Correctly evaluating, purchasing, and implementing rental management systems can be a huge cash-saver
Putting an IT infrastructure in place is an expensive and time-consuming project. Unless your company has retained the services of a professional IT consultant, there are several pitfalls that you should seriously evaluate before you move ahead on your own.
This column is meant to help you navigate the landscape of what has come to be known as “rental software.”
It should be understood that the staging-and-rental business is fairly young when compared to other industries. Since the industry is in this youthful stage, business management software designed exclusively for the industry is bound to be a step behind in terms of its maturity. That makes it incumbent upon the buyer to be diligent, as well as prepared, for such evolving products.
Further, the staging-and-rental industry is comprised largely of entrepreneurial organizations, and most such companies are seeing only organic growth these days. The exceptions are companies that have grown via corporate mergers and acquisitions. What does this mean for companies investing in inventory management? Several things:
- Expect to find many products that don't fit together well. There are no industry-standard practices and benchmarks established as of yet. Operations have evolved inconsistently across companies, influenced by personalities, equipment types, and customers.
- Expect resistance to adjusting your current practices. Management and operations personnel may be industry veterans who have lived on an addictive diet of crisis and gun-slinging solutions. They may resist anything that calls for new or disciplined ways of doing things.
- Look beyond the obvious benefits. Managing a company is still very intuitive — driven by semi-quantitative factors, and not hard-core metrics. Financial indicators like asset return on investment and utilization are still not driving business strategy. Numbers based on such factors as sales, revenue, and pricing still remain the major focus.
- Focus on the whole organization. Since staging and rental is a customer-driven service business, anything that has more that two degrees of separation from the customer, show, or sales gets either ignored or, at best, lip service.
So how do you get the highest payoff from your technology investment? A successful technology strategy can be divided into three distinct phases: setting clear objectives, evaluation and selection, and implementation.
Each of these phases is equally important. Most companies tend to focus on the evaluation and selection phase and not on the others. However, all three are interdependent.
Clear objectives are essential to evaluating and choosing a system. If your key objective is to replace your existing inventory control system because it is obsolete, then you will end up looking for a system that is close to what you already have, only more up to date. And if you do not diligently implement the system you choose, the benefits of your investment will always miss your organization.
The landscape is littered with systems that have been thrown out because companies did not set clear objectives or failed to implement them appropriately.
Setting objectives is a critical phase. Investing in a rental management system must deliver a payoff to the business. A few simple guidelines will help you set better objectives:
- Focus on the future. Software systems have an expected lifecycle of about 7 to 10 years. The system must serve your future needs as well as your present needs. Write down what you expect you might need in the near future.
- Set business goals separately from operational goals. A common mistake people make is in addressing their objectives to operational issues only.
- Decide early on whether you want automation technology or information technology.
A simple way to ensure that there is a focus on long-term business goals is to prepare a checklist. High-payoff goals should include the informational concepts of control, business intelligence, and analytical metrics such as return on investment, sub-rental costs, job profitability, rental frequency, lost jobs, integration with other systems, etc.
Low-payoff objectives, on the other hand, tend to focus on automation. Keywords in this category include terms like tracking, check-in/check-out, pricing, and discounts. Keep in mind that operational objectives are necessary and must not be ignored. The point is to first address them, and then go beyond them to focus on business goals.
Selection and Evaluation
Critical success factors for this stage can be grouped into two areas: asking the important questions and avoiding common evaluation traps. The following are some key questions smart business people will ask as they go through this process:
- Does the system use data to improve your competitive ability?
- Does the system provide intelligence and analyses that will affect inventory, personnel, and capital decisions?
- Does the system provide end-to-end capability across all aspects of operations? For instance, does it require re-entering? Does it cover all departments? Does it provide for seamless hand-over across departments?
- Does the system have controls, checks, and balances? Does the system have well-defined processes?
- Is the system built using current technology? Be careful to distinguish between current and latest. Technology needs to be reasonably proven.
- Is the system designed to grow? What is the technical architecture? What database is being used? Does it have functional architecture (multi-site, etc.)?
Another important thing to consider is choosing a vendor. What is the track record and capability of the vendor? Things you should investigate include how long the vendor has been in business. What are the strengths of the organization in terms of people and skill resources? Is the vendor financially sound? Do the referrals check out?
Always speak with at least two other companies that have been using the system you are considering for more than one year. Keep in mind that for any system there will always be some dissatisfied users, so ask the vendor to provide references. That way you are sure to get the information from the right person who can address the big picture. When you talk to the vendor's customers, ask what they like and dislike about the system, and why. Also, ask about the attitude of the vendor after the sale.
There are several “evaluation traps” out there, as well. It's good to keep them in mind. Trap number one is the idea that more is better. By that, I mean that a common sales ploy is to dangle additional features. The logic behind this is the “more bang for the buck” concept. Be careful. Ask yourself if these features satisfy the objectives you have set. If they do not affect your set objectives, then you might end up paying for functionality you do not need. This is important because unwanted features may only serve as overhead in terms of speed, resources, and maintenance.
Trap number two is the all-in-one concept. Certain areas of business require unique expertise. It is advisable to use best-of-breed solutions that integrate instead of using an all-in-one compromise system. For example, accounting and operations both require rich expertise. Therefore, a company would be better served to use best-of-breed solutions that integrate, rather than compromise.
Trap number three is “the way we do it.” When evaluating a system, consider two things. First, does the system deliver the goal, and how well? Second, how closely does the workflow come to the way your organization works?
Since every company functions differently, to base your evaluation only on similarity to your workflow is self-defeating. Instead it would be better to evaluate the gap and determine if it is important enough to warrant customization. Being focused only on your existing process makes you lose sight of other benefits.
Post-purchase implementation of a system is, sadly, often an afterthought for buyers. The effects you can be left to grapple with include incorrect setup and under-trained users. These lead to dissatisfaction with the system and incorrect use. Other problems might include delays, cost overruns, and major sticker shock on your service bill. This often leads to cutbacks in implementation services, which in turn creates a vicious cycle of poor implementation and consequences with no end in sight.
Vivek Bhaman is currently marketing director for Unique Business Systems, Santa Monica. He has 15 years of experience in marketing and technology consulting. He also has significant experience in advertising and event management and holds an MBA with specialization in marketing and finance, and a bachelor's degree in engineering. Reach him at email@example.com