Historically, the rental industry has been slow to adopt new information technology. It still tends to lag behind the general business marketplace in terms of IT, with many rental company owners believing that their customers don't demand or expect technology-based solutions.
In the past, rental company owners were often satisfied with basic systems that functioned well enough, printing contracts at the point of sale, including fundamental inventory tracking capability. Simple accounting programs were enough to keep businesses operating while shop management required simple organization and skills. The tracking of warranties, service agreements, parts inventory and availability, and maintenance schedules were usually relegated to manual paper-based filing systems.
But times are changing rapidly. As the pace of technological advancement accelerates daily, so have far more sophisticated tools become available to rental operators. And as competition heightens, so does the need for greater efficiencies and real-time integration between rental companies and their suppliers, and rental companies and their customers. Rental companies are also concerned about maximizing integration between point-of-sale systems and software systems for accounting and other services.
It used to be good enough for rental companies to chart their progress on an annual or bi-annual basis, then quarterly, then monthly. Now, however, down-to-the-minute data is expected as rental companies increasingly chart time and dollar utilization, inventory status, parts availability as well as overall profitability and the return-on-investment status of each machine they own. There are an increasing variety of methods to report on, analyze and understand ones' own business in order to operate more efficiently, and rental companies are generating reports far more frequently and at a more sophisticated level than ever before. Nearly 80 percent of respondents to a recent RER survey on software usage reported that they use utilization reports, while nearly 75 percent said they use return-on-investment reports. [See Chart 1]
“At first, operation management, like emitting contracts, invoicing, and accounts receivable, were the main objectives behind computerization,” says Andre Gilbert, CEO of Montreal-based Orion Software. “But now, our customers are more familiar with computer usage, the Windows platform eases access to data, and the competitive environment is adding pressure on our customers' operations. Now, our customers review utilization reports or statistics per item or customer categories in order to maintain a fleet of equipment that matches their customers' demands, and also to focus marketing activities on the customer groups that are the most profitable.”
What it boils down to is that it used to be good enough for rental companies to track their inventory. Now the need is to incorporate more effective analysis of the degree of profitability of that inventory, to give them information on depreciation, and other analytical tools to make better-informed management decisions. “We have more and more demand for training on management tools,” adds Gilbert. “In that regard, our trainers have extensive training in management processes in order to provide management consultation at the same time that they implement our system.”
Software suppliers, such as Bob Shaffer of Grand Prairie, Texas-based Point-of-Rental, note the dramatic upswing in usage of preventive maintenance modules and the computerized organization of shop activities has become an important mainstay of many rental operations. In addition to essential organization of service and repair, systems such as Norwalk, Conn.-based SmartEquip have added significant efficiencies to the efforts to maximize uptime.
“If you can shorten the average service time for equipment by as little as 8 percent — and we're aiming for 30 percent or more — an average rental branch with, let's say, between $4 and $5 million worth of equipment can reduce the size of its fleet by $65,000 and still get the same rental revenue out of it,” says SmartEquip CEO Alex Schuessler. “When people really understand the economics, the right technology can help you decrease downtime by identifying the right parts, by shortening the service cycle, by automating preventive maintenance requirements, by making people a lot more efficient, and that at the end of the day that is a tremendous driver of value.”
Software suppliers have noticed burgeoning interest in other aspects of their software that rental companies tended to pass over in the past.
“Interoffice communication is also important,” Shaffer says. “A high percentage of our customers are using a relatively new feature called Task List. This program has nothing to do per se with rental but is used to assign employees or groups various tasks. For example, you might want to use it to remind an employee to sharpen all the points and chisels every three months. I've also noted more users using some of our pre-programmed marketing reports. For example, we have a pie chart compiling income for customers residing in different zip codes. Many stores are using this information to determine if their yellow page advertising is paying off.”
Credit card swiping, drivers' license scanning, bar-coding, mapping software, digital photography and Internet usage for product information, parts and product ordering, complex delivery routing and Web-based software solutions have become or soon will be routine. The ability of any sized rental company to leverage the Internet and Web-based software products helps smaller rental companies compete with larger chains that can afford more advanced IT solutions. The use of radio frequency identification devices and global position systems — or telematics — are likely to make dramatic inroads into the rental industry over the next few years.
“The ability to know where your machine is at all times is a powerful business tool,” says Bill Quinney, vice president equipment sales for Longview Advantage.
Nearly 40 percent of respondents to the RER survey said they consider being able to offer Internet rentals in the near future to be important, and a surprising 15.9 percent already offer the service. [Charts 1 & 2].
Rental companies have increasingly demanded more sophisticated solutions, forcing even “off-the-shelf” rental software suppliers to work much harder to satisfy users' needs. “We are definitely past the days of one-size-fits-all in rental software,” says Rob Ross, vice president and co-CEO for Alert Computers, Stockton, Calif.
