The Future is Mobile and It s Already Here

Transcription

1 The Future is Mobile and It s Already Here Excerpted Remarks by Herc Rentals President and CEO Larry Silber ALH Conference Miami, Florida, October 11, 2016 Note: Corresponding slides are noted by numbers in the text Good morning. (1) As many of you know, on July 1, 2016, Herc Rentals became a separate, independent, publicly traded company following its spinoff from the Hertz car rental business. Our parent entity is Herc Holdings Inc. which is what our shares are listed under but we operate as Herc Rentals. We are a company with approximately $1.7 billion in revenues; 4,700 employees; and 280 branch locations 270 of which are in North America. While we feel as though Herc Rentals is a brand new company, we have more than 50 years in the equipment rental business under the Hertz Equipment Rental brand (2) There are many other aspects of managing an equipment rental firm that we could discuss and which could easily be the subject of a full presentation. I would like to spend my time talking about what often is an underappreciated part of any business, and the equipment rental industry is no exception. I m talking about Information Technology and in particular the way IT is deployed to make our businesses run more efficiently and to help improve the way we interact with and serve our customers. And that will lead me to the discussion of mobile technology. (3) I will start with what we consider to be the Big Idea which is the Cloud and the Internet of Things. When we started to identify all the tasks associated with separating from Hertz car rental, we knew that IT systems would be the most challenging to untangle. And as we started down the path, we realized that we had an opportunity to completely rethink our IT model. That led us to the decision to move all of our IT infrastructure into the Cloud environment. The rationale was simple and similar to the rationale for renting equipment why invest in data centers, servers and all of the attendant maintenance requirements when we can operate more efficiently using a third party s equipment and services, scale up as necessary and still have the ability or even better capability to make rapid updates and changes.

2 2 Ultimately, we consider that to be a competitive advantage in terms of cost, efficiency and business velocity. The Cloud gives us advantages that allow us to integrate all the tools and applications necessary to conduct our daily business and to deploy them rapidly across all of our platforms from the desktop to smart phones. It also allows us to seamlessly implement the Internet of Things with respect to equipment, such as telematics that enable comprehensive fleet management, diagnostics and analytics. (4) As a result, when we decided to move entirely to the Cloud, we established the premise for a Mobile-First approach to developing our technologies. And, in fact, that is our philosophy. Any tool or application we develop for customers or for field-based employees must meet the requirements of mobile devices. If it works on that platform, it will work on the more traditional platforms. So, that s where we begin our technology deployment. Why do we insist on this Mobile-First approach? First, our customers are increasingly relying on mobile devices for messages, , information searches and transactions. Today more Internet searches are performed via mobile than by desktop users and that trend will only continue. As a result, mobile devices are becoming the screen of choice. If that s how our customers are operating, that s how our businesses need to adapt. Second, our industry is kinetic. Our most important work is not performed behind a desk, but in the field. We owe it to our customers and our employees to deliver tools that are designed for their work requirements. Third, our future success is tied to convenience, on-the-go data and information access, and a mindset that service is the core differentiator in our industry. Given this scenario, mobile technology becomes a prime criterion for success. And, as we continue to advance our mobile capability, we expect to realize ongoing benefits, whether that means making transactions easier or driving operational efficiencies. Let s take a step back and look at what mobile technology does for us in general. Fundamentally, mobile is a link that bridges on-the-go convenience with the trend to selfmanaged, disintermediated transactions. Mobile also gives us opportunities to manage our fleet and business with greater efficiency.

3 3 When customers can see what equipment is available, compare rates, select equipment, schedule delivery, and extend or release equipment without calling and or visiting a branch location, we provide a service that makes the customer more efficient and effective in running his or her business. At the same time, mobile technologies offer efficiency for our business as we: Automate manual tasks Generate data that helps us understand dynamic market trends and customer histories Establish and track KPIs for fleet trends and equipment usage View real-time operating conditions and alerts Receive notifications for field service and preventive/scheduled maintenance And enable telematics for equipment tracking and geofencing, among other benefits. (5) Some of this is better explained with a real world example and I m pleased to refer to our mobile app in doing so. Like most mobile apps, ours operates on both the ios Apple platform and the Android platform. We designed the app using a B2C model meaning that we wanted to provide a user experience that was comparable to what customers expect when using apps for retail transactions. (6) You ll see some of that B2C philosophy reflected in our app s features, including the ability to: Search our entire equipment catalog See rental rates, by the day, week or month Select your preferred branch and to book by location Review equipment specs See pictures of equipment Submit a live reservation directly into the system, including the start and end date Add the requested equipment to the shopping cart and checkout And extend or call equipment off rent. (7) We have also incorporated other conveniences, including: Driving directions using a map app A one-click-to-call functionality A My Preferred Branch Location selector A GPS-based location finder from the mobile device functionality List of branches by state with individual branch details Contact-us functionality And a loyalty/incentive program. (8) Of course, we would like our customers to return to our app regularly and frequently to conduct business with us.

