Remember IBM, one of the most admired, highest market cap, and best corporations to work for in the world in the 1980s? As of December 2023, IBM has a market cap of $148.05 billion. Compare this to the market caps of Apple, Microsoft, and Google at $2.7 trillion, $2.5 trillion, and $1.8 trillion, respectively. IBM now ranks No. 74 in Fortune’s “2023 list of 100 Best Companies to Work For.”
IBM fell from its esteemed position due to its inability to recognize and internalize the changing fundamentals of the market it dominated:
By 1986, IBM’s mainframe business had entered a long, slow decline. The PC business had gone into a more rapid fall, and the move to billable services was just beginning. The new CEO then did what most CEOs typically do when IBM had sagging fortunes: Trim the ranks by offering an early retirement program. But too many employees took the buyout, including too many of the company’s best and brightest. Then came the iPhone, cloud computing, and AI innovations, and IBM fell even further behind Amazon, Microsoft, and Google and is trying to play “catch-up.”
Fast forward to 2023, and history repeats itself in other high-growth tech-enabled sectors like transportation management systems, commonly known as TMS. Today’s market-dominant TMS products are antiquated, and they were often founded in the 1970s and 1980s. They are built on inflexible mainframes and servers from suppliers like IBM. They started by digitizing manual processes and paper-based workflows. They offered basic features like planning, visibility, and execution while centralizing shipment data. They focused on serving operations for enterprise carriers, brokers, and shippers.
Like IBM, legacy TMS products have not kept up with the needs of their customers. Incumbent solutions are challenging to train and use, limited in features, expensive, and slow. Their UI/UX is dated and feels like ‘Web 1.0’. Implementation times and ramp-up periods are long and cumbersome. The total cost to the customer is orders of magnitude higher - per delivered load processed – when compared with what it would be using contemporary cloud-based technology.
It’s no surprise, then, that most users dislike their existing legacy TMS platform. We’ve heard complaints in nearly all conversations with supply chain companies and users. Everyone is on the spectrum between growing dissatisfaction and outright dislike (see 2023 TMS Report by Activant Capital).
Despite these issues, legacy TMS vendors have continued to dominate and retain major market share, usually for one or both of the following reasons:
As the supply chain grows ever more complex and the freight market more volatile, these are some of the ways legacy TMS platforms are falling further behind in applying new technology solutions that deliver the next level of customer productivity, efficient total cost per delivered load, enhanced revenue generation, and solutions that deliver fluid collaboration with trading partners:
The “bell tolls” increasingly faster for the legacy TMS platforms. Several cloud-based TMS startups have taken root in the past five years and are growing fast.
In 2024 and beyond, these cloud-based TMS platforms will erode legacy share market share and profit margins at a faster pace due to:
Modern TMS technology infrastructure — cloud computing and AI — are now simplified enough to be affordably available to businesses of all sizes. Importantly, the optimal application of these technologies in businesses will accelerate the erosion of remaining strategic advantages derived from “large business size” versus small and medium size. Also, it makes legacy TMS platforms
very vulnerable to being “ripped and replaced”:
EKA ‘s People-First TMS platform is one startup compound venture that solves real-life problems by delivering state-of-the-art technology infrastructure capabilities fully integrated into the platform. This enables its customers – carriers, brokers, and shippers – to take customer business workflow automation, decision support, risk management, and predictive solutions experience to a new level to maximize outcomes. It includes zero-based technology and workflow design premised on a vision of a common chassis to deliver the highest productivity. These trading solutions maximize revenue that enables fluid trade between carriers, brokers, and shippers. It has successfully served small and medium-sized carriers, brokers, and shippers in the past two years. In 2024 it will be ready to target to penetrate large carrier, broker, and shipper customers. EKA Platform delivers a TMS with new technology infrastructure coupled with deep domain knowledge and operating experience, and an uncanny ability to make the complex simple. Of equal importance, EKA’s work ethos powers fluid work with customers to configure and solve key management and operational pain points.
Like IBM before it, legacy TMSs suffer from similar technology and business fundamentals blind spots and organizational inertia. They are likely to lose their primacy, just like IBM!
Who ultimately benefits from all this? The customer!
This is responsible capitalism doing what it does best!
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