Outpacing the Competition

By Eileen Feretic  |  Posted 2009-09-09

In the competitive, fast-paced car rental business, technology is the fuel that keeps companies running. That’s certainly the case at the Avis Budget Group, which includes Avis Rent A Car and Budget Rent A Car. In fact, the company, which has more than 6,900 rental locations, more than 400,000 vehicles and some 24,000 employees, constantly strives to outpace its competitors by testing and implementing leading-edge technologies.

“We’re always on the cutting edge for new technologies that can help us improve the customer experience or cut costs, so we’ve established a process that enables us to pilot technologies in order to gauge customer reaction to them,” says John Turato, vice president of technology for the Parsippany, N.J.-based company. “We’ve been the first to market with some of these technologies, including our Rover and WOW systems.”

Rovers are wireless handheld devices that Avis uses in its lots to electronically process car returns by connecting to the company’s data center. “Recently, as part of the Rover system, we introduced E-Receipts, a system that sends electronic receipts directly to a customer’s e-mail so he or she doesn’t have to worry about losing a receipt,” Turato explains. “We’ve gotten really good reactions from our customers on this program.” The

E-Receipts application uses Avis’ OMEGA (One Merged Enterprise & Global Architecture) service-oriented architecture (SOA) components.

The second technology, Wizard on Wheels, or WOW, is used on Avis’ airport shuttle buses. “Basically, WOW allows us to handle the rental agreement paperwork for people enrolled in our preferred customer programs while they’re on the bus and then drop the individuals off right at their car, bypassing the check-out counter,” he says.

Innovation and Infrastructure

But these technologies are only the tip of the iceberg. “We have gone through multiple iterations of automation and innovation,” Turato says. “We’ve upgraded our technology infrastructure and brought it into the 21st century. Our objective is not only to create new areas to innovate, but also to continue innovating on our existing products.”

Though Avis’ data center has been outsourced to IBM for several years, Turato’s group has its own lab and systems to test new technologies and work on projects. “Our lab is where we do applied research and try out new technologies,” he explains. “We do our brainstorming there, and we have vendors come in and demonstrate their products for us.

“We take our existing technologies and components and innovate by using wireless technologies. When new applications arise, we’re already experienced in those wireless technologies and are able to introduce them quickly into the various platforms.”

The lab also looks for ways to do cross-channel consistency so that the customer experience on avis.com and budget.com will be similar to what they experience at the two companies’ rental counters and other touch points. “That’s a work in progress and is based on our OMEGA SOA,” Turato says. “We’re also working on new projects. Some haven’t been introduced yet, but we’ve started rolling out others, such as thin clients and the software that drives them. We’re also replacing the user interface for our customer service agents.

“Today’s interface is basically a green screen, and we want to provide more of a GUI-based system. That will enable us to deliver more tools to help the customer service agents do their jobs more effectively. These tools will help them get to know our customers better by providing more CRM capability. It will also help our agents sell additional ancillary products, such as rentals of GPS devices.”

Currently, the Hewlett-Packard thin clients are being installed in new Avis and Budget locations, but ultimately, the thin clients will be at all company locations, including airports and suburban offices. “Seven or eight large airports have already been converted, and we’ll continue adding more, as well as implementing thin clients in the small locations,” Turato says. “It will take a couple of years before the thin clients are fully implemented.

“We have not released the user interface yet, but we plan to pilot it toward the end of the third quarter. We’re going to go slowly. We believe there will continue to be some green screens used for certain functions, but the main rental screens will go GUI eventually.”

Wireless is another technology that’s being implemented on a gradual basis. The company has already offered Wi-Fi capability to its customers in some locations, but customers have not expressed a great need for it at Avis and Budget offices.

“For the most part, we use Wi-Fi operationally,” Turato says. “For example, with the Rover system, those hand-held devices communicate over the Wi-Fi network, and our WOW system also uses Wi-Fi when a bus is in the lot. When it’s off the lot, the system communicates via wireless WAN. We also use wireless in our suburban locations, enabling the terminals to talk to the router and the router to talk to the data center.”

