The digital transformation journey
An overview of how organisations are managing digitalisation within their businesses, including the KPIs used to measure the impact of digitalisation and manage the journey, and how to organise for digitalisation
DIGITALISATION IN THE RENTAL INDUSTRY – THE DIGITALISATION ADOPTION CURVE
There is no one size fits all approach adopted by rental companies to implement digitalisation into their business. If a company implements via a platform, or a commercial off the shelf package, they may move immediately up the adoption curve. Similarly, the starting point might be implementation of telematics and then elements such as delivery and maintenance. However, the change required within an organisation in terms of staff training and process re-engineering is not to be underestimated in order to achieve the full benefits of digitalisation. These changes will be covered in greater depth later in this section.
The digitalisation adoption curve maps the most common approach followed by the early industry leaders in rental industry digitalisation:
The digitalisation adoption curve for the rental industry
Typically, a company implementing a digitalisation strategy will start with a “point solution” such as Electronic Data Interchange (EDI) with customers, or digitalisation of the rental process, however to gain the full benefits of digitalising the end to end rental process, particularly in areas such as maintenance, delivery, time of use billing, asset management, a rental company will need to implement telematics.
Telematics doesn’t just enable efficiencies to be unlocked, it also provides a lot of data on real time use, location, etc. This data can be analysed and then additional solutions provided to customers such as emissions data.
Once data is available on, for instance, machine health and location, it can enable the transformation of the business model by allowing rental companies to challenge the mix and age of their fleet, the number and location of depots, the way they charge their customers and to move to a greater provision of services to their customers.
“e.g. failed generator – system sends note to manager – useful, system allocates next available generator and organises transport and notifies customer – efficient”
“Ground up, we said this is not an ecommerce platform, this is a fleet management tool – so customers can optimise rental. We send alert to customers if they are not using the equipment to ask if they want to send it back. Not a means to upsell but to enable the customer relationship.”
DIGITALISATION AS A FORCE FOR BUSINESS TRANSFORMATION
Step 1 – Problem solving
The following are the key learnings from the getting started stage of digitalisation, the automation of the end to end rental process. The main key message is that a traditional rental company is hard to transform, don’t overestimate the ability of staff to change, and don’t overlook the shortcuts, if there is a manual shortcut that circumvents the new digitalised process, staff will take it! It is often better to not try and change staff, and existing tools and ways of working, rather than try and use digitalisation to make them better – faster, easier and to eliminate the potential for errors.
Ideally start with a number of ring fenced, easily implemented projects, typically aimed at addressing easily identifiable challenges and delivering measurable results, use these as a learning journey for staff and to facilitate organisational change, in a controlled manner and to educate staff so that they see a little success and then want to change, are ready for greater change and more importantly want to change.
The project process usually involves mapping the “As Is” rental model and process and automating this process to eliminate paper and create a continuous process avoiding data entry and handoffs.
RENTAL COMPANY DIGITALISATION – DIGITALISATION IS A CHANGE MANAGEMENT PROCESS
Step 1 – Process automation (cont)
Once the process is mapped it can be reviewed from both internal and customer perspective – where are the pain points, what does the customer need? What can we develop for the customer (that they will value), where can we eliminate handovers and manual intervention, how can we eliminate the potential to make mistakes and increase the speed of the process and eliminate / reduce administration.
Once the “As Is” business model has been reviewed, a “Should Be” model and set up projects to digitalise the process, or automating manual processes with Commercial Of The Shelf (COTS) solutions. Targets set for transforming the business should not just be around cost reduction and process efficiency, but business related with digitisation transforming results.
Digitalisation of core business processes, as described above, is a big move in every aspect of the business, it doesn’t just transform the operational processes but should also transform support processes such as HR, for example timesheets become digital. It should also include functional digitalisation – for example the QHSE business management system.
Step 2 – Telematics, the machine digital twin, service and solution development and the platform for business transformation
In parallel with looking at the digitalisation of core business processes, rental companies move their focus from that of internal efficiency, to that of looking at getting and using data from rental assets by installing or linking to already installed telematic systems.
These systems can provide, in real time, the location of an asset, the condition of an asset and how much work an asset has undertaken, when and how hard it is working and fuel or charge levels. Often this is achieved by the rental company installing Commercial Off The Shelf (COTS) telematic nodes and software.
This data allows for further benefits particularly in the area of maintenance and repair, moving to proactive and targeted maintenance based on actual machine condition. Additional services, such as a proactive fuelling service can be easily offered to customers at this stage of the companies digitalisation.
Bigger customers are already asking for data feeds from rental assets in the areas of emissions data and to generate permits for the site. Customers want one stop solutions – machine, data, emissions analysis.
