organization within IBM.

Strengths

• Sterling TMS is primarily a North American-centric TMS, given the strength of its North American carrier network. Although it is growing its global deployment capabilities (now in 30 countries), it has yet to replicate an international carrier network comparable to what it has in North America.
• Because it is a SaaS-only TMS offering, Sterling TMS is strongest in network-centric transportation execution, where access to and the ability to easily communicate with a large population of carriers is important. It is capable of handling most core transportation requirements for over-the-road planning to execution and settlement.
• Although TMS is a small part of IBM's business, IBM is a large global company, so company viability is strong.
• The vendor has a large number of North American SaaS-based TMS shipper customers. It offers one of the largest of North American over-the-road carrier communities (for example, 15,000 carriers in its network) on a SaaS TMS platform.
• The vendor's strength remains supporting clients with modest planning complexity or sophistication, which requires electronic interaction with a large number of carriers, especially if the user regularly needs to supplement normal tendering with broadcast tendering beyond its preferred carrier list.
• Ease of use for shippers and their trading partners, and short implementation and time to value, are most often cited as the vendor's key strengths.

Cautions

• Although competitive in the TMS areas it covers, the vendor does not offer as broad a solution as the TMS leaders do, and its carrier network, which is one of its strengths, remains predominantly North American-centric.
• Sterling TMS is missing key functional pieces, such as fleet management, multileg international shipment planning/optimization and execution, and multicarrier parcel management. It partners for some pieces of missing functionality, such as parcel management.
• The Sterling TMS offering is well-suited to midsize shippers (less than $50 million in annual freight spending); however, short of a few distribution relationships with some 3PLs that resell the TMS, it is not structuring itself to focus its sales efforts to grow in this end of the TMS market. Instead, the vendor is focusing more on targeting larger shippers.
• Sterling TMS' main differentiation has been — and continues to be — its North American carrier network, but functionality remains undifferentiated and incomplete for the most complex users. IBM is changing its North American centricity, but the lack of a comparable international carrier network, combined with undifferentiated functionality, hold it back in complex global TMS engagements. It deserves watching to see whether the vendor can replicate the scale of its carrier network in new markets.

JDA Software

Although JDA Software has two TMS solutions in its portfolio, it has now chosen to use the former i2 Technologies' TMS as its go-forward TMS platform. It intends to selectively move some functionality from the previous Manugistics TMS onto this platform, but the Manugistics TMS will no longer be sold to new clients. Over time, existing clients will be encouraged to move to the new platform. For this research, we are only evaluating the one strategic TMS offering.

JDA intends to continue to support both TMSs. It has a track record of supporting legacy products in the long term; however, these customers become further and further removed from the mainstream direction of the vendor. For current Manugistics TMS users, this will demand that they re-evaluate their long-term TMS strategies during the next couple of years.

Strengths

• The JDA TMS is a differentiated TMS, with the breadth, depth and adaptability demanded by complex and sophisticated TMS users. Planning and optimization are its core competencies, and the TMS continues to have one of the most sophisticated planning engines.
• Some of the largest and most complex TMS operations use its TMS. Some of its recent customer successes validate that this remains true.
• JDA is one of the few TMS vendors that offer the same TMS through multiple delivery models, including on-premises, SaaS and managed service. JDA now has one of the most sophisticated and functionally deep SaaS TMS offerings, although its trading partner network is not as comprehensive as those of other pure SaaS TMSs.
• JDA has one of — if not the — largest and most complex SaaS deployments of TMS.
• It has experience, live implementations, functional support and development operations that support optimization and execution of complex multileg global logistics moves.
• The vendor offers a differentiated approach when organizations need to optimize multileg international shipments. It supports dynamic, optimized multileg routing versus the more typical, itinerary-based approaches of many other TMSs.
• i2 was historically a TMS innovator, and it was out in front enhancing its offering with features such as global logistics capabilities, network design, 3D load design, and tactical and strategic transportation planning. It continues to add notable functionality, such as embedded analytics and integration with one of the leading freight benchmarking consultancies.
• The TMS solution is architecturally well-suited to organizations that want to manage transportation as a global shared service, in which freight is managed simultaneously across multiple business units and geographic locations. This capability also supports the needs of 3PLs and logistics service providers (LSPs) that plan and simultaneously manage freight for multiple customers on a common instance of the TMS.

Cautions

• JDA has established the go-forward strategy for JDA TMS, which is developing a "superset plus" of the legacy TMS solutions that JDA owns. In other words, the development plan would ensure that the go-forward TMS includes the best functionality of the legacy solutions, as well as net-new capabilities that JDA is developing. However, its go-forward strategy does not include developing to parity between the legacy i2 and Manugistics TMSs.
• JDA's TMS market penetration and momentum have picked up somewhat, but its perceived position in the TMS marketplace has diminished. Where i2 had historically been in a high percentage of large complex TMS deals, JDA has yet to return to preacquisition positioning.
• The vendor's TMS remains complex, mainly because of the sophistication of the planning engine, the number of industries supported within the one TMS, and its complex UI, which make the vendor's TMS best-suited for sophisticated and complex shippers and LSPs.
• Community management (that is, carrier onboarding) remains a challenge for customers, as it is for many TMS solutions. However, as part of its SaaS offering, JDA provides some preonboarded connections to major land-based carriers, but its network is not as comprehensive as some SaaS-only TMSs. It has now delivered this connectivity to some on-premises TMS customers.
• TCO remains high compared to many other offerings.
• JDA lacks an established and robust ecosystem of system integration and consulting partners focused on TMS.
• The vendor has no intention to force Manugistics or i2 TMS customers to move to the new converged TMS platform. However, for most Manugistics customers, this is a likely objective in the next five years, so users should start developing migration strategies. The vendor is developing toolkits to make the migration easier.

LeanLogistics

LeanLogistics, headquartered in Holland, Michigan, is a focused provider of multitenant SaaS TMS solutions. It is owned by Brambles, a financially strong, large Australia-headquartered organization with global operations. LeanLogistics has been on the forefront of recent innovations that take advantage of the SaaS platform to extract additional value from the information flowing across its network of shippers and carriers, and to package self-service capabilities in a manner that is more consumable by a wider audience of users — most notably, small shippers. For example, it is aggregating data that flows across its network to offer benchmarking data to shippers and carriers, and it is offering self-service, rate-bidding software in an "App Store"-style format on the network.

Strengths

• LeanLogistics offers a robust and stable SaaS TMS that addresses most of the core North American multimodal TMS requirements (planning, execution, visibility and freight audit/payment) for shippers and LSPs. It has begun to expand internationally over the past year. The vendor has a modest number of customers, but is growing at almost double the TMS market average.
• For many users, some of the main benefits of the vendor's SaaS TMS are its network centricity, frequent upgrade cycles and built-in EDI carrier connectivity.
• The vendor has been one of the more innovative TMS vendors of late, experimenting with multiple new capabilities. Although not all of its innovations are gaining traction, it continues to investigate new opportunities to leverage its network.
• LeanLogistics is one of the best positioned vendors to exploit TMS growth in the small or midsize business (SMB) market. As an example of this, the vendor has developed a formal partnership with a predefined integration layer with NetSuite, a leading provider of SaaS ERP targeting the SMB market.
• LeanLogistics has introduced self-service capabilities, such as freight sourcing, called LeanSource, which is a Web application that enables shippers to solicit and contract carrier rates, capacity and lanes, as well as to manage the entire RFP process over the Internet.
• The vendor is unique in exploiting the data it captures through managing a SaaS TMS. It offers benchmarking data, called LeanDex, to shippers and carriers that want to compare their lane-by-lane activities against a normalized index of data across the network.
• Customer satisfaction is high, and customers reference the vendor's transportation domain expertise, strong grasp of transportation industry trends and real-world experience as the main reasons they continue to work with LeanLogistics.
• The vendor has completed 48 implementations across multiple countries in the past 12 months.

