IT-on-Prozac approach to technology works wonders

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Bausch & Lomb wanted interactive web-based reporting to help manage its drivers and fleet costs. Here we look at how B&L saved 15% on its $10 million budget with interActive.

B&L was looking for a company with the kind of vision it promised its customers: perfect. And when John Majchrzak, manager of B&L’s global fleet, sat down with an executive from PHH Fleet vehicle management services to hammer out a leasing deal, that’s exactly what it got.

“We were looking to replace our supplier of leased vehicles,” said Majchrzak. “I was having dinner with a sales VP from PHH, and some guy walked in and introduced himself simply as Mark. He wanted to know what I was looking for. He wanted to know what was important to me.

“I told him I wanted interactive web-based reporting to help manage our drivers and our fleet costs, and I wanted something that was real-time,” said Majchrzak. “Mark just smiled.”

The mystery man was Mark Miller, CEO of PHH, and he was smiling because he knew he could give Majchrzak exactly what he was looking for.

That was PHH InterActive, a password-protected extranet site that delivers real-time information from PHH’s database to customers eager to get their hands on maintenance histories for their leased cars and trucks or driver safety records of their employees.

Customers who used to receive reams of hard-copy reports and stacks of floppy disks with month-old data can now monitor repair transactions minutes after they take place. They can predict when a vehicle will need preventive work, identify a driver who purchases high-octane fuel unnecessarily or observe a trend in increased rear-end collisions.

They can also use interActive to store their own vehicle data in PHH’s data warehouse and create customized queries in the application. And to make global operations easier, they can see the reports in any currency.

Saving time and money speaks volumes to customers whose fleet costs are often a significant portion of their total budget.

“Now when our sales VPs want to know if salespeople are making calls in their territories, I can find out where they’re fuelling up,” said Majchrzak. “Our productivity has increased enormously because the data is always right there. We’re not on the phone with PHH constantly requesting information.”

PHH’s business model is a simple one: the company acts like a giant dealership by purchasing large numbers of cars and trucks from manufacturers such as General Motors and Ford, and passes on the benefits of its volume discounts to customers. Using call centers and branded credit cards, the PHH database tracks driver expenses and gives customers access to that information via its web-based InterActive system.

“One of the biggest things a fleet management company can do for its customers is to pull together all the bits and pieces of information – literally thousands of transactions every month for some companies,” said Kaman Industrial’s Reynolds. “In the past, we had to keep files with thousands of pieces of paper. Now it’s all on the Internet. I can determine a vehicle’s operating costs and its associated expenses. I can look at our fleet business and compare one region with another. Or I can compare different types of vehicles and calculate their total cost of ownership.”

Most of PHH’s closest competitors – General Electric’s Capital Fleet Services, Automotive Resources International and Wheels Incorporation – have moved to web-based interfaces, but have yet to produce the kind of real-time information that InterActive provides.

So how did PHH pull off what its competitors hadn’t yet imagined? “We asked customers what they valued,” said a spokesman. “We asked them what issues they were wrestling with today. What they worried about for the future. How PHH could help. Then, when customers spoke, PHH Listened.”

“PHH’s competitors tend to give you what they’ve put together, what they assume you’re looking for. But nobody is really asking,” said Reynolds.

Throughout the 70s and 80s, PHH added a variety of ancillary services – vehicle maintenance repairs and expense reporting – as a logical extension of its primary leasing business.

The company established a call center in 1975 to help customers get their drivers’ vehicles towed and repaired or replaced. The call centres answer phones, access vehicle histories, locate nearby garages, determine warranty coverage and negotiate with repair shops for the best price. The call centers also use voice-recognition technology to help weed out calls that really shouldn’t go to the mechanics – policy questions, for instance, or vehicle registration information.

PHH uses volume discounts to save money for customers and turn a tidy profit for itself. But in addition to revenues, PHH also collects information. Lots and lots of information. It tracks vehicle repair costs from its call centres and monitors drivers’ spending habits from its gas and credit cards.

“It wasn’t until we recognized how much customers valued that information that we realized we had something very powerful,” said CIO Larry Kinder.