Step 3 – ERP system upgrade
Digitalisation of core business processes, as described in the previous slide is a big move in every aspect of the business, it doesn’t just transform the operational processes but should transform support processes such as HR, for example timesheets become digital, digitalisation of the QHSE business management system.
Next on the roadmap will often be upgrading the ERP system as digitisation has a high impact on the ERP system and the ERP system has a high impact on digitisation. Traditional ERP systems have a lot of handovers and checks and balances at different stages which limits digitisation. The rental business will want to collect and use data, in a traditional ERP system a lot of fields are manual and very difficult to report against. To go to full digitalisation the limitations of a traditional ERP system needs to be overcome and often at this stage the ERP system will need to be upgraded.
Step 4 – Data analysis and solution development
The next step for the rental company is to move into data analysis. Telematics provides a vast amount of data, typically ending up in a rental company data lake which can then be analysed to start to transform the business, in areas such as management of end of life, how usage effects the product lifecycle, when to avoid issues with the machines by early disposal and active company wide fleet management data to drive purchasing decisions and fleet mix. These are just a few examples of how data can improve decision making.
This data allows for further benefits particularly in the area of maintenance and repair, moving to proactive and targeted maintenance based on actual machine condition. Additional services, such as a proactive fuelling service can be easily offered to customers at this stage of the companies digitalisation journey.
Step 5 -Business model transformation
But examples of how industry leaders are looking at the future include:
- If you have data on machine location, condition and status, you can ask questions such as can we reduce depots and move assets directly from one customer site to another?
- Data will enable us to understand the position
of a construction project in its lifecycle so we can pre-position assets on site ready for the next stage of construction activity
- Data on work flow, activity levels and even material movement around a construction site can be analysed and consultancy services provided to customers
RENTAL COMPANY DIGITALISATION IN PRACTICE
A case study of the journey taken by rental company digitalising their operations:
1. INITIAL STEP FOR DIGITALISATION
– administration, process efficiency and effectiveness, digitalisation of core rental process:
- Paperless contracting – customer acquisition, customer financial evaluation, contracting, extension of contract, delivery notes
- Next step was credit checking to avoid bad debts, thefts – like bank risks system – automatic
- Monitors customers once in contract – 40% of enquiries rejected for credit
2. NEXT STEP WAS ACQUIRING INTELLIGENCE DATA
– to reduce financial burden – in 17 years never had stolen unrecovered equipment (crisis management during financial crash).
3. NEEDED TO INSTALL TELEMATICS FOR THIS STEP ONWARDS
– initially equipped to handle high theft risk, then hours, position and usage.
4. DYNAMIC PRICING
– floating pricing, same approach as hotel / flights – average rental price increased 33% – human decision replaced with database decision
– profitability optimisation
5. ENABLING SALESMAN TO IDENTIFY AVAILABLE MACHINE, AND GENERATE PRICE FOR THAT CUSTOMER FOR THE AVAILABLE MACHINE
- If customer rents online fixed price, if speak to salesman get deal suggested by computer, but final decision rests with the salesman – floating quotation
- If you sign contract for minimum turnover then you can achieve fixed deals with a maximum rental price
6. DAILY PUSH MESSAGE TO ALL SALES PEOPLE
– availability and medium spot price plus min price
- System records all data throughout the sales process – deals put to customer and chat room recording delivers effective holiday / sickness cover for sales staff
SERVICE DASHBOARD, COMPLETELY PAPERLESS, MANAGED IN SMARTPHONE.
Machine needs repair – job allocated or freedom to take job (like uber)
time recording, activity recorded (fleet equipped with telematics) pictures of jobs – drivers picking up and delivering machines – deliver machines in digital format – no handwritten notes, all paperwork digitalised via app – delivery / mechanic in house or outsourced – everything instantaneous – needed enhanced GPS which enables complete GPS data to upload into their systems via an interface they developed with a specialist telematics provider, this enables data from different equipment suppliers to flow freely into their own systems.
- Now manage by exception, create rules and if equipment outside rules it triggers an intervention
- Example planning of machine maintenance – system measures usage at machine and suggests when maintenance should be undertaken – integration of different systems enabled automated systems / processes such as maintenance
- Schedules service, allocates engineer, triggers dispatch of service kit / spare parts direct to site
- All invoices processed automatically with suppliers and maintenance app automatically enquires for a part, places the order and tracks delivery
- Other rules would be battery disconnected on machine
not being worked on by a mechanic triggers a theft alert
8. DIGITAL TRACKING OF KEY DOCUMENTS IN THE PROCESS
TO ELIMINATE ANY QUESTIONS AS TO WHETHER INVOICE RECEIVED, ETC., BY CUSTOMER
– digitised document delivery and recording (same as UPS / TNT, etc.)