Cautions

• From a TMS product perspective, LeanLogistics lacks the overall breadth (parcel execution/manifesting and railcar management), depth and geographical scope of the leading TMS solutions, although it continues to broaden its functional footprint and geographical reach.
• The preonboarded carrier network is principally North American over-the-road carriers today, and will need to expand to include more modes and geographies for its SaaS advantages to expand outside North America.
• LeanLogistics remains primarily a North American SaaS TMS solution, although it has invested, and continues to invest, in adding international capabilities, such as language, currency and local rules, as well as expanding support for complex multileg international shipments. Although it has customers in multiple regions (North America, Australia/New Zealand, South Africa and Europe), it has not yet duplicated the preonboarded, multitenant, carrier network it has in North America to other parts of the world.
• Unlike other vendors in this space, LeanLogistics is not well-positioned to begin offering at least a warehouse management system (WMS)/TMS combination — if not a larger supply chain execution (SCE) convergence strategy.

Logility

Logility offers a broad portfolio of supply chain management (SCM) applications, including TMS. Although its TMS is mature and proved, it represents a small percentage of the vendor's revenue, which is concentrated in supply chain planning (SCP). Although it has not grown its TMS business at the pace of some of its past and current competitors, Logility's conservative management has allowed it to remain an independent, financially solid (although modestly sized) vendor, while many of its competitors have been forced out of the market or acquired. Logility has a more than 30-year tenure in transportation, solid domain expertise and a solid product, but it lacks the broad vision, global TMS presence and investments to move into the Leaders quadrant. A closely held company structure, a multiyear track record of profitability and a strong balance sheet made Logility somewhat impervious to the recent economic downturn.

Strengths

• Logility offers a mature, proven and competitive North American-centric TMS solution that supports unattended end-to-end processes, including load building/optimization, mode/carrier selection, load tendering, tracking and freight audit.
• Customer support and domain expertise are highlighted by customer references as key strengths of the vendor.
• One of the vendor's functional strengths is its multimodal rating engine, which supports less than truckload (LTL), truckload, rail, intermodal, parcel, air and ocean shipping. This is coupled with its offering of industry databases covering LTL tariffs, transit times, service guides, rail routes, and parcel and air freight rates.
• The vendor offers some unique tools and capabilities to help simplify rate maintenance.
• Logility's optimization engine, which employs a simultaneous solve process, is more sophisticated than many other TMSs that employ sequential solvers.
• Along with product maturity, Logility continues to maintain a seasoned and knowledgeable TMS team and has consistently been working on its TMS for numerous years.
• The TMS solution is built on a Microsoft .NET platform. The vendor is unique in choosing to not embed any third-party software products inside its TMS solution, which makes it a clean, truly single-vendor solution. It uses XML integration points for integration with ERP and WMS applications.
• Strong performance management capabilities through the Voyager home page provide a Web-based UI for analyzing key performance indicators and metrics used to manage transportation.
• Logility has made strides by introducing global freight management capabilities, including a worldwide geographic database, multisegment shipment support and multicurrency capabilities.

Cautions

• Logility continues to make modest functional progress, which only brings parity to its TMS product when compared with TMS leaders, rather than market-leading or visionary functionality.
• Its TMS is targeted mainly at North American-based shippers, and the vendor has not articulated definitive strategies to expand sales and deployments internationally, although it continues to add international logistics capabilities.
• Logility has not articulated a multitenant SaaS or preonboarded trading partner network strategy. However, it could deliver its TMS in a dedicated hosted single-tenant deployment model.
• The vendor does not offer full support for asset- or fleet-based planning and execution, or for complete multicarrier parcel manifesting, although it does support some ability to leverage its strong rating engine to support planning and execution capabilities, considering fleet costs or parcel carrier rates during mode and carrier selection.
• It has not positioned itself to routinely compete in the most complex deals, although pieces of its solution (notably, its rating engine and optimization) can address this for North American shippers. At the same time, Logility is not limited to the SMB market, and it can play across a range of shipper sizes and levels of complexity.
• Logility has not articulated a strategy for addressing SCE convergence or process consolidation between its TMS and other vendors' WMS and ERP solutions.

Manhattan Associates

Manhattan Associates, headquartered in Atlanta, Georgia, is a vendor of SCM solutions. Manhattan has deep roots in WMS that go back almost 20 years, and it has added many new capabilities to its portfolio throughout the years, such as transportation management and SCP. Several years ago, the vendor "bet the farm" on building a common business process platform, called supply chain optimization, planning through execution (Scope), in which it would converge all its solutions onto a common technical architecture. Scope supports all the vendor's significant supply chain solutions, such as transportation, warehousing and planning. Although Manhattan largely focuses on self-innovation, it does make some acquisitions, typically favoring early-stage vendors, where it can acquire the intellectual property (IP) and then can more easily, and quickly migrate the IP onto its platform. Although acquiring later-stage companies with mature products might initially add more customers, more functionally robust and mature solutions, and maintenance revenue, it also adds a support and development burden. Manhattan's approach can take longer to gestate, but has the advantage of moving the IP to a common platform more readily.

This was the approach the vendor used for TMS, acquiring Logistics.com in 2000. Although having a TMS on Scope has advantages, it has taken the vendor longer than hoped to become a viable player in the TMS market. Logistics.com brought some multimodal shipper-centric TMS capabilities to Manhattan, but it took some time for the vendor to recognize the value of the carrier-centric capabilities that Logistics.com also provided. Although the vendor has global operations, the majority of its TMS focus and business continue to come only from North America.

Strengths

• Manhattan's Transportation Lifecycle Management (TLM) product is a credible multimodal TMS. The vendor's TMS is approaching market-leading functional capabilities in North American operational planning; execution; settlement (audit and payment); freight sourcing, procurement and bid optimization; and fleet management.
• It has integrated for-hire and fleet planning and execution, including deep last-mile routing and scheduling (R&S) that it refers to as high-density routing.
• The vendor's TMS is well-suited to the transportation needs of retail, including particular strength in grocery and related retail, where the goal is to integrate inbound and outbound optimizing across for-hire and private fleet transportation.
• TLM can support complex planning and optimization scenarios.
• The vendor remains stable and, historically, has conservative financial operations.
• Manhattan is unique in offering a common SCE platform that includes WMS, TMS, distributed order management, SCP and more. While nascent, the vendor is beginning to leverage its Scope platform to demonstrate real examples of SCE convergence, such as integrating TMS, yard management system, appointment scheduling and cross-docking.
• TLM has strong historical roots in solutions that are specifically designed for truckload and LTL carriers. The vendor continues to develop and sell solutions to carriers, and it has more than 100 carrier TMS clients.
• Manhattan is exploiting this expertise to deliver differentiated solutions for asset-based planning and execution for companies that operate private or dedicated fleet operations, integrated with support for contract carriers.

