Multi-Million Dollar TMS Lawsuit – Lessons Learned

Transportation industry watchers are witnessing a clash of titans as a leading OTR carrier sues a leading provider of transportation management solutions (TMS), claiming that after years of a lengthy and complicated implementation, the logistics IT solution proved to be “virtually useless”. The TMS provider has filed a countersuit claiming “poor planning” on the carrier’s end is to blame for the failure and that the carrier has been making illegal use of their intellectual property. Let’s look beyond the legal posturing to examine the roots of this dispute.

The carrier’s multi-million dollar lawsuit charges the TMS provider with breach of contract and negligence for allegedly failing to bring the route optimization and carrier management system software online according to the contractually obligated go-live date. By a full year and a half after the go-live date, the solution had still not been activated prompting the carrier to seek a full refund which the TMS provider denied prompting the initial lawsuit.

The TMS provider’s multi-million dollar counterclaim seeks to deflect liability for the failed implementation. The countersuit seeks to prove the carrier was unable to manage its extensive user community who resisted the transition from the legacy system and processes to the new, state-of-the-art solution the provider was engaged to deploy. The TMS provider says the customer’s internal technology group submitted thousands of requests for changes to the solution in efforts to make the new tools conform to old, legacy processes and practices.

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The importance of preparing a new user community for the implementation of a wholly new model for performing well-established  business functions cannot be overstated.

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And herein lays the crux of the dispute: lack of any standardized change management processes. Sadly, this dynamic is not an exotic problem afflicting only a handful of providers and users of logistics IT solutions. Rather, it is one of the most well-known challenges facing any organization seeking to implement such solutions.   The importance of preparing a new user community for the implementation of a wholly new model for performing well-established (if poorly managed) business functions cannot be overstated.

A TMS provider would be right to insist that their product is not intended to accommodate a carrier’s request to modify their system so it acts like (and integrates with) the legacy systems it was intended to replace. After all, technology tools like TMS and other logistics IT solutions are not designed to more effectively correct and manage existing broken, incomplete or outmoded processes. Instead, these solutions are intended to completely replace existing systems with new, more efficient ones, powered by the latest and greatest advances in computing power and integrated industry best practices.

To be fair, the TMS providers share some responsibility for ensuring smooth transitions occur as well. Rather than simply relying on the language contained in their client contracts, providers must sufficiently communicate the significant scope and ramifications of the imminent changes to new clients, early in the process and repeatedly. It is incumbent on a provider to prepare customer users for the significant changes initiated by a new TMS implementation.

This process must involve managing expectations properly. Best practices include developing and delivering detailed resource estimates illustrating what personnel/resources will be delivered by the provider (i.e. implementation managers and project managers) and those that will be required from the client organization (i.e IT resources, transportation department champions, etc.). If it is determined the client resources are unavailable or not forthcoming, it is up to the provider to call out the deficiency and insist that adequate client resources are made available. Other best practices include detailed, initial risk and change management assessments and joint reviews of “as-is” and “to-be” documents. Complete change management activities – discovery audits, process mapping exercises, stakeholder meetings, user trainings/forums, etc. – should be scheduled and attendance should be compulsory for all.

The lesson to be learned from this high-profile conflict is this. Customers of IT solutions must be disabused of the notion that the new solution will correct fatal flaws in their existing processes/practices. Providers of logistics IT solutions must take better responsibility for working diligently during implementation to convey the benefits of their solution to the customer’s rank and file in order to drive enthusiastic adoption and effective usage of the new technology.

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