70% of digital transformations fail, as per research by Boston Consulting Group. As the second in command, looking to digitally transform your rental business, you want to be among the 30% that have done it right.
At To-Increase, we have worked with international companies with nearly two decades of experience in offering software solutions embedded in Microsoft Dynamics 365 for Finance and Supply Chain Management.
With a global presence and deep expertise in how the rental business has grown and evolved, we’ve interacted with numerous Chief Operating Officers (COOs) who have shared their challenges, experiences, and how rental software made their job easier.
This article is for COOs of the rental industry and will talk about the following:
- The shift in the COO’s role in the rental industry
- Why COOs must pay attention to digital transformation
- Current rental market trends on digital transformation
- 5 challenges of a COO and how digital transformation can help
- Technology COOs must look for
How is the role of COOs in the rental industry shifting?
Traditionally, the COO’s role was about increasing operational efficiency and focusing on implementing the strategy developed by the CEO. This has now changed. Today, in a post-pandemic time, the COO spearheads the rental business’s change and transformation while managing regulations, risks, and interdepartmental communication.
COOs are now at the forefront of strategy and execution with unique insights into customers, day-to-day operations, and the roadmap of the business.
Why do COOs in the rental industry need to pay attention to digital transformation?
According to a PwC survey, when COOs were asked what is the biggest operational challenge they expect to face in 2022, 43% of the respondents stated digital transformation initiatives.
When asked how they plan to manage uncertainty in the business environment in 2022 — 41% responded by saying investing in digital capabilities.
Furthermore, according to a Gartner survey on the key trends in leadership thinking for 2022 to 2023, 34% of the respondents stated that technology-related issues like digitalization would be their focus.
It is clear that digital transformation isn’t optional, but a necessity in today’s world, and the rental industry has seen this change more pronounced than ever.
Unlike the conventional idea of merely renting out a fleet of equipment or set of products for a fixed period, the rental market has evolved with dynamic customer demands who expect flexible payment modes and services provided to them with quality and speed.
This responsibility of increasing profit margins while still operating within the given budget falls upon your shoulders as the COO — and digital transformation is your ticket to success.
How are the current rental market trends heading toward digital transformation?
The rental market is seeing an upward trend, with the Fortune Business Insights report on the construction equipment rental market stating that the global market is expected to be valued at 145.22 billion US dollars by 2026. The American Rental Association (ARA) estimates the equipment rental revenue growth to surpass 60 billion US dollars in 2024, despite supply chain issues and labor shortages.
The revenue forecast for Canada is similar to the United States, with an increase of 6.4% in 2023 and 3.8% in 2024. Additionally, AMA Research, the United Kingdom's leading specialist provider of market research, forecasts the Kingdom's construction equipment rental industry to grow by 11% in 2023.
This scope of growth combined with the trends of low-code, cloud-based digitization worth 1 trillion US dollars by 2030, is what will pave the future for a successful rental business.
However, with an increased risk of post-pandemic technical debt for corporations and a shift toward remote operations, you need to link your growth strategy with the right technology.
But what is the right technology? A simple google search will offer you many buzzwords such as Industry 4.0, digitalization, innovation, and so on. What’s imperative is for you to understand what this means for your business.
From our experience, we can vouch that the right technology would address all your challenges head-on while offering ample space to plan and accommodate the long-term vision of your rental business.
What are the top 5 challenges for a COO in the rental industry and how can digital transformation help?
1. Supporting hybrid work and remote operations
With the pandemic forcing people to work from remote locations, you must know how to adapt and make the work environment as easy and accommodating as possible for your workforce. This means giving them access to the right information at the right time.
Solution: Look for software that enables your workers to work easily, regardless of their location. For instance, a field service mobile app in the rental software enables field workers and engineers to access data anytime and anywhere.
Such a solution allows you to offer quicker resolution around equipment maintenance, further improving customer relations and making the job of a field engineer easy through remote access.
2. Maintaining a smooth supply chain despite inflation
A Gartner survey polled more than 400 senior business leaders about their priorities for 2022 to 2023. The survey found that 51% of the C-Suite considers supply chain issues result in a lack of growth for their businesses.
This supply chain has further been disrupted by geopolitical conflicts, resulting in increased prices of commodities such as oil, gas, base metals, semiconductors, and so on, which are critical to the equipment rental industry.