Cautions

• Manhattan's TLM new customer sales, and its number of live and referenceable customer implementations, remain below that of leading TMS vendors.
• Manhattan's primary focus and largest source of revenue is WMS. Based on feedback Gartner receives from its clients, customers, prospects and third parties think TLM is not garnering the strategic focus it deserves.
• The vendor has yet to demonstrate a desire to consistently compete in stand-alone, TMS initiatives outside its customer base. Currently, its focus is on selling TLM to its existing customers or in concert with multiple other Manhattan applications.
• Manhattan's TLM historical focus, while not exclusively, is on retail and related companies, and the majority of its shipper customers are in these industries.
• TLM is sold primarily only in North America. The majority of its customers are in the U.S., with some limited growth in Canada and Mexico, and limited customers in Latin America and Australia. The vendor has elected to not extend its TMS more broadly to the international market.
• TLM is a sophisticated and complex system, primarily suited to large shippers ($75 million or more in annual freight spend).
• Holistic multimodal TMS user references are limited.
• Manhattan almost exclusively sells TMS as an on-premises application, although it started as SaaS and now only has a few SaaS TMS customers.

MercuryGate International

MercuryGate International, headquartered in Cary, North Carolina, is a small and focused — but rapidly growing — TMS vendor. Although the vendor came to market later than some other TMS providers, the founders have deep roots in logistics and transportation, and were able to apply their experience with modern Internet-based development platforms to rapidly bring to market a more-than-competitive TMS offering. MercuryGate initially targeted small 3PLs, but has taken this initial focus and expanded its market to shippers and larger 3PLs. It offers a broad suite of TMS capabilities, but also offers one of the lowest TCOs in the TMS market. The vendor has been growing its customer base at more than double the industry average and continues to operate profitably. The vendor is a financially sound and conservative company, generating new customers and profit percentages above industry averages.

Strengths

• MercuryGate International solely focuses on transportation management, has built a credible TMS offering, and has rapidly assembled an impressive and rapidly growing list of shipper, 3PL, brokers and freight-forwarding customers.
• Beyond functionality, TCO and time to value are two of the vendor's notable strengths, with a starting price point that is well below TMS market averages.
• MercuryGate provides a comprehensive multimodal TMS that covers operational planning, execution and settlement (audit and payment). It offers a native, parcel-manifesting system that is integrated with multimodal TMS.
• MercuryGate is one of the only vendors to also integrate with numerous load boards to share loads or look for backhaul opportunities.
• For its size, the vendor is impressive in its ability to rapidly bring new functionality to market, such as freight brokerage, carrier self-management and international freight forwarding.
• The vendor is growing much faster than most of its TMS competition, due largely to its core functionality, modest TCO, rapid time to value and continuing growth in functionality.
• The vendor has developed a rapid development environment, in which it issues a new release every eight weeks. Functional changes are user-role-controlled, so users don't have to take upgrades if they don't want or need them.
• From its inception, MercuryGate built a data model tuned to the needs of complex transportation operations, such as 3PLs.
• It has proved that it can support a wide array of customers, from small TMS novice users to very large, complex and sophisticated shippers.
• MercuryGate continues to build a third-party sales and implementation partner network to help supplement its internal capabilities, which are also growing — thus, expanding its sales and delivery capabilities.
• The vendor offers its TMS primarily as multitenant SaaS, and the majority of customers choose SaaS. It will also offer an on-premises implementation; however, to date, there are only four customers doing so.
• The vendor's application architecture allows for configuration and customization in the cloud.

Cautions

• Service and support resources have been constrained because of MercuryGate's size and rapid growth, but the vendor is adding internal resources and building a partner network. Customers should seek staffing assurances in agreements.
• MercuryGate remains one of the smallest vendors in the TMS Magic Quadrant in terms of revenue and the number of employees. However, it is growing, is profitable, has no debt and has cash reserves, so long-term viability is a minimal concern for potential customers.
• Historically, the vendor's sales have primarily focused on North America, but it is expanding its logistics capabilities and sales reach internationally.
• The vendor's sole focus on transportation limits its ability to pursue SCE convergence, unless it were to partner with other ERP or WMS vendors that lack credible TMSs.

Oracle

Oracle Transportation Management (OTM) has been part of Oracle since its 2005 acquisition of best-of-breed TMS vendor G-Log. Since the acquisition, Oracle has continued to enhance OTM by adding significant new functionality, expanding global capabilities and developing several strategic alliances. Oracle continues to maintain market momentum, growing its OTM customer base globally. Furthermore, it has expanded its marketing and sales presence, and has grown its consulting capacity with internal and partner resources. OTM has one of the largest and most mature ecosystems of system integration and consulting partners. Oracle has more new TMS customers than most of its competition. Notably, Oracle has expanded its marketing and sales presence domestically and internationally. Gartner estimates that at least half, if not more, of OTM sales are outside Oracle's installed base and that a third or more of its customers are international. OTM has a mature and stable product development team that Oracle inherited when it acquired G-Log. Oracle has impressively been able to keep this team intact and to add to it years after the acquisition.

Strengths

• OTM is a functionally broad, deep and robust TMS that can scale to support the complex transportation requirements of sophisticated organizations. OTM has one of the most mature development teams, with R&D leadership and some team members working together for more than 20 years. OTM is also the third TMS this team has built, providing it notable domain expertise and experience.
• Oracle is one of the few TMS vendors that has made unit of measure a user-definable characteristic, which enables it to support planning and execution for businesses that ship in nonstandard units of measure, such as bushels, gallons or individual vehicle number.
• Oracle is one of the only TMS providers that offers global transportation (OTM) and global trade compliance (Oracle Global Trade Management) on a single, integrated platform.
• OTM provides extensive rail capabilities, such as Rule 11, bulk commodity units of measure, order splitting, and intermodal and multicarrier routing and billing.
• OTM is well-suited to organizations that want to manage transportation as a global shared service, in which freight is managed simultaneously across multiple business units and geographic locations. This capability also enables OTM to work well in 3PLs and LSPs that plan and simultaneously manage freight for multiple customers on a common instance of the TMS.
• OTM provides in-line analytics, supported by Oracle Business Intelligence Enterprise Edition (OBIEE). This is the same BI tool leveraged by other Oracle applications, including its other SCM solutions, in which BI capabilities are embedded into operational process flows, such as the ability to reference a carrier scorecard when carrier assignments are performed.
• OTM has the strongest and most mature ecosystem of third-party service providers that can help implement and support OTM.

Cautions

• Although Oracle now offers packaged integration from OTM to Oracle E-Business Suite (EBS) through its Application Integration Architecture (AIA), integration issues continue to affect Oracle's ability to fully exploit emerging concepts (such as SCE convergence) that look to orchestrate end-to-end processes across traditional functional silos, such as warehousing and transportation.
• Given the current architecture of OTM, the move to Oracle Fusion Applications will likely be evolutionary because of the underlying design approach and technology components of OTM (for example, Web services, workflow and event-driven architecture).
• Community management remains a challenge for OTM users, as well as other TMS offerings. Oracle's partnership with E2open is a step in the right direction, but the current trading partner community is small, but growing, so most customers continue to have to address some trading partner connectivity issues during implementation.
• OTM has a very broad functional footprint, but it is not a one-stop shop. There are several areas, such as multicarrier parcel manifesting (Kewill), and carrier community management (E2open), where buyers would have to license solutions separately from partners, in addition to licensing OTM. Although Oracle has relationships with vendors that offer these capabilities, users are not forced by Oracle to use these solutions, and users can build or use alternative solutions.
• Oracle does not offer a multitenant SaaS version of OTM. However, Oracle does offer an on-demand option for OTM, which provides hosting and application management services for a single-tenant version of OTM. In addition, there are Oracle business process outsourcing partners that provide OTM and related services via SaaS or cloud deployment models. Furthermore, in the future, Oracle's cloud strategy for transportation will follow that of Oracle Fusion Applications.
• Given OTM's broad and deep functionality and high degree of flexibility, OTM is best-suited to sophisticated shippers.
• Oracle's pricing model, which is based on freight spending under management and multiple modules, can result in disproportionately high list prices for large shippers; however, Gartner finds that market prices and list prices are not synonymous, and customers should work with Oracle on customer pricing.