Era of integration
The theme of integration was mentioned repeatedly by rental operators and software suppliers interviewed by RER. Jack Shea, CEO of Solutions by Computer, Springfield, Mass., says his company's new system, Enfinity, “is particularly adept at integrating with outside software and hardware.”
“Today's software products do a better job of integration to the work environment,” says Jim Franke of The Edge Consulting Services, Euless, Texas. “An example would be scanning a bar code, which saves time and eliminates errors.”
Being able to integrate with GPS to prevent theft and enhance diagnostics has become an important consideration for many rental companies, and software suppliers are partnering with telematics designers to facilitate that capability, especially as more manufacturers consider installing GPS on equipment before it leaves the factory.
“I would expect to see more and better integrations between products,” says Clark Haley of Business Computer Systems. “For instance, we are working with many customers to provide check details to banks — called Positive Pay — to protect against fraud. This kind of interaction between systems will become more common in the future.”
“[There is] a move towards integrating or “bolting-on” third-party products into the rental software package,” adds Alert's Ross. “Companies like Alert now have an extensive library of integrated software to extend its capabilities, from faxing to mapping, from credit card swiping to driver's license imaging, and more. Everybody wins, because the rental store doesn't have to foot the entire R&D bill for custom software modules, especially when these programs have already been developed and are being used by thousands or even millions of users at a relatively low cost in the general business marketplace.”
Integration with customers' systems can provide opportunities for rental companies to leverage their systems to take the level of service they offer to a more sophisticated level. Don Whitbeck, CEO of Guelph, Ontario-based Texada Software, offers an example.
“Rental companies rent to construction guys and project management people who need to rent equipment because they don't have [those machines], says Whitbeck. “But normally [customers] have a lot of equipment and look to their rental companies as an overflow supplier. But [the customers] themselves don't do a particularly effective job of managing their own assets, and rental companies don't want to alert them to that fact because it would reduce their revenue from rental. But since rental companies use software today to manage their own assets, imagine if they could take the same software to their customers and say, ‘Why don't we manage your assets for you?’”
However, Whitbeck points out, there is a development curve that must be filled in before that kind of integration can occur. As Whitbeck points out, Texada as well as its competitors have to make systems easier to customize, more mobile and configurable to integrate more effectively with software the customers of the rental companies may be using.
“A major customer of ours had a request from one of their customers to plug into their own purchasing systems,” Whitbeck says. “But they didn't know anything about how they might offer their customer some kind of programming interface to plug the two systems together to exchange purchase orders and provide information for job costing, to provide value-added information from the rental company to enable that customer to make better use of the information around the rental, not just the rental itself.”
While some of these solutions may require further development, the good news is that rental companies are requesting them and are excited about the possibility of developing them.
“Today rental companies are like islands between their suppliers and their customers,” adds Whitbeck. “But what I've seen in other industries over the past five years is a much tighter integration. Over the next two to three years I expect to see customers demanding it. For example, why shouldn't customers' project-management system be able to automatically generate requirements for rental as part of the project plan and deliver those electronically straight to the rental company and if the rental company doesn't have the equipment, to re-rent it electronically or order it electronically from the supplier? Today it is required in many industries to be integrated electronically with both your suppliers and your customers. Today that's not a requirement in the rental business, but it will be.”
Facilitating this integration will be telematics systems, which will help rental companies manage equipment utilization, maintenance, billing and customer service on machines while they are on rent at jobsites, in addition to helping prevent theft and facilitating diagnostics.
Open your windows
Many industry software suppliers cite the trend toward Windows-based systems as significant. “Younger people have grown up with Windows and expect it on any system they encounter in the workplace,” says Point-of-Rental's Shaffer.
“Windows literacy reduces the time it takes a new employee to be productive.”
Orion's Gilbert adds that Windows technology allows users to utilize product pictures to help train new employees, take customer pictures, scan drivers' licenses, among other applications.
Beyond contracts?
In RER's survey of rental companies, it was no surprise that the most often-used functionality in rental software is still making contracts at the rental counter. And improving efficiencies in the contract process was one of the most often mentioned areas when survey respondents were asked how they most wanted to improve their software systems.
Texada's Whitbeck says his customers ask him if he can make the contract process more efficient as well. Yes, Whitbeck, replies, it is possible to make it more efficient, but what if we could eliminate the rental contract altogether?
Sound farfetched? At first thought, yes. The rental contract is the mainstay of the rental business and the most critical ingredient in the rental transaction. The contractual agreement between a rental company and the customer is also important in the protection of the rental company from liability — it stipulates that the rental company offered instruction on proper operation of equipment.
However, take a look at the car rental industry, says Whitbeck. Liability is critical there as well, although the car rental company doesn't need to offer driver education classes to each car renter. In recent years, the growth of preferred driver programs has streamlined the car rental process. Instead of having to wait in line and sign a contract, the renter only has to get in the car and drive off. When he returns the vehicle, an employee prints out a receipt, and off the renter goes to catch his plane. The renter, when signing up for the program, agrees to the rules governing the rental transaction and that agreement governs the rental process every time he rents a car. Nobody has to remind him every time what the rules of the agreement are — he has already legally signaled his intent by joining the preferred renters' program.