Of course, the use of wireless technology does create some security issues, but the company keeps on top of them. “We spend a lot of time and effort on security, since we handle credit card data,” Turato says. “It’s all vetted through our information security department.”

Working as a Team

At Avis Budget Group, technologies are integrated into the business—not just in terms of the functions they provide to the business, but also in the way the IT and line-of-business people work as a team. “We work cohesively,” Turato says. “If there’s a new problem to solve, we work on it together.

“We have a formal process whereby projects come from the business to us. My job is to take a look at technology and our business strategy and determine how technology can be brought to bear on our problems and opportunities.”

SOA is a prime example of using technology to deal with business challenges. Key drivers are the desire to have all the company’s customer data in one place, as well as the need for innovation and cost reduction. “This involves surfacing new opportunities for common services that get reused over and over again,” he explains.

Avis Budget Group has been involved with Web services for about 10 years. “We participate in the Open Travel Alliance [OTA], which was formed about 10 years ago to develop XML specifications for transacting travel business via e-commerce,” Turato says. “XML specs were developed and ready to use somewhere around 2001, and we began using a function called Direct Connect, which allows two B-to-B partners to connect directly using the public Internet.

“That saves a lot of money for our travel company, since there aren’t any booking fees. It’s the same concept as having somebody book a trip on a Website. We were one of the first companies to do that, and we’ve been leading and innovating in that area ever since.”

One example of Avis’ use of the OMEGA SOA is the insurance replacement application, which handles situations in which a customer’s car is in a crash. “Think of it as a direct connection between us and an insurance company, as well as working closely with car dealerships and collision shops,” Turato says. “That’s an area of expansion for us. We can leverage this service for other so-called checkout services as they come along.”

One of the reasons behind the success of SOA at the Avis Budget Group is the close collaboration between the technology and business groups. “The business worked hand in hand with us on this,” he says. “Everyone understood the mission, so there wasn’t a problem when it came time to get funding for this project.”

The projected ROI also helped sell the project to management. “In the old days, a partner connection was, say, a $50,000 project,” Turato recalls. “The first couple of Direct Connects were around $20,000, but now, if it’s a plain-vanilla Direct Connect, it could cost less than $1,000. So SOA is very cost-effective, and when you have a success like that, business folks tend to bring you other projects.”

To measure the cost of reusing services, the Avis Budget Group assigns a complexity rating of from 1 to 3 points for each service. “Each point of complexity is worth $5,000,” Turato explains. “Then we multiply the complexity rating by $5,000 and multiply that by the number of reuses. That gives us the dollar value we have saved by reusing a service. For example, on a complexity scale of 1 to 3, our location service is rated a 2 and has been reused six times. That works out to 2 x $5,000 x 6 = $60,000 saved.”

What’s Next?

Turato’s group is certainly not resting on its laurels. “Now that we have the thin clients in the field and are finalizing the user interface, we’re working on other innovations designed to improve the customer experience and reduce costs,” he says.

“We view the thin client and associated software as a platform to let us do a lot of other things. In fact, we are piloting a couple of innovations that will draw from the common services. We have not released information about all these projects yet, but we hope to introduce them in the third quarter.”

One project that Turato is able to make public is a signature capture application. The way this will work is that the customer service agent and the customer will each have a screen to view. The customer will be able to see information, such as the rental agreement, and will be able to sign the agreement on the signature capture pad.

Avis Budget Group is not letting the challenges of the 2009 economic climate put a damper on technology innovation. The company views customer satisfaction and loyalty as the foundation of its success. However, at the same time, management realizes that, in this economic environment, it must operate leaner and smarter.

“Some projects are on hold,” Turato acknowledges, “but we are moving forward with a number of strategic initiatives that will enable us to continue pleasing our customers and growing our business, while also keeping costs in line.”

The goal? To continue outpacing the competition.