RedPrairie

RedPrairie, headquartered in Alpharetta, Georgia, is a long-tenured provider of SCE and, more recently, retail solutions. In 2010, RedPrairie underwent a change in ownership, whereby its previous financial partner, Francisco Partners, sold the firm to private equity firm New Mountain Capital. RedPrairie's roots in SCM go back two decades with its deep history in WMS, and it has added capabilities such as TMS and retail applications through multiple acquisitions throughout the years. During the past several years, the vendor has primarily bought innovation through numerous acquisitions, enhancing its position in transportation by adding parcel management, and acquiring a specialized fleet management provider, which it subsequently rewrote onto the same architecture as its core multimodal TMS.

RedPrairie's TMS is strongest in North America, but it has been working with several European companies to enhance its capabilities for European transportation and to improve its ability to support 3PLs. In early 2011, RedPrairie bought the assets of Shippers Commonwealth, which had been a small reseller partner of RedPrairie's TMS, primarily targeting the SMB shipper market. Shippers Commonwealth provided a hosted single-instance deployment option for the RedPrairie TMS, as well as some new IP capabilities, such as transportation procurement and bid collaboration. The vendor has a reasonably sized client base that is split a bit more than 50/50 between multimodal TMS and pure fleet management.

Strengths

• RedPrairie offers competitive solutions in three transportation domains: multimodal transportation; asset-based, private/dedicated fleet R&S; and multicarrier parcel management. It remains one of the few TMS vendors that have converged multimodal, fleet and parcel shipping on a common platform.
• The vendor's core multimodal TMS product covers the primary functions of planning, execution and settlement, addressing relatively complex user requirements.
• RedPrairie has added some international shipping capabilities for Europe, expanding the scope of the core TMS to include such capabilities as European geography, multiple units of measure, multiple currencies and special European transportation considerations. It is working on a few language translations today, with plans for the addition of other languages over time. However, the vendor's TMS remains primarily a North American-focused offering.
• With the breadth of RedPrairie's SCE portfolio — especially in consumer goods, retail and LSPs — the vendor is well-situated to exploit SCE convergence. Although nascent, the vendor demonstrates some ability to coordinate processes across TMS and WMS applications. For example, the vendor has offered transportation client billing for several releases but can also converge this with warehouse client billing, providing a strong 3PL billing solution that includes transportation buy/sell capabilities, along with space, labor and other warehouse-related cost factors.
• The vendor's SCE visibility and event management capability merge order, inventory and shipment information at the enterprise level, spanning TMS and WMS functions across the logistics.

Cautions

• RedPrairie has not established a market-leading position or vision in the TMS space.
• There had been some instability and inconsistency in TMS product management a few years ago, with several changes in product managers that affected product road maps and vision. However, the vendor recognized this and has made commitments and invested to re-energize TMS product management during the past 18 months.
• The vendor lacks momentum in the TMS market, compared with TMS leaders, with the majority of its reference customers in North America.
• Customers have noted professional services capacity and quality issues during the past 18 months.
• RedPrairie's core TMS is becoming more global in functionality and the number of deployments, but it still trails the leading solutions in the number of countries where systems are deployed and the extent of its international logistics support.
• The vendor does not offer a true multitenant SaaS-based TMS; however, with the Shippers Commonwealth acquisition, it can host a single-instance TMS for a client.
• It has yet to fully deliver on a comprehensive carrier connectivity and community management strategy, although it is leveraging the Shippers Commonwealth and Escalate Retail acquisitions to move in this direction.
• Although RedPrairie can articulate an SCE convergence vision, thus far, this vision is germane only to its Warehouse Management/D and related solutions, which share a common technical platform with TMS. Warehouse Management/R (formerly called Dispatcher) customers and customers using other RedPrairie legacy products should view TMS as an independent solution decision, although the vendor is offering interface capabilities between TMS and its other offerings.

SAP

SAP completed ramp-up on TM 8.0, announcing mass shipment in June 2011. Then, SAP executed ramp-up for TM 8.1, which brought new functionality for logistics service providers. There were approximately 40 clients in SAP TM 8.0 and TM 8.1 ramp-ups. So far, there are about 11 live operational clients using notable pieces of the TM 8.0 and 8.1 products, and the rest are in various stages of implementation. TM 9.0 ramp-up started in August 2012, and the 9.0 version brings new functionality to address the needs of LSPs and shippers. Also new in 2011, SAP has addressed carrier connectivity with its SAP Information Interchange OnDemand solution, which it acquired with its purchase of Crossgate.

Strengths

• SAP's primary strengths are the size of its ERP installed base of large, sophisticated manufacturing and distribution enterprises; its global presence and coverage for global sales and support; and its financial viability. Although SAP's TMS capabilities lag those of leading TMS vendors in this Magic Quadrant, it has a sizable number of customers using some SAP TMS functionality — notably, transportation execution within SAP's ERP.
• Starting late forced SAP to focus more effort on global TMS capabilities, making it more competitive in global TMS initiatives than some other TMSs that remain North American-centric.
• With its global presence (sales, marketing, service and support) and solution globalization (language, currency, localization, multistage and multimodal support), SAP is able to deploy TMS internationally in areas where most TMS vendors lack capabilities, such as Latin America, the Middle East, Africa and small markets in the Asia/Pacific region.
• SAP TM was built exploiting NetWeaver development tools such as the rule engine, which provides unique and powerful capabilities to adapt the TMS application.
• SAP TM was designed to support all modes (ocean, air, land and rail) and span execution, planning, settlement, visibility and performance management in a single product. SAP is also using TM to extend its reach beyond traditional shippers to include LSPs by adding features such as buy- and sell-side transportation costing and billing, cost distribution and automated revenue, and costs charge management.
• SAP's SCE convergence vision reaches beyond basic warehousing and transportation integration, and extends to orchestrating end-to-end processes (for example, order to cash), in which logistics is synchronized with other areas, such as order management; manufacturing; trade compliance; environmental, health and safety; and financials.

