New technology can be promising, and with smart and stylish marketing it’s often difficult to ignore the claims that speak to your needs. But it’s not foolproof, which can create a questionable return on investment (ROI). The choice to willingly implement new technology is usually done after carefully researching and weighing the true impact it will have on your business.
But what if one of your clients requires you, as one of its vendors, to adopt a new piece of technology or process in order to continue servicing their account? No longer is the question about how to leverage the new technology to grow your company; instead, it becomes more about client retention. You have a choice to make. Is the client worth the investment you’ll need to make to comply? Implementing the technology doesn’t guarantee anything, but it keeps you in the game. On the other hand, if you refuse to adopt the technology, it’s almost certain a competitor will be willing and able to adapt to capture the business.
With a situation that isn’t quite so straightforward, there’s a process that should be followed to determine whether the implementation of the technology is a good fit for your company.
As clients begin to implement new technology to better manage their physical assets, certain technologies are becoming more mainstream - particularly those designed to collect and manage more data so the client can make more informed, real-time decisions. If you want to work in this arena, you must be willing to accept, adopt and welcome your clients’ requirements.
It will take time and effort to figure out how their requirements will impact your business, and what new processes you’ll need to establish to make their implementation work from your end.
Is the client worth it?
You must first determine the lifetime value of the client. Examine your sales and margins over the life of the relationship, and evaluate where you expect them to be in the next one to three years. Look at the estimated ROI. If you have a long-term agreement, can you recoup the money you must invest within the time frame? What if you operate on a season-by-season basis? The risk vs. the return may be quite different.
If your gut instinct and back-of-envelope math tell you it may not be worth the investment, dig deeper to see what other options you have to retain this client. If the money or the time required for a viable ROI simply isn’t there, don’t be afraid to walk away. Be honest with your client and move on. But if you think it might be doable begin developing a plan to move forward. Besides retaining your client’s business, you may actually improve your business as you develop processes and policies that apply more broadly to other areas.
Your client is making an investment to improve operations and needs vendors to be a partner in making it successful. A good client is worth the investment.
Compliance comes at a price. Out-of-pocket expenses for hardware, software and labor are all true costs to your business and should be evaluated before making the commitment.
Management labor: Consider the time necessary to learn the new requirements, adjust/change and implement the new processes required in your business, plus the time to manage the new processes. Does your management team (which may be just you) have the time to adequately tackle this challenge, or will you need to hire additional administrative support?
Training labor: Your field and administrative staff need to know and understand the new process involved. Once trained, audit and follow-up will be necessary to make sure the process is being followed. If the process changes, additional training will be required. Consider the trainer’s and trainees’ time, and whether it will be outsourced or done in-house.
Receivables: If their system does not work as intended, you may not be able to report work for payment or they may not be able to process it effectively, resulting in a potential delay in payment. How long can you realistically work for this client without being paid? If you answer “normal payment terms,” then you’re not prepared for a bump in the road. You may very well be financing your client through their technology rollout or transition. If the cash flow from your other clients’ business can’t support the volume of work that you’re financing, then you’ll need alternative funding sources to float the shortfall.
Hardware: Reporting from the field may require smart devices that you will need to purchase if your crews don’t currently have them. Consider the commitment with your current carrier and whether you’re willing to take on an annual commitment if its a seasonal account. Look for ways to extend the value of the hardware beyond the season.
Software: Applications may or may not be free, and the computer software you may need could cost you per license. Fortunately, many reporting methods are Web-based and provided by the client, but these systems are for their work only. If you want to replicate the process for your other clients, you may have to invest in existing software and applications or develop your own.
Whose burden is it?