Additionally, according to a McKinsey Global Survey of executive sentiment, the current geopolitical state has increased economic volatility.
Considering all the above, COOs of rental and manufacturing companies must also think through the various aspects of geopolitical risks and their potential impact on the inventory, financial, operational, and personnel side of their business.
Solution: Invest in software that will help your rental business be more resilient to any external factors by being able to track availability. You must have real-time visibility across the entire supply chain with the ability to make adjustments to the prices of the rental products or commodities you offer.
You can view all your upcoming reservations from a single dashboard, managing the entire inventory, from booking to return, in one place.
A software solution that offers analytics with specific KPIs through IoT sensors that indicate the time, frequency, and duration of your equipment utilization enables you with long-term strategic visibility and future planning.
3. Driving customer loyalty and trust
Customers today are looking for a seamless experience. A well-maintained CRM is an answer, but it does not stop there. You need to go above and beyond to ensure your clients are happy with your services.
Solution: Invest in technology that has a customer portal that provides information about your product catalog or equipment list to your customers with the option to self-book. This empowers your customers by offering them an easy booking experience where they are informed on the equipment options, availability, pricing, customizations, and so on.
Make sure you offer timely repair and maintenance to any rented or leased product. Look for software that supports scheduled and unscheduled maintenance and allows you to inspect, repair, enhance or upgrade the rented product. The software should provide insights on the maintenance time, expenses, spare parts, and maintenance history of each product.
4. Managing complex contracts and pricing models
To align with customer demand, rental companies must establish different rental delivery models such as renting out standard equipment with consumables or billing based on usage or subscription. These complex contracts with varying customer profiles, when managed inefficiently, lead to delayed invoices, missing contracts, extended credit deadlines, and more.
As a rental business, you must also comply with any regulatory changes according to the leasing accounting standards.
Solution: Look for software that recognizes multiple revenue streams and allows you to invoice customers based on the payment mode. The solution should support pay-per-use, product-as-a-service, standard rentals, selling, subscription-based models, project rentals, and so on.
Additionally, look for technology that automates the process of invoicing, billing, and payment. The software must have comprehensive contract management tools with the capability to send out alerts and reminders when payments are due.
5. Access to data in real-time with process automation
There are various stakeholders involved in the success of a single rental order — be it service, delivery & transport, rental inspection, planning, or field engineering. However, a lack of automation results in communication gaps as different departments work in silos.
For instance, the sales team doesn’t have the critical knowledge to offer the correct quote to a customer, leading to a dissatisfied client.
Solution: Tackle your bottlenecks arising from workforce shortages by migrating to the cloud to automate processes and manage different departments in a single and secure system. This enhances interdepartmental communication and avoids issues arising from working in silos.
Look for software that can sync your CRM with ERP to automate the marketing process and allows you to generate leads and nurture your potential customers with fewer resources. The solution must offer you a 360-degree view of your leads, opportunities, sales orders, and customers.
Related reading: How Rental ERP Mitigates Challenges for CFOs in Rental Companies
What solution do you need as a COO to digitally transform your rental business?
COOs must look for technology offering:
- Cloud-based software as a steppingstone to digitally transform your business
- An end-to-end solution with a single source of truth giving access to rental data — availability, tracking, utilization, and more
- A lead-to-cash solution that can document each touchpoint of the customer’s journey
- Rental-specific features to maintain a smooth supply chain and better fit the unique rental business model — be it renting, selling, or both
- Human resource management for intelligent resource allocation so you can deliver quality services at reduced costs
If you’re interested in a solution that offers all the above and more, you could explore the option of ERP embedded software.
An ERP embedded software is pre-configured, offers maximum flexibility, and handles the entire rental lifecycle of your business in a single system.
Ready to begin your digital transformation journey?
By now, you’ve realized the significance and urgency of digital transformation. A wise COO would want to execute this strategy seamlessly by collaborating with ISVs offering the right expertise.
We offer you a solution embedded in the world-class ERP — Microsoft Dynamics 365 for Finance and Supply Chain Management. You could explore our cloud-hosted, ERP-embedded, rental-specific software — DynaRent.
The DynaRent solution addresses all the above challenges and manages your financial, operational, and personnel challenges, from lead to cash, in one solution.
You could check out the DynaRent factsheet to discover more about the following:
- How DynaRent can support your business
- The combination of DynaRent with Dynamics 365
- Key benefits that you can gain
- The features of the solution