Cautions

• SAP only has a few live customers holistically using TM capabilities, and some customers have long rollout schedules. It will likely be some time before there is a sizable number of live customers holistically using SAP TM.
• There are notable gaps in functionality, such as parcel management, sourcing, 3D load design, rail and tactical planning.
• Although primarily a strength, SAP TM was designed to exploit the NetWeaver development environment. Users need to understand that this will require strong NetWeaver skills for implementation and support.
• SAP TM is a more complex product than those of many TMS competitors, and implementation could be time-consuming and costly. The vendor is developing rapid deployment solutions that will help address this for customers with basic needs.
• SAP's complete TMS offering is more complex and flexible than many other TMS solutions, because functionality can reside in multiple places — that is, TM, ERP and stand-alone applications, such as rail car management and partner solutions. This was not a design flaw, but an intentional strategy to protect the investments of existing ERP users that might have previously implemented some transportation functionality, such as rating or settlement, in ERP. However, this could complicate implementation planning and decision making for a new end-to-end TMS implementation, because customers will need to evaluate where best to automate certain functions.
• Like many TMSs, TM 8.0 does not provide all the necessary capabilities in a neat and tidy box, and users must develop strategies during the selection and implementation process for addressing capability gaps. For example, although SAP has an emerging strategy for addressing carrier connectivity with its SAP Information Interchange OnDemand solution, this does not mean that all modes and carriers are preonboarded onto a network, so carrier connectivity remains something users must address. Likewise, SAP extends its offering through partnerships, with various solution providers targeting things such as parcel manifesting, 3D load design, carrier rate repositories and other needs. Users need to be aware of this to ensure that they appropriately address these issues during the selection, budgeting and planning processes.
• To fully migrate to SAP TM, current customers of legacy SAP TMS functionality may choose to reimplement functionality they already use; however, these customers could selectively continue using current transportation capabilities, augmenting them with SAP TM.
• SAP does not have a multitenant SaaS TMS strategy.

TMW

TMW, headquartered in Beachwood, Ohio, is the leading supplier of solutions specifically targeting the carrier, broker, private fleet and asset-based 3PL, transportation service sectors. TMW has grown organically and largely through acquisition, and offers an extensive portfolio of solutions from enterprise trucking software to planning and optimization and fleet maintenance management. It has customers that span trucking, 3PL, private fleet, construction, municipal government, retail repair and waste management industries. From its acquisitions, it now has offices in Cleveland, Ohio; Durham, North Carolina; Indianapolis, Indiana; Dallas, Texas; Vancouver, British Columbia; Nashville, Tennessee; and Oklahoma City, Oklahoma. TMW has more than 2,300 customers across its various product lines.

TMW is new to the Gartner TMS Magic Quadrant. Although its strength remains asset-based transportation and brokerage operations, it has had growing interest from its customers to add non-asset-based transportation planning and optimization. Although its multimodal capabilities are nascent, it is building on its legacy products and customers to enter the multimodal TMS market.

Strengths

• The vendor's core strength is asset-based transportation operations (such as carriers, 3PLs, brokers and private fleet operations) that also require for-hire, multimodal TMS, in addition to asset-based capabilities.
• TMW has a broad portfolio of transportation solutions to support the carrier 3PL and brokerage order-to-cash process, as well as routing and scheduling.
• The vendor has a strong rating engine, given its experience on the carrier side and now the shipper side.
• Its strong optimization and planning engine supports asset and for-hire carriers encompassing final mile delivery.
• It has the largest transportation-centric customer base, although most of this will remain focused only on asset-based transportation management.
• The vendor has a large number of existing customers that use its asset-based solutions that might want a reasonable, but not differentiated, for-hire solution.

Cautions

• Its multimodal, non-asset-based TMS is nascent and unproved.
• Its non-asset-based multimodal TMS is new and was not the vendor's core focus.
• TMW's product catalog has grown through acquisition, and it has a large portfolio of solutions across multiple technology platforms and architectures.
• The vendor's focus is primarily in North America only.
• Its current focus is on over-the-road transportation and not on other modes, such as air, parcel and ocean.
• TMW's implementation capacity for multimodal is limited, given the newness of its product.

Transplace

Transplace, headquartered in Dallas, Texas, chooses to compete primarily in the transportation-centric 3PL market, rather than in the stand-alone TMS application space, although it has recently grown its stand-alone TMS customer base. Although the vendor offers a competitive TMS, it believes (and users confirm) that the depth of services it offers differentiates it from pure-play TMS application providers. Although Transplace chooses to call itself a 3PL provider, Gartner deems that it has evolved to more of a transportation management service provider, which supplements a strong TMS with value-added services (operations-centric human capital) beyond application implementation. Transplace will allow customers to subscribe to its TMS offering separately, and a moderate (but growing) number of customers have done so. The vendor's position as a transportation management service provider is what distinguishes it most from other TMS providers. Transplace's position in relation to its managed service competitors is influenced primarily by its strategic decision to focus exclusively on the North American transportation market.

Strengths

• Although not an industry-leading vendor in terms of breadth, depth and geographical scope, Transplace offers a reputable SaaS multimodal TMS that spans the core TMS functionality of planning, execution and settlement, and it is particularly strong in analytics and performance management.
• The vendor's TMS is sufficient for complex and sophisticated users, but it is nondifferentiated from the TMS leaders, particularly in global logistics.
• As a managed service offering, the vendor's TMS is staffed with technical and operational specialists, and the vendor knows how to apply best practices to make the most of the TMS features right away. In many cases, this enables its customers to reap value sooner than they could on their own.
• The vendor offers a "power user" interface based on extensive use of Java Swing technology employment that enables power users to access the system over the Web without losing the depth of manipulation and drill-down capabilities needed to manage complex freight decision making.
• Users give the vendor high marks as a transportation managed service provider. Customers praise its domain expertise, freight process methodologies and broad portfolio of supporting services as key vendor strengths. Transplace's customers are happy, and they continue to highlight the vendor's services, rather than just the software that helped them achieve their performance goals.
• The vendor offers a strong North American, over-the-road carrier community network.
• Transplace offers enhanced support for bulk commodity transportation management (notably, chemicals and associated products) through its acquisition of SCO Logistics.

Cautions

• Transplace has a modest, but increasing, number of holistic TMS-only clients; however, it has increased its focus on competing in TMS-software-only deals. The vendor's TMS product focus is primarily on over-the-road transportation and not other modes, such as rail, ocean or air.
• Transplace's TMS supports only domestic, North American transportation requirements; however, it partners with other vendors for international shipping. Yet, in the past several years, its growth in covering transportation requirements in Mexico has been noteworthy, giving Transplace a comprehensive U.S. North American Free Trade Agreement (NAFTA) solution.
• Although the two are integrally linked, Transplace is a service provider first and a technology provider second. It is more focused on providing tangible, near-term value to customers than on mapping a long-term technology-centric vision and strategy. However, by controlling its technology destiny, this affords it a nimbleness that competitively differentiates Transplace from many of its direct 3PL competitors.
• It will likely continue to partner to fill gaps in its nondomestic offerings versus building or acquiring add-on components to support international transportation management requirements.

Vendors Added or Dropped

We review and adjust our inclusion criteria for Magic Quadrants and MarketScopes as markets change. As a result of these adjustments, the mix of vendors in any Magic Quadrant or MarketScope may change over time. A vendor appearing in a Magic Quadrant or MarketScope one year and not the next does not necessarily indicate that we have changed our opinion of that vendor. This may be a reflection of a change in the market and, therefore, changed evaluation criteria, or a change of focus by a vendor.

Added

• TMW was added.

Dropped

• One Network Enterprises did not meet this year's inclusion criteria for number of new hub customers in 2011.

