Smarter, Stronger, Faster, Better
B
uying software and
performing a conversion is
really hard work and a complex
undertaking. You are usually
tempted to believe that you
can do it better yourself. For
us, the critical decision was the
allocation of capital -- how do
we spend most efficiently to
grow our business? Our returnon-investment calculation
impelled buying. MercuryGate
has worked diligently to make
the transition as straightforward
as possible!
Dan Bentzinger, CIO for MIQ
Logistics
Overview
The Results
MIQ Logistics states that
their ROI calculations made
the decision to buy versus
continue to build their
own product obvious. Key
categories of savings included
• development expenses
• maintenance expenses
• operational expenses and
• personnel
The Need
MIQ Logistics, a full-service
third party Logistics Provider,
faced a tough “make or buy”
decision in 2009. Their inhouse PowerTMS needed
additional components to
keep up with expanding
business requirements of new
clients. MIQ’s key issue was to
understand how to efficiently
allocate capital causing them
to critically evaluate replacing
their own TMS.
MercuryGate International Inc.
Build vs. Buy
MercuryGate TMS reduces total cost of ownership and improves ROI
Headquartered in Overland Park, Kansas, MIQ Logistics is a leading provider of global,
transportation, and distribution services in North America, Latin America, Europe, and Asia.
Along with their global network partners, they provide services in and between more than
80 countries and deliver seamless end-to-end supply chain solutions around the world.
MIQ Logistics services help clients optimize their operations with supply chain management
solutions which improve their overall business performance. These include Distribution
Services to manage distribution and warehousing efficiently, Global Services to simplify
international shipping, and Transportation Services to streamline domestic shipping.
Supporting this portfolio of services is state-of-the-art technologies. MIQ Logistics employs
Web-native tools that are secure, easy-to-implement, and easy-to-use. Since its inception in
2002, MIQ has evolved from a software company providing Global Trade Management and
Domestic Transportation Management to a Logistics Service Provider providing a complete
line Global Services as a third party. MIQ has grown, in part, through acquisition. An early
acquisition of a Managed Transportation Services firm started them on the path toward
becoming a full-service Logistics Service Provider.
MIQ was able to derive that capital TCO was essentially a wash; however,
operational costs were twice as high to build vs. buy.
Business Growth Required a More Robust Solution to Efficiently Allocate Capital
Through a series of acquisitions and expanding market price of entry, MIQ was faced with the
question “build or buy” a Transportation Management System (TMS).
MIQ had already built PowerTMS, its own web-native TMS. This product, developed initially as
a rate quotation and shipment management system, was expanded to include additional modes
and operational disciplines. As MIQ acquired clients, the additional business requirements
were incorporated into the PowerTMS system. In addition, components were acquired from
commercial software vendors to fill other functional needs. In 2009, MIQ faced the need to “build
or buy” several major component subsystems to extend their reach into the marketplace.
The key issue for MIQ was how to most efficiently allocate their capital. The capital
requirements within other lines-of-business caused MIQ to critically-evaluate replacing
PowerTMS with an integrated commercial offering.
MIQ had three key criteria for evaluating commercial TMS software.
1. The software had to be functionally complete, with the ability to manage shipment planning, day-to-day execution, and freight payment, with total visibility to in-process shipments across all modes – truck, rail, ocean, air, and parcel.
2. The system had to be “brokerage” capable, managing the Logistics Service Provider’s relationship with both the shipper and the carrier (including the freight billing/payment and revenue accounting).
3. The system had to be web-native to be consistent and integrate with all other MIQ systems.
919.469.8057
[email protected]
www.mercurygate.com
Overview
The Solution
MIQ logistics needed a
functionally complete,
brokerage capable, and
web-native TMS to meet the
demands of their growing
client base. Along with these
criteria, MIQ derived that
capital TCO was essentially a
wash but that operational cost
was twice as high to build vs.
buy, leading them to select
MercuryGate as their vendor
of choice.
MercuryGate TMS Halved Operational Costs
MIQ weighed a set of factors, and took an honest look at both TCO and their IT capabilities.
Using the matrix below, MIQ was able to derive that capital TCO was essentially a wash;
however, operational costs were twice as high to build vs. buy. After conducting a competitive
evaluation of several vendors’ systems, MercuryGate TMS was chosen. Not only did the
MercuryGate TMS fulfill all of the key selection criteria, but MIQ perceived that MercuryGate
was a “like-minded” company of the
same size, age, and culture. MIQ
believed that MercuryGate shared
their customer service-orientation
and would work closely with them
to make their transition as easy and
effective as possible. This perception
has been confirmed during the life
of the relationship.
Total Cost of Ownership
(TCO)
This simplistic comparison
of volume and cost appears
sensible and straightforward,
with the initial costs for inhouse production higher than
buying, but leveling out over
volume and time. However,
no IT spend decision is ever
that easy and, realistically,
companies must consider
many factors, both from
a technical and business
standpoint, when choosing
whether to make or buy.
MercuryGate International, Inc.
200 Regency Forest Drive,
Suite 400
Cary, NC 27518
www.mercurygate.com
P: 919.469.8057
[email protected]
MercuryGate TMS Delivers a Complete Solution that Yields an Impressive ROI
While MIQ wishes to keep specific financial savings private, they state that their ROI calculations
made the decision to buy versus continue to build their own product relatively obvious. Their ROI
calculation included the cost of conversion as well as the cost of software acquisition and
long-term support.Key categories of savings included avoiding significant development and
system maintenance expenses, and reducing operational expenses and personnel.
Any organization that faces the make-versus-buy decision has the same conundrum.
Transportation Management is a complex business problem, with many processes and
alternatives. More and more companies are adopting commercial alternatives instead of
developing, or continuing to develop, their own systems. Any organization offering managed
transportation services requires the additional capabilities of a brokerage model. This ability
sets the MercuryGate TMS apart.