9. ONCE TELEMATICS LINKED TO SYSTEM, CAN MOVE TO PAY PER USE RENTAL FROM DAILY RENTAL, ESPECIALLY FOR CONTRACTS WITH LOW USAGE
now for example on generator you can pay
a flat fee for having the generator on site and a larger pay per use fee when you use it. Or you buy a low level of hours pre paid and then pay extra when and if you go over pre paid hours (like a rental car with 100km per day included in rental fee) initially rolled out with generators, access platforms, lighting towers, transport cost so high (as a % of total cost) makes sense to have low on site fee and higher fee for use
10. INTEGRATED ALL ASSETS ONTO SYSTEM
including non powered assets without GPS such as scaffolding
11. NEXT STEP WAS ALIGNING DIFFERENT LAYERS WITHIN THE ORGANISATION,
up until now people not in the system for example sales linked to other functions such as accounting, back office, maintenance, etc.
12. MADE SALES APP TO ENABLE THE SALES STAFF TO DO JOB FROM ANYWHERE
– access to assets, all contracts, can set up back office tasks, can take pictures on site – post to social media for marketing, integrated negotiation programme, objectives, chat history, QR code scanner for any asset on site. Tools for heat calculation, also time keeping drives payroll, automatically allocates leads to sales staff (pre qualified with full info) plus information on local authority approved work sites, so you can identify work permit authorisation
for new buildings to generate leads for
OF VISITS, NUMBER OF CUSTOMERS, ACTIVE CONTRACTS, SALES STAFF TRIPS
/ LOCATION, ETC.,
so automated sales management reporting, integrated with accounting to access financial information such as spend / debts, etc.
14.NEXT STEP WAS TO MONETISE DATA IN DIFFERENT SYSTEMS VIA DATA ANALYTICS TO IDENTIFY TRENDS,
such as is a customer paying current market price, level of damage, % of revenue on transport, how does customer react when receives a damage invoice, which type of customer has most damages, etc., – can use to choose which customers are best for you (similar to insurance underwriting where insurance companies offer best deal to ideal customer, and decline to cover other type of customer) system creates a customer master data record – every piece of data related to that customer.
15.ALSO INCLUDED TRACKING EXTERNAL FACTORS
such as temperature and rain, if it rains
you will lose 15-25% of sales volume in
a depot, therefore you can predict revenue based on weather.
16.FOR CUSTOMER THEY GET CONTRACT DATA AND TRANSPARENCY ON THEIR FLEET, ACCIDENTS, DAMAGE REPORTS, ETC.
– rental history and service standards provided by rental company – basic contract management (but not customer analytics)
- > Example: Customer had a damage invoice for €3k and then his order volume dropped from €50k spend per month to €15k per month!
- > So you can suggest you will waive damage invoice if you commit to train all your staff for a day, stops future damage and generates additional training revenue
- > Can interrogate operator errors when they are using the machine and propose training to customer – enhance productivity and safety and lower damage costs
17.THEY ARE NOW LOOKING AT FUTURE BUSINESS MODELS UNDERPINNED BY DATA AND MARKET KNOWLEDGE
5 STEPS IN THE CHANGE MANAGEMENT PROCESS:
To maximise the chance of success, organisations should follow a five step plan:
1. PREPARE THE ORGANISATION FOR CHANGE
For an organisation to successfully pursue and implement change, it must be prepared both logistically and culturally. Before delving into logistics, cultural preparation must first take place to achieve the best business outcome. In the preparation phase, the manager is focused
on helping employees recognise and understand the need for change.
They raise awareness of the various challenges or problems facing the organisation that are acting as forces of change and generating dissatisfaction with the status quo. Gaining this initial buy-in from employees who will help implement the change can remove friction and resistance later on.
2. CRAFT A VISION AND PLAN FOR CHANGE
Once the organisation is ready to embrace change, managers must develop a thorough and realistic plan for bringing it about. The plan should detail:
- Strategic goals: What goals does this change help the organisation work towards?
- Key performance indicators: How will success be measured? What metrics need to be moved? What’s the baseline for how things currently stand?
- Project stakeholders and team: Who will oversee the task of implementing change? Who needs to sign off at each critical stage? Who will be responsible for implementation?
- Project scope: What discrete steps and actions will the project include? What falls outside of the project scope?
While it’s important to have a structured approach, the plan should also account for any unknowns or roadblocks that could arise during the implementation process and would require agility and flexibility to overcome.