Vendor Notable Mentions

• One Network Enterprises has been in Gartner's TMS Magic Quadrant for the past several years but has been dropped this year, because it did not meet this year's TMS Magic Quadrant inclusion criteria. This is not to say that our opinions of One Network's solutions have fundamentally changed or that what we have previously identified as its strengths or cautions has changed. In fact, its innovation, adaptable architectures and vision for SCE convergence remain vendor strengths. As noted, it did not meet our inclusion criteria for customer growth, but this was, in part, because of its business strategy and not a flaw in its business. One Network's strategy has been to grow its network of trading partners connected to its platform, instead of focusing its attention on strictly growing its number of hub customers. In a network scenario, there is typically a "hub" or anchor customer with numerous "spoke" partners connected to that hub. Spoke partners could be carriers, suppliers, customers or even potentially other shippers. One Network is focusing on its Real Time Value Network (RTVN), which it believes changes the enterprise-centric way of thinking. We agree that OneNetwork's vision for RTVN largely fits Gartner's view of the evolution to a multienterprise business process platform. One Network says that once a customer connects to the RTVN, companies may choose from a full suite of prepackaged best-practice templates. Although this is an innovative concept and has merit, this is not the focus of this research at this time. Multimodal for-hire transportation is largely a multienterprise business process; however, the focus of this Magic Quadrant is on the depth and breadth of the TMS tools and capabilities offered specifically to the shipper, and the network is only one of many considerations on which we evaluate vendors and TMSs. Although we reconsider inclusion criteria for the TMS Magic Quadrant every year, our focus this year was on hub customer numbers and growth, and not the scope of the vendor's network. Although its growth in the total number of TMS hub customers did not meet our inclusion criteria, One Network is worth considering by customers looking for a strong multienterprise platform to exploit connecting multiple trading partners. See "Magic Quadrant for Transportation Management Systems" from 2011 for more details on One Network's TMS offering.
• Transite is an up-and-coming TMS vendor focused on 3PLs, shippers and carriers. Although it did not meet this year's inclusion criteria for number of new customers and total revenue, it has merits worth consideration by North American shippers and 3PLs. Transite's JaguarTMS is one of the most adaptable and customizable TMSs in the market, as stated by the vendor and customer references. It covers aspects of the transportation business from carrier selection and dispatch/execution to freight audit. It can offer TMS as SaaS or on-premises. JaguarTMS has a strong contract and pricing management system to rate across any type of mode, including truck load, LTL, parcel, air and multimodal. Transite's TMS is based on the company's Jaguar transportation management platform that offers customers the flexibility to build their own transportation management processes within or outside of the platform. Customer references also note the low cost of ownership and rapid implementation time as additional vendor strengths.

To be included in the Magic Quadrant for TMSs, a vendor must offer:

• A credible multimodal TMS product and vision for shipper or non-asset-based 3PL, multimodal transportation, including — but not limited to — sourcing, planning/optimization, execution/tendering, audit/payment, visibility and performance management
• TMS software sold and used independently of other services offered by the vendor
• 2011 multimodal TMS license revenue of at least $10 million per year or hosted/SaaS TMS subscription revenue of at least $15 million per year
• At least 20 live multimodal TMS customer references and at least 10 new customers in 2011 that are independently and holistically using the TMS solution being evaluated

Because of end-user demand for evaluations of other significant vendors' TMS offerings, we also consider inclusion of TMS vendors that meet one of the following criteria, even if the offering does not meet the initial TMS specific criteria:

• Major enterprise software vendor: The vendor must offer its own multimodal transportation planning and execution solution and have greater than $500 million in enterprise application software license revenue and greater than $100 million in SCM (for example, warehousing, planning and transportation) software license revenue in 2011. This is because many end users are interested in the TMS offerings of the major application suite vendors.
• Major SCM suite vendor: The vendor must offer its own, multimodal transportation planning and execution solution and have at least $25 million in SCM software license revenue in 2011. This is because many customers with significant investments in SCM suites would like to evaluate the capabilities of an integrated TMS product.

As noted above, we have not included stand-alone parcel manifesting vendors, stand-alone fleet-based R&S solutions, multicarrier parcel manifesting solutions global logistics solutions or global visibility solutions.

Evaluation Criteria

Ability to Execute

• TMS vendors' product breadth, depth and technology are highly rated components of their ability to execute, because the requirements for the most complex and sophisticated users in this market are so functionally intensive. We rate the vendors against their support of multiple subcomponents that make up a comprehensive TMS solution across planning/optimization, execution, track and trace/visibility, and performance management. Users with complex requirements and sophisticated operations focus intensely on the product, and will typically want solutions in or near the upper quadrants. Less sophisticated or less complex users might require less functional robustness (see "Issues to Consider When Building a TMS Business Case and Evaluating TMS Sourcing Options" and "Stratifying Transportation Management Systems: A Multilevel View") and could be satisfied with a wide variety of solutions.
• Vendor/product viability and risk remain important criteria. Although viability is important, it should not overshadow product fit, vendor expertise, TCO, and service and support. Several of the vendors are small. Although there are some viability concerns, all other factors being equal, viability alone should not preclude users from considering these vendors.
• Sales execution and pricing were not significant differentiators in the TMS market until recently. As smaller shippers have entered the TMS market, affordability has become more important. Although functionality remains important, these organizations typically demand less robust TMS capabilities, making price a more important evaluation criterion. Furthermore, because this is a global evaluation, the ability of a vendor to support global sales and go-to-market channels is becoming increasingly important. We consider vendor capabilities for supporting multinationals choosing global solutions or customers buying in select geographies.
• The TMS market continues to evolve rapidly, and TMS solutions must keep pace to remain relevant, which makes market responsiveness and track record very important. We assess the historical and current performance of vendors to add to and enhance their TMS solutions to keep up with the changing wants and needs of TMS users. Marketing execution, although important to market visibility, is not an important element of the overall evaluation process.
• A TMS vendor's ability to use and exploit functionality to drive business value and provide a good customer experience is a critical element of a provider's ability to execute. We consider a vendor's track record with complex and sophisticated customers, client satisfaction with products and services, and how much TMS experience a vendor has. Although client satisfaction is always important, we also consider the nature of the relationship that vendors establish with the clients and whether these are tactical or strategic.
• Operations is a very important criterion, and it considers a vendor's ability to meet its goals, obligations and commitments on an ongoing basis — and there are marked differences in capabilities across vendors, as confirmed by customer references. Vendor support, maintenance, business and technical consulting, and field operations are important parts of the TMS selection process. Factors include the quality of the organizational structure, as well as skills, experience, programs, systems and other vehicles that enable an organization to operate effectively and efficiently on an ongoing basis. As projects become more complex, a vendor's ability to not only sell and implement a solution but also to help customers fully exploit their TMS investments is critical to long-term success.

