Examining the Logistics Software Build vs Buy Debate

Logistics software build vs buy.

A common question in transportation management and logistics software often arises: build or buy? Is it better to build a transportation management system or buy logistics software?

The build vs buy debate arises in many industries – not just in the transportation and supply chain space. Let’s consider the build vs buy question from a different angle: home improvement.

Have you ever completed a truly successful remodel in your home? Not painting a room or changing a light fixture, but something that needed plumbing and electricity and a knowledge of buildings and construction. Quickly, that do-it-yourself project creates a lot of costly growing pains. The same is true for trying to build your own transportation management system.

Let’s take a closer look.

Build vs Buy: DIY Mentality of Logistics Software Purchase

If you’ve ever considered a remodel project, it is easy to look at the cost of materials, compare that to what contractors would charge you for the work, and think, “I have YouTube. I can do that myself.”

How does that renovation usually turn out? Maybe not as easy as it seems. Does that do-it-yourself project normally finish on time and under budget? And most importantly … was it worth it? Was your hands-on home remodel truly a good investment of your time and money?

It’s easy to compare the TMS build vs buy costs and come away with an “I can do that myself conclusion.” However, if cost was simply a matter of materials and time, then many companies would go out of business.

Let’s say you get a quote back for a transportation management system that costs $80,000 a year. Then you ask your developers, and they say they can build a TMS in a year for about $150,000. That seems like a no-brainer because, by those estimates, your TMS built in-house will pay for itself in two years.

Not quite. You’re not accounting for the true cost of ownership.

Security Risks of a Do-it-Yourself TMS Build

Software is an ongoing investment to maintain and upgrade over time. A decade ago, if you were building logistics software in-house, you likely developed something that was built to sit on an on-premise server. How are you going to take it to the cloud now? How’s your information security?

If you built your logistics software in the 2010s with those on-premise server conditions, you probably can’t deploy the latest security measures. Chances are you’re probably not in a secure data center. So, in a short amount of time, you need to go back and re-develop that solution or accept a lot of security risk into your business.

Logistics Software Development: The Talent Factor

Software development experts usually work for a software development company. Are you financially able to compete for talent? Who’s going to maintain the code?
That’s not an indictment of your IT staff. They’re well-suited for their roles within your organization. However, they’re likely not the experts you need for a logistics software build project at this scale. And even if they are, in our modern climate, there’s a reasonable chance that they will leave your business after initial development is complete. The best developers want to develop more products – not maintain one.

Continuing Costs of Logistics Software Build: Education and training

Costs for developing a transportation management system don’t end in IT.

If you build your own TMS, you’ll need to create video training libraries. Don’t forget that someone needs to provide software training for your staff and your customers. How are you accounting for employee turnover and onboarding when it comes to keeping everyone up to speed on using the software – and any advancements in your technology?

Honestly, most people don’t even make it this far.

TMS build projects start off well-intended. However, as in the case of construction or home remodeling, software development delays happen. You start with optimistic timelines and a budget. Fast forward 2-3 years down the line, and you’re still struggling to produce a minimum viable product. The build is behind schedule – and potentially over budget – then you’re forced to think about omitting “must-have” features so you can finally put your software to work at a reasonable cost.

In an environment affected by delays, that initial $80,000 per year software purchase cost looks pretty good … except you’re too far invested in your TMS build to scrap it. And remember, during the time you’ve spent trying to develop your logistics management software, all the processes that you needed a TMS to support still haven’t been improved. What’s the opportunity cost to your business for that kind of delay?

TMS Build vs Buy: 2 Questions to Answer

So sure, you can build a TMS. But why would you want to?

Essentially TMS build versus buy will always come down to two questions:

  • Is your core competency software development?
  • Does your ROI analysis account for the true total cost of ownership?

Unless your answer to both of those questions is “yes, absolutely,” you probably shouldn’t attempt to build or renovate a transportation management system.

This is an area where experts exist for a reason. Instead of dividing business resources between your core competency and software development, you can buy a proven TMS product and can start realizing business value.

The quickest path to business value is buying a configurable TMS. One that can change and grow with you as your business evolves.

The MercuryGate TMS is an industry leader in freight under management across all modes. It is pre-built to support integrations to ERPs, load boards, and visibility providers. Likewise, MercuryGate TMS is equipped with an API that connects you to the largest digital freight marketplace in the industry. We’ve even helped customers transition from internal builds to our TMS platform.

Calculate your potential Saving While Using an enterprise TMS

MercuryGate Experience Fuels TMS Value

MercuryGate has spent over two decades building and refining the best TMS on the market. We accomplished that because transportation management software is our core competency.

Now that you’re convinced that “buy” wins the build vs buy debate for TMS, request a demo to learn more about our portfolio of logistics software solutions. Our transportation management experts can clearly map out your path to business value with the purchase of the MercuryGate TMS.

See how MercuryGate TMS drives value in your business


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