The requirement to collect and report information in order to validate work completion takes time and is, therefore, a direct expense to the contractor. How much time and cost are involved depends on what information is being requested and how it is collected. When the client or property manager dictates a change in reporting protocol that may require new methods, processes or technology, consider the time and other expenses and who’s paying for it. Change can be positive, saving time and money, but it can also create an undue burden:
Positive change. Required signatures from store managers may be replaced by smart-device applications, allowing the driver to report completed work on-site. A GPS-enabled device can validate that the driver was on-site when the work was reported, providing the client real-time information while saving the vendor time since the driver doesn’t have to wait for a manager to sign paperwork. The investment in smart devices and training is offset by less time spent on-site.
Burden. Before-and-after photos of completed service are part of the scope of work and need to be uploaded or emailed at time of service. Assuming you have a process to manage the information flow, consider the time it takes for field personnel to take four or five photos, complete the service, take completed photos from the same four or five positions, and then transmit the photos. The additional 10 minutes it takes to perform this function multiplied by the number of sites you service and then multiplied by the quantity of service visits in a given season results in a significant time investment.
Assuming you service 12 sites, two additional hours of production time have been spent emailing 96 to 120 photos per event, which likely are not viewed unless there’s an issue. If you service the sites 30 times in a season, 2,880 to 3,600 photos are sitting in a folder with thousands of photos that other providers have taken. Does the client really need or use this information? If so, negotiate a price so you don’t lose production during a storm event. Ask them whether they would rather have you servicing more sites or taking pictures when the snow is falling? If the answer is pictures, then they should pay for the time and data-related costs.
Ironing out the kinks
Even if your client is using market-tested technology and processes that are relatively common, their rollout and implementation may not run smoothly. They’re integrating new processes into their existing systems, and it will likely result in some minor kinks that need to be ironed out. Larger issues may arise that require more significant program adjustments, and you’ll need to adapt. You and the client will be learning and adjusting together, and you need to have the operational and administrative capacity to play catch-up.
In all likelihood the new technology your client has chosen to simplify things on its end will result in some changes on yours. The amount of data you’ll collect and have to manage will likely be different and may increase. Plan to train your team on what will be required.
Basic improvements in productivity may be achieved by providing additional training to existing staff that work with specific software, or by training those using it for the first time. More detailed on-the-job training will be required for specific applications, Web portals or other interfaces your staff will be required to use. Additionally, your processes that have been modified or created will need to be explained, tested and managed.
Training is an overhead cost and likely not one you can charge to the client. It will be easier to determine direct out-of-pocket costs for training, but soft costs related to productivity loss or otherwise will be more difficult to quantify.
Administratively, you must have the capacity to handle reporting requirements. Technology generally allows for more points of information to be collected. If there are exceptions to the process, the data points still need to be collected and reported, but perhaps manually or through alternative methods. These exceptions can become time consuming and require a well-designed process on your end, plus administrative labor to ensure all data has been captured and communicated to the client. You will need to audit your new processes to make sure your team is functioning properly within the new system. If there’s a glitch, you may find yourself waiting for your client to respond to questions or concerns. When you get a response, which may or may not resolve the issue, can you catch up from one or two weeks or even months of data entry?
What if it fails?
There’s a risk that your client’s best efforts at implementation will fail and negatively impact your business. More likely than a catastrophic failure, though, is that your client may roll out new technology that doesn’t work entirely as advertised and becomes a drag on your resources. In either case you’ll have invested your resources in your client’s business. Can you afford to lose the investment without adversely impacting your business? What if, after a year or two, the client scraps the program and returns to the old methods or decides to try a different solution? Will you have gained from this experience? Will your investment have been wasted, or will your business continue to benefit from the changes you made? Failure may not be obvious from the outset and may come in different forms. You need to be prepared to weather the storm.
Reaping additional benefits
Going through a rollout may have some downsides and unwelcome cost implications. Consider how you can use this investment to improve your operations and leverage the investment to other clients, thus improving your ROI. For example, if you’re required to submit a certain report during or at the end of the storm, can the same template or process be used to send information to other key clients?