Source: Gartner (August 2012)

Completeness of Vision

• A demonstrated knowledge, proficiency, and differentiated vision of the current and future transportation marketplace are critical considerations. Market understanding assesses the TMS vendor's ability to understand TMS buyers' wants and needs, and to translate them into products and services. Vendors that show the highest degree of vision listen to, anticipate and understand buyers' wants and needs, and can augment them with their own TMS visions. Vendors that simply respond to current market requirements without anticipating future requirements will likely be unsuccessful over the long term.
• Vendors' domain expertise, technology vision and vision for the TMS of the future rank highly. We consider vendors' knowledge and vision for traditional shippers, LSPs, and domestic and international logistics. Because SCE convergence is an emerging best practice, we also consider vendor strategies to support this concept beyond data or transaction integration. We also consider a vendor's vision for transportation process innovation, not simply process execution, which means demonstrating a compelling vision for how transportation trends will influence transportation needs of the future.
• Until recently, marketing strategy and sales strategy have had minimal impact on the TMS market. Today, although important, marketing strategy is not differentiated across vendors. Sales strategy is also minimally differentiated, although Gartner believes this will likely be critical for exploiting future growth in the SMB market, where channel strategies become more important.
• Offering (product) strategy is critical, and it refers to a TMS provider's approach to product development and delivery that emphasizes differentiation, functionality, technology, methodology and feature set, as they map to current and future TMS requirements and technology evolutions. In addition, we consider a vendor's strategies for supporting end-to-end processes that span functional areas, such as order management, warehouse management, trade compliance, manufacturing or hazardous materials safety. The vendors' understanding of these market changes, and their product strategies for successfully navigating these changes, significantly influence vendors' completeness of vision.
• Vendors' business models (that is, the soundness and logic of providers' underlying business propositions) and vertical/industry strategies are important but not critical. However, this is changing and will become more important in the future. Most notably, a vendor's vision for global expansion and how it will address the nuances of key verticals will increasingly differentiate offerings.
• Innovation is a critical differentiator, and it is important for vendors to demonstrate the ability to support innovation by staying close to the most creative solutions or complicated problems in the market to drive pioneering functionality. Leaders and Visionaries will be the vendors on the forefront of change, while a majority of vendors will lag in adoption, often for years.
• Geographic strategy looks at technology providers' strategies for directing resources, skills and offerings to meet the specific needs of global logistics in terms of a multigeography TMS (including multilanguage, multicurrency and geocoding), as well as complex, multileg international movements. This criterion also assesses vendors' abilities to support global transportation requirements beyond core TMS functionality, such as capabilities or partnerships to address trade compliance and trade document management.

Source: Gartner (August 2012)

Quadrant Descriptions

Leaders

Leaders have a compelling vision and a reliable ability to execute. Leaders in the TMS market have broad, deep and formidable functionality that addresses a broad range of user requirements. These vendors have proven products, track records of customer success and demonstrated momentum in growing their market presence. Leading vendors support sophisticated and complex transportation strategies for large customers with substantial freight spending, as well as being deployable in smaller shippers. They also meet the needs of users throughout the transportation process, with offerings from strategic planning and procurement through to freight payment and audit functionality. Leaders also offer adaptable technical architectures that allow for rapid innovation, which is needed to stay ahead of market demands.

Leaders are innovators and have compelling strategies for addressing the ongoing market changes related to the emergence of new technologies, the integration of dedicated and private fleet assets, the convergence of TMS with other SCM functionality, and support for global transportation operations. Leaders are extending the reach of TMS beyond traditional shippers to include LSPs and other styles of transportation, such as bulk commodities. They are also adding functionality to address the unique needs of emerging markets. They're out in front of the evolution of transportation management as an enterprise shared service. Leaders are also furthest ahead in supporting the transportation needs of multiple geographies, and adding capabilities to support the complex needs of multileg global logistics and transportation. Leaders listen to their customers but just as importantly, their customers look to them for thought leadership, and they establish symbiotic relationships.

Challengers

Challengers offer reliable TMS solutions and have a historically reputable presence supporting complex transportation requirements. However, Challengers trail Leaders in certain aspects of the technology, functional breadth and business requirements of the most advanced users of TMS solutions, or they lag in offering a captivating vision for the TMS of the future. Challengers may have reasonable TMS functional breadth or depth, but may lack functionality in innovative areas, such as strategic or tactical planning, multileg international movements, TMS/WMS convergence, or dedicated/private fleet integration. Challengers are often followers that introduce emerging capabilities only after these capabilities have been established in the market by more-innovative vendors.

Visionaries

Visionaries have a compelling vision for achieving a differentiated position in the TMS market, such as a full service-oriented architecture strategy, a network-centric offering or a comprehensive global transportation management solution, but they lack certain characteristics in their ability to execute. Visionaries might have compelling product strategies, but they lack the market momentum, have too few customers, have functional gaps in their TMSs or lack the market presence to move higher in their ability to execute.

Niche Players

Niche Players are often functionally satisfactory for many users, such as North American-only shippers, smaller shippers, or companies with minimal transportation complexity or sophistication, and these vendors could well be the best choice for these types of users. However, these solutions lack the full depth, breadth or robustness of functionality demanded by the most complex and sophisticated TMS users, might have limited global presence, and do not have a persuasive vision for next-generation TMSs. These vendors might also lack the experience, number of clients, customer references or business viability of the leading vendors in the market. Yet, Niche Players may be viable or preferable for many TMS buyers.

Gartner tracks multiple software application types that support the various needs of transportation operations, such as multimodal TMS, stand-alone fleet R&S, stand-alone parcel management, international logistics platforms and carrier-centric TMS (see "Hype Cycle for Transportation, 2012" and "Supply Chain Management Market and Vendor Guide, 2011"). This research focuses specifically on multimodal TMS, where a company routinely uses multiple modes of shipping, such as full truck load (FTL), LTL, intermodal, rail, air, ocean, small package, and private or dedicated fleets. Historically, the emphasis has been on over-the-road modes (FTL and LTL). All the TMS applications covered in this research do an acceptable job planning and executing these types of modes. However, market and transportation economic and business conditions are driving companies to use more modes, which places more importance on a TMS's ability to handle more than just over the road. Some of these conditions are:

• Increased consideration of private or dedicated fleets to give shippers more control over freight capacity
• Growth in use of intermodal freight, especially in Europe, to lower costs and add long-haul capacity
• Rethinking the value of rail to lower costs
• Use of hub-and-spoke networks to improve efficiency
• International ocean and air to support global trade
• Higher volumes of parcel and small package shipping, especially in retail, because of growth in consumer direct shipping, multichannel commerce and e-retailing.

Gartner finds continued expansion in the sophistication, functional breadth and depth, and geographical scope of the TMS market. As shipper requirements grow, there remains notable differences across TMSs in being able to address the most complex requirements, the ability to deploy outside North America and TMS native support for modes other than over the road.

During 2012, the TMS market was again led by Oracle (with its OTM offering) and JDA Software (formerly the i2 Technologies TMS offering), which continue to support some of the most complex TMS users, have broad and deep TMSs, and have compelling visions for next-generation TMSs. Oracle continues to generate strong sales. Globally, it continues to expand the depth and breadth of its application footprint, and Gartner finds Oracle a finalist in a high percentage of complex TMS deals. For JDA, although new customer growth remains modest, it is once again showing up in large complex deals, and it has a unique position with a Tier 1 TMS SaaS offering.

Several vendors continue to close the gap in terms of core over-the-road transportation functionality, and are gaining some traction in the TMS market, but none of these have differentiated themselves enough to move into a leadership position.

The gaps in core North American TMS planning, execution and settlement functionalities have narrowed across many vendors, but several continue to distinguish themselves with a more compelling TMS vision surrounding functionality, technology and globalization. Several vendors are positioned as Challengers, Visionaries or Niche Players. For some customers, depending on the scope of their needs, these vendors could be suitable alternatives that are comparable to or more favorable than this year's Leaders. Most current TMS vendors fail to exhibit consistent strategies or traction for the SMB segment, despite growing buyer demand. A few vendors are testing strategies for SMB shippers, but this remains an unfulfilled market opportunity. LSPs and global shared services have become a strong market for TMS, but only a few vendors have the multitenant architecture needed to effectively support this market.