3. IMPLEMENT THE CHANGES
After the plan has been created, all that remains is to follow the steps outlined within it to implement the required change. Whether that involves changes to the company’s structure, strategy, systems, processes, employee behaviors, or other aspects will depend on the specifics of the initiative. During the implementation process, change managers must be focused on empowering their employees to take the necessary steps to achieve the goals of the initiative and celebrate any short-term wins. They should also do their best to anticipate roadblocks and prevent, remove, or mitigate them once identified. Repeated communication of the organisation’s vision is critical throughout the implementation process to remind team members why change is being pursued.
4. EMBED CHANGES WITHIN COMPANY CULTURE AND PRACTICES
Once the change initiative has been completed, change managers must prevent a reversion to the prior state or status quo. This is particularly important for organisational change related to business processes such as workflows, culture and strategy formulation. Without an adequate plan, employees may backslide into the “old way” of doing things, particularly during the transition period. By embedding changes within the company’s culture and practices, it becomes more difficult for backsliding to occur. New organisational structures, controls and reward systems should all be considered as tools to help change stick.
5.REVIEW PROGRESS AND ANALYSE RESULTS
Just because a change initiative is complete doesn’t mean it was successful. Conducting an analysis and review, or a “project post mortem,” can help business leaders understand whether a change initiative was a success, failure or mixed result. It can also offer valuable insights and lessons that can be leveraged in future change efforts.
RENTAL COMPANY DIGITALISATION – ORGANISING FOR DIGITALISATION
The key learnings from the interviews revolved around treating digitalisation like any other change programme or project in the business:
- Involve the business
- Ensure operational ownership
- It’s business transformation, not an IT project
- Focus on benefits – cost > reduction, efficiency and effectiveness, customer experience
- Ensure clear benefits case for digitalisation (works for process digitalisation)> For data analysis, a different message – once you have collected the data, analysis will show
a raft of opportunities and potential you had not realised existed
- Don’t automate for the sake of automation
- Don’t over estimate the speed of customers adopting digital solutions, the most successful transformations migrated customers (and staff) onto automated platforms over
time with a personal human wrap around the automation until the customers were comfortable in managing rental fully digitally
- The most successful customer sales platforms use multi channel engagement rather than pure digital, digital generates interest, deal is secured by telephone or in depot at the sales counter
- Pure digital offerings have struggled
- Successful digitalisation implementations (with customers) include a migration strategy from traditional to digital and support for the customer through the journey – training, hand holding, etc.
- Understand digitalisation is a transformational journey for the business
(see page 48)
“Digitalisation is just a tool that enhances the power of human relationships”
DIGITALISATION AS A FORCE FOR BUSINESS TRANSFORMATION
Implementing digitalisation is a change management process and should be approached as such.
Digitalisation can be either adaptive or transformational change:
- ADAPTIVE changes are small, gradual, iterative changes that an organisation undertakes to evolve its products, processes, workflows, and strategies over time. Digitalising maintenance tasks is an example of an adaptive change.
- TRANSFORMATIONAL changes are larger in scale and scope and often signify a dramatic and, occasionally sudden, departure from the status quo. Launching an end to end digitalised customer service portal would be an example of transformational change.
Change management is the process of guiding organisational change to fruition, from the earliest stages of conception and preparation, through implementation and, finally, to resolution. An effective management strategy is crucial to ensure businesses successfully transition and adapt to any changes that may occur.
Approximately 50 percent of all organisational change initiatives are unsuccessful, highlighting why and knowing how to plan for, coordinate, and carry out change is critical for success.
While no two change initiatives are the same, they typically follow a similar process. To effectively manage change, managers and business leaders must thoroughly understand the steps involved, and ask themselves the following questions:
- Do you understand the forces making change necessary?
- Do you have a plan?
- How will you communicate?
- Have you identified potential roadblocks and do you have mitigation strategies in place?
DIGITALISATION – KEY PERFORMANCE INDICATORS
The key learnings from the interviews indicated that digitalisation involved very few new key performance indicators (KPIs) in the business, rather it was about applying existing KPIs to the digitalisation project.
