If you are in the business of renting out equipment, you are aware of the challenges you face in terms of the changing market demands, increasing competition, the evolving needs of customers, and the regulatory requirements.
What is more, as an equipment rental company with numerous assets and a diverse market, equipment rental companies are likely to face problems with the management of your equipment rental business.
Many equipment rental companies consider opting for an ERP-based equipment rental software solution, but aren’t sure how beneficial doing so might be. One of the most frequently asked questions by our customers at To-Increase is how they can calculate the ROI on their equipment rental software investment.
Investing in an equipment rental software solution can be a painstaking and complicated process—one that may take a long time to implement and deploy. What’s more, you may also face some opposition when it comes to the way your equipment rental operations are run.
Therefore, it’s essential to carry out a thorough cost-benefit analysis to determine the ROI of your investment in an equipment rental solution.
In this article, we’ll outline the factors that you need to consider and include while carrying out an ROI analysis of your equipment rental software solution.
ROI Step #1: Costs
Your total investment in the solution
When you are calculating ROI, you must tag the cost of equipment rental software solution as an investment instead of just a price. This is because though the cost of your solution is substantial, the returns on this investment can be all-pervasive and if you do it right, can be enjoyed for a long time to come.
You can get a definite return on investment if you do a thorough analysis of your current requirements and future plans while selecting the equipment rental solution.
Start with an analysis of the type of equipment you own, the mix of short and long-term rentals you offer, broad classification of your customers as per the sector (government contracting, construction, power projects, etc) a look at what competitors are offering, and a look at the changing market conditions in the equipment rental sector.
Additional IT cost
Rental software solutions can add to the cost of your IT resources. However, you can overcome this cost by ensuring that you select an equipment rental software solution that requires configuration rather than coding support. When you have the configuration option enabled, the changes that you need to make to your equipment rental solution software can be carried out by the operational team. Coding, on the other hand would require the support of the IT team. Having a solution that depends on configuration rather than coding can make sure that you implement and deploy your solution with minimal addition to your IT resources.
Cost of disruptions to operations
The changeover from your legacy rental solution to the new solution can cause some disruptions in your current operations. However, talk to your solution provider to find means by which the data from the old system can be moved to the new solution with minimal disruption.
Provide your solution provider with the details of the data and where it resides to get an accurate estimate on the time and expense factors.
Costs related to staffing the implementation team
You will need to factor this cost element as part of your implementation project cost, given the long-term benefits you will derive from it.
However, select the team members with due consideration to the key areas they will be working on. For example, you can add a few people from IT, some people from the operations, logistics, field, and front office teams. This way the workload will not be entirely disrupted, and all areas of the company will be represented.
It is the best way to ensure that additional people will not be required for the implementation project since you will be selecting people from existing teams and ensuring that your regular operations are not affected adversely.
ROI Step #2: Benefits
An optimum equipment rental software solution can bring about significant operational improvements. For instance, a graphical planboard that some solutions provide offers you a complete overview of all your assets and locations, along with the location of the specialized personnel needed to move or operate it.
Your operations will see an uptick from such detailed information.
Modern equipment rental software solutions offer you features like IoT (Internet of Things), that can not only help you track the movement of your assets but also provide you insight into their usage.
You can use this data to determine if the usage is beyond the agreed upon terms in your rental agreement, and your rental solution can automatically bill customers on the overages. You can also save on costs with better transport and logistics planning with the location insights from rental IoT.
Vendor support synergy with your internal team
When you select a reputed vendor, who has the requisite experience and expertise in equipment rental software solutions, you can benefit from the synergy of your internal team working with and being trained by the vendor. The vendor’s team can quickly bring your team up to speed on the nuances of the equipment rental software features.
Improvement in customer satisfaction
An equipment rental company must be able to meet complicated orders from their portfolio of customers to offer equipment rental options like sub-rental, peer-to-peer rentals, intercompany rentals, rental kits, etc., with flawless and timely service at competitive rates.
Once you have the right equipment rental software solution with these functionalities in place, you will be able to see a definite rise in customer satisfaction. Read how we helped our customer CP ApS increase focus on the quality of service they provide to customers by streamlining aspects like operations, transportation, service, and maintenance have been streamlined completely.
Calculating the ROI of Equipment Rental Software
With inputs provided above, you will be able to look at various aspects of your investment in equipment rental software solution. Since investing in rental software is a big decision, you will need to carry out the following exercise before you make the final decision:
1. Look at the main problem areas for your business
When you do a deep dive into the problem areas of your equipment rental business, you will be able to get a clearer picture of the value that an equipment rental software solution can add. Ensure that any solution you select has features that will help you mitigate if not all, most of the problem areas in your business
2. Evaluate future plans for expansion and diversification
Investing in rental software is a long-term investment and this needs to not only support your current needs but also future plans. No business in today’s world can afford to be static and the equipment rental is no different. Factors like on-cloud, mobility, scalability can play a big role in your investment decision
3. Consider hygiene factors that can boost your revenue
While the investment in rental software needs to help you with diversification and help mitigate problem areas, it is equally important to look at the ways in which your rental solution can help you boost your revenue. A rental solution with IoT (for cost saving and helping add revenue that could be lost) and mobility (for real-time billing, updates to quicken collections) can help you add to your revenue.
We hope you will be able to calculate the ROI on your equipment rental software solution from the various cost-benefit factors that we have outlined above.