Your client has many vendors, and it uses some method of scoring to determine how effective its vendors are, both in providing service and in managing the relationship requirements. Your score will determine if they’ll continue to work with you. You can negatively impact your score if you’re slow to respond to questions, don’t provide timely or complete reports and make mistakes on invoicing. No matter how subjective or objective the scoring is, you’re being evaluated. Your ability to deliver on expectations will impact your long-term relationship.
Being forced into a change is not always easy or welcome, however, there can be benefits, particularly if you’re focused on making it a win for both parties. When the request is more of an undue burden, it’s time to negotiate. One thing is certain. As technology improves and the industry evolves, more clients will mandate that vendors comply with their proprietary systems, requiring the vendor to choose between adopting the new technology or walking away from their business.
Methods of validation
Property owners and managers have used different reporting methods to validate work completion and ensure compliance. Property managers often work hundreds or thousands of miles from their clients’ properties, and have a large volume of in-formation to handle from the service providers working on behalf of their clients’ portfolio of properties.
With so much data to collect and manage, it’s no surprise that property managers are looking to technology for help. Con-sider the challenge when a large snow event hits a region and the property manager or property owner needs to know if their sites have been serviced. Real-time information with validation has been difficult to attain; but with today’s smart devices and customized reporting apps, the ability to know in real time is possible.
Geofencing is one of the technologies being used by property managers to determine whether its properties are being serviced.
Property managers have been burned by vendors, eroding the trust factor. Dishonest contractors who had fixed-fee seasonal contracts may have underserviced their properties, while those with per-occurrence pricing either overserviced or sub-mitted erroneous or ghost invoices for work they claimed was completed. In either case, property managers need to know honestly and realistically what’s happening on the sites they manage so they can aggregate the information and provide necessary reports to other stakeholders. Simply invoicing is no longer an option. Instead, property managers may use any of the following:
- Signed service tickets by site/store managers are still used but are usually submitted electronically, although fax and mail are still used.
- Summary reports of completed work may be submitted by email, fax or mail.
- Before and after pictures provide validation that the work has been completed. These are often submitted by email or uploaded to a website portal.
- Live call centers for reporting work have largely been replaced by Integrated Voice Recognition (IVR) systems.
- Web portals allow the vendor to log in and submit service details directly into the system. They’re also used by some property managers for vendors to self-service contracts, insurance certificates and other required information.
- E-invoicing is relatively new and has been made possible due to the integration of technology that can capture real-time information.
- Smart devices (i.e. tablets and smartphones) are the latest technology that allows a vendor to report completed services via a custom app, entering service data. Combined with geofencing sites, GPS-enabled apps allow the property manager to determine in real time which sites have been serviced, or perhaps more importantly, those that have not.
Ripple effects of implementation
Your client’s decisions will impact your business as you adjust your processes and train to ensure compliance with their new technology. If your client experiences quirks and issues on their end, the ripple effect will be felt throughout your organization. Try to anticipate what the impact will be and what processes you will need to have in place for a successful implementation. Understand who will be impacted, what their role will be, and how you will audit the new processes. What new forms, processes or checklists will they be working with, and what training will be required?
Front office/administration: Manage user names/passwords for various systems, collate service information, generate reports, ensure all appropriate data has been entered into spreadsheets/databases/Web portals, manage invoicing and receivables, as well as contract compliance.
Dispatch: Shared responsibilities for managing service information, special requests and reporting procedures; handling exceptions during storm events; and ensuring all real-time information is being submitted.
Field crews: Collect and report service information accurately and properly via the various methods that may be required.
Fleet & equipment: What modifications to your vehicles and equipment may be required for reporting? GPS systems may be vehicle-mounted, while cameras and smart devices are mobile. Determine what equipment you will need to purchase and how it will be administered.
Management: Decisions related to level of investment, process development and implementation, hardware/software purchases and ensuring consistency.
Doug Freer, CSP, owns Blue Moose Snow Co. in Cleveland.