4 4 That led to an account management capability to help customers keep track of their Herc Rentals activities, including the ability to: View equipment on rent Receive alerts for overdue items Set schedules for equipment pickup Drill into contract details individual contracts And see an account summary, including open invoices. So, all of the previous was designed with the customer in mind. (9) But mobile also gives us better insights for managing our business and for helping customers manage their businesses. Our Herc on the Go app, based on telematics technology, is a great example, allowing us to simplify the delivery process, reduce the time spent on administrative tasks, and overall improve our productivity. For example, we have established a mobile workflow, including the ability to: Capture electronic signatures from customers at delivery and pickup Capture the before and after condition of equipment via photos Track driver ETA for delivery or pickup See the real time location of the driver (10) Our mobile-enabled ProControl telematics and logistics technology offers deeper insights about and management of equipment and fleets, including: Real time equipment utilization The ability to track and trace equipment Alerts specific to individual equipment, with details and histories Geofencing, which allows setting operating-area parameters and alerts when equipment transits out of the designated area And dashboards that provide a quick view to key operational data. Maybe much of this seems familiar to you. After all, if you are already using an app from Starbucks, Amazon or some other major retailer this is already part of how you operate. And, in many respects, what we have developed is not revolutionary. But for the equipment rental industry, it s relatively new ground. The trick for us is to keep imagining new features that give our customers a reason to incorporate mobile into their daily work flow. And we also must keep our back end IT data infrastructure up to date and scalable to allow the front-end mobile experience to reflect the most current and best technology in the market.

5 5 To that end, we knew that when we first released our mobile app in July 2016 we would begin the continuous process of updates and improvement. So, what you see next year from us will probably look a lot different than you what you see today. From our perspective, the investment in mobile has become a central component in fulfilling our customer service mission. It s how our customers already operate, and it s one of the ways we will differentiate ourselves today and in the future as we continue to build new capabilities into the platform. (11) We can t entirely envision how the technology will evolve, but we can imagine some ways mobile will be adapted to the equipment rental industry. For example, wearable technology connected to the mobile app may give us important information about the equipment operators range of motion, vertical and horizontal positioning, where they are looking, the conditions in which they are operating and other data that can continuously improve safety. Mobile apps are likely to offer comprehensive, all-in-one equipment catalogs, complete with training and safety content, things to know about the equipment, what you can do with the equipment, and recommendations for other equipment or gear the user might need. As speech recognition accuracy gets better it is predicted that in five years time at least 50% of all searches will be by voice. This will enable mobile app users to request location, usage, and other important information without having to type or navigate through menus and drop downs. Virtual Reality can be used to visually depict specific equipment, which, when coupled with a virtual assistant, may help identify and resolve mechanical issues. This would also provide us the ability to create virtual guided trainings, educational videos, and safety instructions. And, we should expect that Artificial Intelligence capability will continue to evolve, enabling mobile apps to perform business processes that currently take hours or days such as actuarial analysis and credit processing to take place instantly. These extensions of current mobile technology may seem like distant or remote possibilities. I ve seen enough in my days to believe differently. Ultimately, the utility of a mobile app comes down to functionality and specifically enabling the user to do something better, faster or more efficiently because of it. And as future user expectations evolve, so must mobile apps. So, fundamentally, successfully implementing a mobile first strategy depends on giving the user a reason to download and use the app. It s not enough to provide superior content, discounts, loyalty programs or other incentives to try the app.

6 6 Eventually, the app must offer functionality, ease of use, and operational benefits that encourage the customer to return again and again. (12) I will close with five observations. First, as the title of my remarks suggests, the mobile future is already here. Every day more of the things we do outside the mobile environment will soon become routine inside the mobile environment. And as much as we believe we are leading the way in embracing mobile, we are in fact being led there by our customers and our workforce. Second, today in the equipment rental industry, mobile technology and in particular a transactional mobile app is a differentiator. In the near future, it will be table stakes as customers increasingly transact and perform their work off their mobile devices. Third, mobile technology is the front end of a much more intensive back end IT data infrastructure. The back end technology has to be sound and managed properly in order for the front end mobile piece to work as users expect it to. That means having a high-performance IT function is critical to success. Fourth, you can t work backward into a sound mobile strategy if you want to create a bestin-class user experience. IT decisions need to be made with mobile as the primary strategic consideration, which will then cascade across all other platforms. And finally, there is no such thing as a one-and-done mobile app. Every mobile app will have multiple generations incorporating updates. As our mobile app continues to evolve, we will be incorporating feedback from our customers and partners. Many of you here today are just as important in providing valuable insights that will lead to next generation upgrades in our mobile app. That may sound self-serving, but remember that our success in this area ultimately accrues to your success. We look forward to working with you, and with our customers, to develop a mobile mindset that is the equal to the leading consumer-brand retailers. After all, our customers are already operating under that expectation.