An estimated four out of five businesses manage their company cars or not they want a black car. Software can help. without the benefit of fleet management software; if you’re one of these, consider this: switch the financing of one £40,000 company car – say, a director’s saloon – from outright purchase to contract hire and you could save £2,000 over a three-year period.
Not worth bothering about? Then apply the mathematics to the rest of the fleet and you start to rack up serious money. On a middle-of-the-range motor the three-year saving could be £1,000 just by changing the financing approach.
Then comes a whole raft of other issues – whether it is most financially beneficial for the company and the driver to have a car or cash equivalent; whether drivers should make a contribution for private motoring and, if so, how much; whether the fleet is renewed at a time to reap the optimum second-hand price. Taking this into consideration, it is difficult to see why only one in five companies use fleet management software to make the task easier.
Let’s face it, managing company cars is a messy business. And the mess comes from two sources. First, successive governments have made running company cars more complex and expensive. Secondly, companies themselves often add to the confusion by erecting a welter of in-house regulations and controls about the management of the fleet.
So switching to fleet management software should be a natural choice – if only that wasn’t a messy subject too. With packages costing as little as £99, but prices for complex bespoke systems running well into five figures, it is an extremely complicated decision. Moreover, with as many as 47 different packages listed in a recent industry software guide, there is an ever-present danger of selecting an ancient package from a company soon to quit the business. Indeed, we found some of the 47 had already quit.
No wonder an authoritative report on the subject from the Centre for Automotive Management, at the Henley Management College, declares: “Suppliers of the less sophisticated old-fashioned packages can take some solace that their market-place is, in general, a lot less sophisticated than the packages they promote.”
It adds: “With notable – usually large – exceptions, the UK fleet operator has yet to grasp fully the modern management and cost control techniques.
Many still base acquisition decisions on the list price of the vehicle or whether the MD thinks it’s a ‘good buy’.”
That just about sums up the traditional approach to fleet management.
Fortunately for those directors who want to squeeze the last drop of value out of their fleets, things are changing. The market is slimming down, there are fewer suppliers of better quality packages (see panel).
Secondly, there are signs that new technologies such as CD-Roms and the Internet are being used to deliver applications that can add real value to the process of managing car fleets. The main software suppliers have wised up to the fact that they need to address their users’ real concerns if they are to deliver software that provides real benefits.
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All this activity needs to be seen in the context of two significant trends. First, the number of companies using one flavour of outsourcing for fleet management is growing, points out Simon West-Oliver, UK sales manager for FCS which markets the Drive package. A minority of companies choose to outsource the total management of the fleet – which removes the need to choose fleet management software as well as many other decisions.
Others outsource elements of the task.
This means that an effective modern fleet management system needs links to other kinds of computer system in order to collect data. For example, it may need links to human resources systems for data on car drivers, payroll systems for P11D data and petrol company suppliers for downloading data on fuel card use. Notes West-Oliver: “The biggest new driver for fleet management software is whether it can integrate into the corporate IT strategy and manage all these outsourcing activities.”
The second key trend is the shift of fleet management software towards electronic commerce and trading as well as providing management information and reporting. Greg Connell, managing director of Car Fleet Control, one of the package suppliers vying for market leadership, says: “We are getting solutions coming onto the market which can transmit electronic requests for quotations or hire a car via the Internet. When this happens the software saves physical manpower. I can see management software applications actually becoming electronic fleet trading applications.”
Connell paints this picture of the future: a fleet manager wants a replacement car for the FD who stipulates it must be an Audi. The request for the car is transmitted to the dealer network to see which will provide the cheapest quotation. The FD accepts the cheapest quote and specifies the car’s colour and extras, also electronically. When the car is delivered the company is invoiced electronically and pays the bill the same way.
Although this is still some way off, it suggests that directors ought to be thinking about fleet management software in a more integrated way than is the case at present. In fact, as usage figures show, senior managers mostly don’t think about it at all. Given that expenditure on cars is one of the largest controllable expenses, the use of effective software could become increasingly important.
Your company may already use fleet management software. In which case, the priority is to discover what value the software adds to the management fleet and whether that value can be enhanced.
Focus groups run by the Centre for Automotive Management found that managers of both large and small fleets defined a number of “must haves” for their software. These included tools for cost analysis, tools for listing and recording, statutory reporting for tax, maintenance cost presentation, fuel cost records and analysis, integrated inputs for fuel card data, cost centre analysis, accident management reports and exception reporting.
As managers in the focus groups pointed out, this last function is important because when you’re running dozens or even hundreds of cars you want to know what’s going wrong, not what’s all right.
Alternatively, you may be planning to move from using some other form of IT fleet management support to a specialist package. For example, Gatwick Air Traffic Control recently converted its fleet management from Excel spreadsheets to Auto:Manager, a low-cost package which now boasts 2,500 users.