That realization was the genesis in 1996 of PHH FleetLine, a client / server system to enable customers to access the details of their fleet reports online. “We had to install 11 diskettes on our customers’ PCs to get the application up-and-running,” said Kinder, “then they could download the data once a week and look at it themselves.”

But FleetLine was far from ideal. The untidy tether to PHH’s database was annoying both to PHH and its customers.

“We couldn’t send them all the data they wanted because their PCs weren’t powerful enough,” said Kinder. “Their hard drives couldn’t handle the years’ worth of information we had collected. Besides, we had more data than we could ever dump in a nightly download.”

So Kinder challenged his staff to take FleetLine a step further. He asked, “How can we step away from this model and give our customers continuous access to our data warehouse?”

Jim Trotman, PHH’s lead applications developer, who had a handle on both IT and business, to begin work on an Internet version of FleetLine and to talk with customers.

Armed with feedback about a variety of transactions, PHH decided that its maintenance program – the records that tracked vehicle repairs such as oil changes, timing belt replacements and new tires – was the best candidate for an initial test project.

They created the paradigm that says, ‘We will do the work for you, and you can access your information anytime, from anywhere’. And the rest is history.

Early adopters of business-to-business e-commerce struggle with being of two minds: while deciding what business they’re in today, they also need to keep a finger on tomorrow’s pulse. Will familiar business models look the same two years from now? Or will they even be viable?

When PHH started listening to its customers, it became a leader in its industry. Here’s how CIO Larry Kinder got there.

1. Begin with the end in mind
Start by answering some basic questions: who are you trying to serve? What are you trying to achieve? “Once you’ve done that,” said Kinder, “people will see that, despite everyday distractions, they need to think about the greater good.”

2. Think win-win-win
Get business talking to IT, and IT talking to customers. “Five years ago, it was us and them, pointing fingers,” commented Kinder. “Now it’s a partnership. It changed because we chose to focus differently; we didn’t see an application, we saw our application. And when we got it right it was everyone who got it right.”

3. Avoid the bleeding edge
Customers don’t want to know what you’re going to build two or three years from now; they want to know what you’re giving them today. “You have to take an IT-on-Prozac approach to technology – no real lows, but no real highs, either,” added Kinder.

4. Hire people who can deliver
“We have never gone over budget or delivered late on a project,” Kinder related. “We would be fired if we did. We set our own deadlines, so we have the responsibility to meet them. PHH is tenacious about budgets and deadlines, because it walks the fine line between leading and bleeding edge. We want to give our customers state-of-the-art information, but we don’t want to increase our own costs by doing so.”

5. Connect the dots
When you put together three groups of people with different backgrounds and ask them to talk about abstract things, they’re going to speak different languages, often without even realizing it, according to Kinder. “So we never go into a room with a blank screen. We always come in with prototypes, right from the start.”

6. Be unwilling to fail
If customers have an issue about changes you feel you need to make, ask people to brainstorm ways to make the customer’s transition a good one.

7. Customize for the masses
Thinking like a mass-marketer won’t get you where you need to go in today’s collaborative world. “We do a lot of testing,” said Kinder, “and then we ask for a lot of feedback.” Customers like talking about doing business on a day-to-day basis, how they’re paying their bills, how they’re interfacing with their own customer base.

8. Show them the money
“We open our kimono around costs,” Kinder admitted, “to show customers details around each transaction – not because they demand it, but because we’re proud of our business proposition. Customers pay for us through their cost savings. It’s a win-win situation, and we want them to know it.”

9. Address security
No matter what your product is, customers won’t use it if they don’t feel safe. “We are certified by ICSA – the Internet Computer Security Association,” said Kinder. “We pay them every month to try to hack our site. We’re now up to 128-bit encryption, and putting that in place helped jettison our e-commerce strategy forward.”

10. Fail fast
Make business decisions unemotionally, and don’t keep going down the wrong path just to save face, “Cut your losses, and cut them fast,” is Kinder’s advice. “Make decisions about where you can fail and where you can’t. When we can’t afford to fail, we pull together and find the areas where we are vulnerable. So instead of putting our fire hats on with the customer later, we take the time to make the right decision now.”

PHH Vehicle Management

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