Unrealistic Total Cost of TMS Ownership Perceptions Often Impact ROI

Everyone loves a bargain.  When it comes to cloud TMS software, there’s no shortage of attractively priced solutions offerings from providers large and small, young and old.  However, just because a provider offers attractively low subscription fees, it doesn’t mean a shipper is getting the best deal.  Sadly, many shippers aren’t aware of all the potential costs associated with TMS ownership.  What’s more, when they discover the true TCO, they often scrimp in some critically important areas which torpedoes their overall return on investment.  

As the handy graphic below illustrates, the subscription fees are just the visible portion of the iceberg, but the majority of the sunken cost (no pun intended) lies below the waterline and out of view.  Especially at the outset, before a solution is deployed and the realities of implementation and ongoing operation are fully grasped by the shipper.

Cost of TMS

Most of the attractively “low-cost” subscription models do not include some pretty significant services such as training for all the important stakeholders.  Not just the shipper’s transportation logistics users, but also their carrier users, vendor users, yard/warehouse users etc.  These trainings are often revealed to be added costs after the TMS has been selected.  Some do provide preliminary “train the trainer” sessions online but, any new hires or new partner training rings the register.  And when a shipper elects to decline costly re-trainings, their user adoption and efficacy takes the hit.

Other hidden costs include support.  System support seems like something that’d be included in the cost of any solution.  Yet, most providers charge additionally for support.  As they also do for the professional services you’ll need during the critical configuration and implementation period.  They’ll charge for data cleansing and loading and carrier onboarding.  They’ll charge for additional training and support after software upgrades which occur at least yearly if not more frequently.

When a shipper faced with these ongoing charges opts to decline these important services, they grow less and less effective in their use and utilization of the tool.  Frustrated users – internally and externally – turn away from using the system without the support.  In the end, this is one of the most frequent drivers of poor ROI and/or failed solutions.

Don’t be fooled by unnaturally attractive subscription pricing.  Find a provider that delivers all the elements you need for TMS success in the price quoted.