Because of growing demand from TMS buyers, global capabilities are of growing importance and remain a key set of criteria in this year's TMS Magic Quadrant. Most vendors have strong North American-centric TMS products, but haven't yet added sufficient global capabilities (for example, multiple languages, currencies, geographic data or rules) or depth of functionality for complex, multileg, multimodal, international logistics, nor have they shown a consistent ability to sell to and support global customers. Support for global functionality distinguishes C.H. Robinson Worldwide, inet-logistics, JDA Software, Oracle, MercuryGate International and SAP in this year's Magic Quadrant. However, so far, only Oracle, C.H. Robinson and SAP have broad global sales and support capabilities, while some vendors such as JDA and RedPrairie have limited TMS global sales and support reach.

Gartner continues to see a shift in demand for TMS delivered as SaaS, with user attitudes shifting from SaaS as an option to SaaS as a preference. Although TMS SaaS demand has largely been due to the lower upfront investment, we find growing recognition of the importance of prebuilt carrier networks inherent in SaaS TMS. While SaaS-only TMS vendors (for example, LeanLogistics and IBM) continued to perform OK in North America, these offerings are just now becoming viable for limited international deployments, and lack the overall functional breadth and depth of TMS leaders. However, newer SaaS or managed service TMS providers, such as inet-logistics and C.H. Robinson, have emerged out of the international logistics arena and bring unique domain expertise to SaaS TMS. Furthermore, some traditionally on-premises application vendors, such as JDA and Oracle, offer SaaS or hosted versions of their TMS applications; however, they have yet to gain market traction in SaaS, mostly because of vendor sales and go-to-market strategies, and not technical issues. Accordingly, a network-centric (SaaS) TMS offering has yet to gain the market traction or breadth of offering to become a market leader.

Gartner finds growing interest in TMSs from SMB shippers (those with less than $50 million in annual freight spending) but the TCO, breadth, depth and flexibility of top-tier TMSs are beyond the scope or budgets of many SMB shippers. We believe that an SMB TMS market segment will emerge, where ease of use, simplicity, time to value and low cost of ownership are more important application characteristics. No SMB TMS leader has yet emerged, but some vendors, such as MercuryGate and LeanLogistics, have shown success in this space, and offer some interesting SMB characteristics and strategies.

TMS vendors continue to invest in expanding the breadth and depth of their TMS suites. During the past several years, vendors have expanded their TMS portfolios to the point where buyers focused on North American over-the-road transportation can source most of their needs from a single TMS vendor. At a minimum, all vendors in this Magic Quadrant support basic North American over-the-road planning, execution, track and trace, and settlement, and offer some multimodal capabilities. However, there remain notable differences in the breadth and depth of various TMS offerings. Some vendors have expanded their product footprints to support other transportation functions, such as network design and optimization, freight procurement, load design, asset-based/fleet-based R&S, appointment scheduling, multileg/multimodal international shipping, intermodal and rail, multicarrier parcel management, and performance management. Additionally, a few have expanded the scope of their TMSs to support global deployments and international logistics. Depending on the wants and needs of individual enterprises, many TMSs are offered in a variety of deployment models (including traditional on-premises, SaaS and managed service).

The evolutionary expansion of the depth and breadth of TMS offerings improves the value proposition for TMS. Enhancements in freight procurement, audit and payment, support for more modes of transportation (for example, intermodal, parcel, rail, air and private/dedicated fleets); visibility/event management (track and trace), and performance management have added to the value of TMSs beyond the traditional boundaries of better load planning and electronic freight tendering. During the past several years, Gartner has seen notable investments in areas such as the integration of asset-based and for-hire freight management on a single platform, improvements in the depth and flexibility of transportation performance management, continued expansion of capabilities to support global logistics, and more capabilities to support LSPs and 3PL.

Although domicile-based, local-fleet, last-mile R&S is a mature category, and several vendors offer this capability (normally from an acquisition), a few vendors are now offering more-sophisticated fleet management tools that address the more complex long-haul fleet management problem. Long-haul fleet management is an emerging area in which fleet operators are tasked with optimizing drivers, power units and trailers independently and over longer time horizons. During the past few years, Gartner has found that shippers now recognize that transportation management is a multienterprise business process, in which, at a minimum, shippers and carriers must collaborate, but also, increasingly, suppliers and customers play a role in freight movements. This recognition of the multienterprise nature of freight now places more importance on the need for TMS to support the network or community of carriers, suppliers and customers.

Various TMS vendors are pursuing different approaches for community management, with SaaS TMS providers primarily building their own communities (today focused primarily on North American over-the-road carriers), while others are partnering to build a complementary carrier community preintegrated with the TMS, such as Oracle's partnership with E2open. Today, networks are specialized and largely geographically limited, such as supporting trucking carriers in North America or supporting ocean carriers only. In talking with clients, Gartner finds a strong desire for a single ubiquitous logistics network in which a company could plug in once and have access when needed to any and all types of carriers. However, this is a long way from fruition, if it ever emerges at all. Consequently, TMS users will have to develop community management strategies as part of their TMS evaluation and implementation.

A number of forces are affecting the TMS market and will likely shape it moving forward, including:

• Expanded support beyond just planning and mode selection are needed for multiple modes of transportation on a single platform, including truck, ocean, air, fleet and parcel/express. Although mode selection remains valuable, newer solutions support the entire functional flow of these additional modes of transportation, such as multicarrier parcel manifesting, rail management or fleet dispatching.
• Improving freight efficiency, as well as reducing outbound costs, is driving demand for more robust logic that is needed to address concepts such as pool point or hub-and-spoke distribution; continuous moves; evolution from prepaid to collect on inbound; merge in-transit; flow-through distribution; and in the most forward-thinking organizations, "co-opetition," in which two or more shippers collaborate to gain efficiencies (see "Predicts 2011: Global Logistics Leadership a Strategic Imperative").
• Sustainability considerations, while most compelling in Europe and Australia, are driving TMS acquisitions and influencing TMS functional requirements. Sustainability needs are driving interest and growth in the use of hub-and-spoke distribution networks, 3D load design and inclusion of carbon as a planning variable.
• The SMB TMS market is expanding. Although large shippers gravitated to TMS leaders because of these solutions' ability to support highly complex functional requirements, smaller shippers do not typically require the most advanced functionality.
• Globalization, in terms of international TMS deployment and multileg, multimode international shipment support, is a bigger issue for buyers. Leading TMS vendors continue to invest in expanding global transportation capabilities.
• Demand for agility and flexibility is increasing the demand for applications that not only meet point-in-time requirements, but also have the architectural flexibility to adapt to the changing needs of the business without extraordinary costs.
• Enhanced usability and embedded analytics that support improved performance management will further enhance the value proposition by providing to more users (and more-diverse users) access to TMSs, delivering more-usable information to make better decisions.
• The need to better address end-to-end processes will motivate users to consider the importance of SCE convergence (see "Supply Chain Execution Convergence: Delivering on the End-to-End Process Promise"). However, in the near term, most TMS purchasing decisions will remain tactically focused on improving freight operations alone.
• Community management is becoming a more important issue in TMS, given the multienterprise nature of transportation. Although some vendors have built impressive North American over-the-road carrier communities' preonboarded on their TMS platforms, support for other modes is spotty, and international networks are embryonic but largely unavailable.