Given that the profitability of most rental companies is based on their ability to attract repeat business, the same principles could exist. The rental customer would only have to come to the yard, pick up the equipment and be gone, just as currently rental companies deliver to jobsites with a similar streamlined procedure for open accounts. Why could the same principle not be applied to customers coming to the yard and picking up equipment themselves? And for small items, why couldn't the customer reserve ahead of time, come to the yard, go to a designated area, pick up the item, put it in his vehicle and drive off, perhaps only checking his identification with a yard/security person before he drives off the property, or let the equipment be scanned by an RFID.
Would customers of rental centers be interested? Whitbeck describes focus groups he conducted with construction companies. “We asked them: ‘If you could walk into a rental store and scan some kind of loyalty card and pick up the equipment you needed and walk out or self-check-out, would you change your rental supplier for that ability, number one, and if you would change your rental supplier, how far out of your way would you be willing to go, how much of your time would you be willing to invest in that process?
“One hundred percent of 60 different companies surveyed said they would change their rental supplier for that ability, and the average detour that they were willing to put up with was 20 minutes on either end,” adds Whitbeck. “Which is huge, because even in the worst lineup times, at Monday morning 8 o'clock, you're still only going to wait 15 minutes. But these guys, for the assurance of being able to go in, get what they needed and get out, would be willing to drive 20 extra minutes.”
Other contractors have said the same. Sean Saunders, director of information systems and purchasing for Tempe, Ariz.-based FNF Construction, the largest highway-heavy construction contractor in Arizona, who procures $4 million to $5 million in rental equipment per year, says the company that enables him to sign a one-time agreement and electronically order equipment whenever he needs it without repeating the rental contract will get more of his business.
Improvements in RFID technology, which would enable a rental company to automatically keep track of inventory as it leaves or returns to the yard, will play an important role in automation, just as the proliferation of telematics will enhance the mobility of the rental company.
Going mobile
As companies become increasingly dependent on communications systems, the need for their mobility presents a new challenge, one most software suppliers are already looking to address.
Making systems portable enough to be used on palm pilots or PDA's is a challenge software developers are working on, giving rental companies the ability to essentially make their branches portable.
“Wireless connectivity over the Internet will become commonplace,” says Point-of-Rental's Shaffer. “Many cell phone carriers now offer wireless high speed data services. Shove a little ‘card’ — think of it as a data cell phone — into the salesman's laptop and he can log onto the Internet from his pickup! Then he can log into your company server to access your rental management software. It's as if he were actually at a terminal in the store!”
Virtually everyone in the rental industry still strongly believes that face-to-face communication remains key to a rental company's success. However, that communication is increasingly informing rental companies that advances in automation will enable them to serve customers more efficiently, as improved IT will enhance a rental company's ability to run efficiently and profitably. It's a message rental companies and their software suppliers are clearly taking to heart.
For in-depth interviews with software suppliers, visit the October issue at www.rermag.com.
Rental Operators Look to the Software Future
How do rental people feel about their software and what do they want it to do? To find out, RER surveyed nearly 5,000 rental company owners to find out their responses.
Nearly 90 percent (88.6 percent) of the survey's respondents said they use their software for rental contracts. Nearly 85 percent (84.8 percent) answered they use it for inventory tracking.
Utilization reports were the third most checked-off response, with nearly 80 percent (78.8 percent) answering affirmatively. In fourth place on the usage list were return-on-investment reports with 73.5 percent. Although we have no computer survey to back it up with, based on past and recent interviews, the increasing interest in reports on the part of rental operators appears to be a significant breakthrough.
Point-of-sale management came in fifth with a robust 72.7 percent, while accounting and bookkeeping, one of the early motivations for automation, remained solid at 69.6 percent.
Shop management was next with 53.8 percent, and again, interviews indicated this area is increasing rapidly. Fleet status reports came in next at 51.5 percent, followed by marketing, tracking lost rental, and customer relationship management tracking next.
E-commerce processes such as customer ability to access data and reservations via Internet continue to grow with 17.4 percent and 15.9 percent respectively.
When questioned what two services were most important to them, a whopping 76.5 percent chose rental contracts as one of them, followed by inventory tracking.
Looking ahead
Looking forward to the future, inventory tracking topped the list of what functions rental operators see as most important to develop in the future. Following close behind were rental contracts, utilization reports and ROI reports, and tracking lost rental. But the biggest growth in interest in the future may come from items six through eight: customer relationship management, shop management, and reservations via the Internet.
Most rental companies, while looking ahead to progress, said they are satisfied with their current software systems, with more than 77 percent of respondents saying they were either extremely satisfied or somewhat satisfied with their current software systems. And more than 82 percent said their software suppliers are responsive to their needs and concerns.