KEY BUSINESS KPIs USED TO MEASURE THE SUCCESS OF TELEMATICS TRANSFORMATION:
- Asset utilisation – out on rent, use when on rent, financial return when on rent
- Rental turnround time
- Revenue leakage / stand down
- Share of contracts with discount
- Discount rate
- Expenses per machine
- Open contracts / contracts ongoing
- Machine work hours
- Amount of eliminated cost of non conformance, reduced cost of conformance, amount of eliminated waste
- Winning big projects because of “added value” of extras provided by new enablers like customer data and information
- Workshop KPIs – asset availability, safety record, breakdowns
KPIs RELATING ESPECIALLY TO DIGITALISATION INCLUDED:
- Share of the volume and share of revenue going through the platform
- Revenue from the website (versus other channels)
For project by project:
- Share of invoices processed digitally, broken down by large accounts and small accounts
- Share of invoices sent by EDI
- How much telematics data used by customers
- How much invoiced via telematics
FOR DIGITAL PLATFORMS
- Number of active users – increasing users
- How many orders – increasing orders
- How many leads
Find out more about:
DIGITALISATION READINESS CHECKLIST
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|Clear link between business strategy and digitalisation strategy (business strategy leads)||
|Digitalisation strategy matches customer drivers in target segments||See
Chapter 1 & Chapter 3
|Implementation strategy (in-house, COTS, platform, hybrid) matches capabilities and resources in the business||See
|Understanding the impact of digitalisation on your business mix, profitability, and ability to service non platform customers||See
|If relying on platform partnership for your delivery strategy, do you have a plan for what happens if the platform arrangement goes sour||See
Digitalisation delivery strategy
|Does the digitalisation delivery strategy – inhouse, COTS, platform, hybrid - match your strategy in terms of budgeting, “ownership” of customers, capabilities and likely development of digitalisation within your business over time?||See
|Does your IT delivery strategy and in particular budgeting over time, considered a transformation journey that is likely to include ERP replacement, telematics roll out and data analysis?||See
|Do you have the skills and capabilities required to deliver your digitalisation delivery strategy and journey over time, or you have
a plan to address any skills and capability gaps?
Organisation of your digitalisation effort
|Is the business (relevant functions, operations, sales etc) involved and leading the strategy development and decision making for digital transformation?||See
|Are you running the digital transformation project as a business transformation project and not just an IT project?||See
|Do you have a clear business case for the digitalisation transformation?||See
|Have you aligned the tracking of benefits and results with business KPIs||See
|Do you have a strategy to bring your staff along with you and manage change and business transformation as you digitalise your business processes?||See
|Does your business process digitalisation strategy cover integration with operational aspects such as sales management, credit control, HR, QHSE?||See
|Does your process digitalisation strategy consider if, and when, you will need to update your ERP system?||See
Telematics implementation / data strategy
|Do you have a telematics implementation strategy – which assets, linkage to business processes and how to talk to different telematics solutions?||See
|Does your digitalisation strategy cover creation of a data lake / warehouse, analysis of data and development of new services and solutions?||See
Chapter 4 & Chapter 5
|Does your digitalisation strategy cover the use of data to transform your business model in areas such as commercial offers, service delivery (depots) asset / fleet management etc?||See
Chapter 4 & Chapter 5
Go to market / customer engagement
|Does you digitalisation strategy align with the different needs of different customer segments||See
|Have you engaged your digitalisation strategy to empower and transform your sales organisation (see implementation case study)||See
|Does your sales front end still allow for traditional (phone and in-depot and sales staff engagement) as well as digital engagement (Multi-channel engagement)||See
|Have you developed the customer journey and support you provide to educate and migrate customers onto digital platforms from traditional servicing
|Does your digitalisation strategy enable efficient and effective fleet management via data analysis and effective forecasting||See
Chapter 2 & Chapter 4
|Does your digitalisation strategy provide data which will inform and drive your procurement decision making||See
Chapter 2 & Chapter 4
|Does your digitalisation strategy deliver increased fleet availability via effective and efficient fleet maintenance||See
Chapter 2 & Chapter 4
|Does your digitalisation strategy use data analysis to drive asset disposal||See
Chapter 2 & Chapter 4
|Does your digitalisation strategy cover how you will reach and engage target market segments and drive customer acquisition||See
Chapter 1 , Chapter 2 & Chapter 4
|Does your digitalisation strategy cover how you will drive customer retention and lock customers in||See
Chapter 1 , Chapter 2 & Chapter 4
|Does your digitalisation strategy cover how you will develop added value services and propositions and develop additional revenue streams for your business||See
Chapter 1 , Chapter 2 & Chapter 4
Business model development
|Does the digitalisation strategy go beyond customer engagement and sales, process transformation and solution development and create a vision of how the business can transform to capitalise on data and customer and market understanding||See
|Does the business strategy include scenario’s for how competitors may transform their business through digitalisation and how your business will respond||See
Chapter 3, Chapter 4 & Chapter 5
|Does your digitalisation strategy align with the strategies of key customer segments and how digitalisation can support and enable your customers strategic development||See
Chapter 1 , Chapter 2 & Chapter 4