Another company to switch was Rank Leisure Machine Services, which moved from an old in-house system to Car Fleet Control’s Fleetbase 3 to help run its 1,200 vehicle fleet. Fleet manager Steve Rhodes drew up lists of “must dos” and “nice to haves” for the software as he reviewed six possible choices. “Must dos” included information about driver and vehicle history and data collection leading towards P11D reports at the end of the tax year. “Nice to haves” included importing information from other sources such as fuel card providers and the ability to manage maintenance.
But Rank Leisure’s experience underscores the perils of moving to new software. At the time of writing, the new package was still in an extended parallel run with the in-house software as teething problems were being tackled. But Rhodes was confident the problems would soon be resolved.
Most fleet decision-makers will find themselves in the position of choosing fleet management software for the first time. Again the important point is to focus on those critical “must haves”. But it is also important to identify the kind of benefits the software might deliver.
Debbie Webber, who manages a 100-car fleet in the finance department of Continental Tyre Group, finds access to information one of the biggest benefits. “When I took over, all information relating to the fleet was kept on paper in large files,” she says. Webber can now use the software to produce automatic breakdowns on cost by vehicle.
Because Continental Tyre Group finances its fleet through contract hire, the software helps Webber keep track of vehicle replacement schedules.
“For example,” she explains, “if I see that a vehicle on a three-year 90,000 mile contract is doing less than expected, I can contact the hire company and reduce the mileage to, say, 70,000.”
But Continental Tyre’s experience also shows how fleet management is often spread around an organisation. For example, the personnel department currently handles P11D calculations manually. Not surprisingly, Webber expects to take over this task soon.
The future should see fleet management software suppliers seeking to make their systems easier to use and harness new technologies. For example, Auto:Manager now offers a service over the Internet aimed at smaller fleets.
The user downloads encrypted data each month which is held on Auto:Manager’s server. The company then sends back reports.
The company is now planning to launch a service in which users with smaller fleets can provide monthly data on a floppy disk or in an e-mail attachment.
Again, Auto:Manager will process the data and send out a report on vehicle comparisons together with data needed for P11Ds and P46s.
Meanwhile, Newcourt Automotive Services has developed a CD-Rom which contains details of all car makes and models available in Britain. The user can look at the basic cost, see how much the price rises by adding extras and calculate the monthly cost over, say, two or three years, taking into account likely depreciation and, if desired, maintenance. At the moment, the CD-Rom is available only to Newcourt clients. But, says managing director Colin Tourik: “If somebody wants to become a customer of ours and would like to play around with it for a few months, we supply it.”
On the whole, the future doesn’t look that bright for the company car.
Both tax and environmental pressures are likely to increase the cost of running fleets ahead of inflation. In this situation, FDs, HR directors and fleet managers are going to need all the help they can get to control costs. Using fleet management software either for the first time – or more effectively – could deliver some unexpectedly large savings.
SUPPLIERS WORTH LOOKING AT
Fleet management software comes in different flavours. Some packages offer a range of facilities, others focus on specific tasks such as developing car purchase quotations. Size of fleet is an important factor when choosing packages. Software suppliers define this in different ways, but the consensus is that smaller fleets are under 250 vehicles, larger over 250. The following are some of the main suppliers:
– Auto:Manager At £99 plus VAT this is one of the cheaper packages available. Extensive functionality including vehicle and driver summaries, accident management and fuel cost records. Permits import or export of data from spreadsheets.
More than 2,500 users.
Auto:Manager: (01427) 678585.
– Fleet Extensive suite of programs for managing cars, vans, trucks and plant.
Modules include fleet administration and maintenance, workshop management, accounts, office facilities – such as e-mail and meeting organiser – and management information.
Kerridge Computer Company: (01635) 523456.
– Fleetbase 3 The system stakes a fair claim as one of the market leaders. Vehicle and driver information, maintenance tracking, driver and vehicle allocations, detailed expenses costs and mileage information among extensive functionality.
More than 2,500 users.
Car Fleet Control: (0121) 717 7444.
– Gamma Fleet Manager Handles vehicle and driver management, fuel and maintenance and financial control. Fleetlite is for under 250 vehicle fleets, Fleet Manager over 250. Gamma voted “best fleet management software company” by Fleet News in 1993 and 1995.
More than 200 users.
Fleetlease (UK): (01635) 524411.
– RoadBase Modules include vehicle inventory, costing, repairs and maintenance, fuel and oil, stock control and accidents. Several hundred users.
Chevin Computer Systems: (01773) 821992.
– Vehicle Fleet Manager Extensive modules cover areas such as vehicle ordering and delivery management, vehicle information, driver information, fuel management, maintenance management and accident management. Also handles commercial vehicles.
Vehicle Cost Manager handles all the financials and reporting.
VRS Europe: (0171) 355 3070.
A business car model that calculates the most cost-efficient option for an employer supplying company cars. Calculates the complex car or cash equation. Calculates costs of different methods of financing – contract hire, contract purchase, outright purchase.
Newcourt Automotive Services: (0161) 490 4900.