With the continuing advances in technology in the collision repair industry and growing customer demands, keeping your body shop well-organized is important to keep from being left behind.
It’s difficult keeping paperwork straight and tracking your profitability and rate of return at the speed necessary to keep your business at the top. That’s where computerized estimating and management systems come into play.
The System Decision
How do you know which system to pick? With estimating systems from four major providers—ADP, CCC Information Services, Comp-Est and Mitchell International—and at least 20 management systems available at any given time, it can be confusing and overwhelming.
There are many factors to consider when deciding which systems—if any—you need. Most important is to know what you need right now while keeping your growth plans in mind. If you don’t know, then you need to figure this out BEFORE you pick a system. “The critical questions you have to ask are, ‘What do you need right now?’ and ‘What are you going to need to accommodate your needs in the future,’” says Rick Tuuri, senior director of industry relations for San Ramon, Calif.,-based ADP.
Essentially, a shop owner should have a three- to five-year plan for growth so when a system is purchased, it will have functionalities that might be needed in the future. “You need to think about other systems that my need to interface with them,” Tuuri says. “You have to take a look at the ability to communicate and trade data with various training partners. Your training partner’s template may get bigger, or there may be things that you want to do in the future that you don’t have in your current management system. You need to know what the system is capable of.”
Traditionally, management systems have served as a business tool to help track and ensure profitability as well as to interface with estimating and accounting systems. Shop owners are able to check profitability as estimates are written. “It serves as a focal point as a vehicle progresses through a shop,” says Phil Capon, senior director of training and consulting for Mitchell International. It also allows a profit and loss (P&L) sheet—a job-cost summary—to be printed to ensure that each individual area (body, paint and sublet) was profitable. If not, a shop owner is able to see why not.
In the current direct repair program (DRP) environment, not only having but having the right estimating and management systems is crucial, Capon says. Some shop owners have estimating systems with management capabilities so profit can be looked at, he says. However, they do not do specific job costing—which makes it more difficult to grow the business. Most shops aspire to this, but because of the profit margin situation, it can be tough, especially because you have to get more work in and out of the door in a quicker amount of time, Capon says.
Estimating and management systems are complementary, and overall, all management systems and all estimating systems, individually, essentially perform the same functions. But it’s important think about core competencies. “With an estimating system, it’s a commodity…you have to have it,” Capon says. “It’s necessary because you have to write an estimate to get a job,” Capon says. “A management system is more of a want than a need, but it’s a need if you want to grow the business. The paperwork involved in processing a claim makes a management system a necessity.” These systems allow techs to systemize repairs, job functions, etc., as well as daily and weekly reports.
“You don’t have to wait until the next month to get a P&L report,” Capon says. “A management system allows you to keep a pulse on your business.” In essence, it’s a temperature reading of where you are, he adds. “In order to reach target goals, you have to know where you are,” he says.
Management systems are also used to help compile information, such as where a shop uses its advertising dollars. When filtering data through the system, you are able to get a report on referral services such as the Yellow Pages, which insurance companies and dealerships sent you work, etc. This type of functionality can be very valuable to determine the efficacy of referral relationships and advertising sources.
Do I Need It?
Although each management system has its own specific utilities, they are similar in that they all have production modules and are able to process a repair order from beginning to end such as the job dispatch, allocation of a tech, parts ordering, pre-closing and closing the repair order, and the closing out to accounting.
There are also similarities in that if a shop owner goes out and buys a management system to change his or her business, “It’s not going to do it,” Capon says. “The training and implementation is where it’s going to make or break them.” A computer system won’t help a shop or its tech unless proper training has taken place—it’ll just add confusion.
“You have to be organized enough to use one,” Capon says. This means shop owners must look at their return on investment, what timesavings they will gain in processing repair orders, what the paperwork flow is and how it will change. “They need to know specific issues they want to address in a management system and ask the salesperson, ‘How is it going to change my current work flow?’ Some shops just aren’t ready for a management system,’” he says.
So how is a shop able to determine whether it’s ready for a system? It depends on the volume of work the shop is putting through the repair process. Typically, top-end shops—$250,000 per month and up—need a management system of some type, Capon says.
ADP’s Tuuri says shop owners should look for a system that is intuitive and easy to use. “You have to know what the training looks like,” he says. “You can’t just buy a system. You have to understand the support model: ‘How am I going to be trained?’ ‘How long will it take?’ ‘Where is it?’ and ‘Once I’m trained how long until it’s fully ramped up?’ Management systems aren’t cheap. You want to make sure you’ve made the right decision.”
Collision repair facilities of all sizes use these systems, and different body shops have different resources. But as with any software application, the whole concept is to streamline current processes—i.e. be more productive, says Don Argento, director of marketing and communications for Columbus, Ohio,-based Comp-Est Estimating Solutions. “Ideally, you should be able to spend considerably less time writing, correcting or filing estimates,” he says. “…and if a shop’s current estimating processes are prohibitive of its ability to actually perform repairs, then it may be time to consider ways of simplifying the software.”
Bruce Yungkans, product manager for Chicago-based CCC Information Services, couldn’t agree more. “There are lots of ways to manage a business,” Yungkans says. But to justify purchasing a management system, he says, it has to be a real asset to the shop. Not only must you have a very labor-intensive shop, but also you have to consider whether having the system will ultimately help you make money. “That’s why we are here,” Yungkans says. “We’re not running shops for the fun of it.”
Additionally, you have to make sure the management system is integrated well with the estimating system. “They need to be able to talk to one another,” he says.
Predicting Systems in the Future
No one is quite sure what management and estimating systems will look like and what new features they will boast down the pike, says ADP’s Tuuri. But there is speculation on many different types of models—from modified capitation to capitation. The latter is when the average cost of a repair is established so an insurer would be able to write a check for “X” amount of dollars. “This is when you’d say, I’ll write you a check, Mr. Repairer, for “X” amount for every car you put through the shop,” he says.
The former, modified capitation, is when you determine the average repair for a light hit is worth “X” amount of dollars. “If you can put more through than this, I’ll give you a bonus or the shop can get a discount,” Tuuri says.
There’s also the possibility of an estimating system where you just measure a degree of damage without writing an estimate. “An estimate could look like a number of different things,” he says. Although Tuuri doesn’t anticipate estimates changing radically within the next five years, it’s uncertain what else might be developed. In the future, Tuuri says it’s possible that assignments may be received directly into the system, but this creates a whole new challenge for management systems to solve.
“We’re off in a good direction by creating a situation where we can now start using management systems to do what we’re better capable of doing,” he says. “It all ends up being a matter of knowing what’s coming and making the decision to buy.”
Working the System
You also need to ensure that your technicians will be able to understand the estimating and management systems and that the companies are available for technicians to contact when necessary. “As an ex-shop owner, I’d be looking for something that is easy to use and something that will write an accurate estimate…and doesn’t take a lot of training,” Yungkans says. “I don’t have a lot of time to spend in training or training someone. I want someone to know estimating rather than how to use the system. I want it to be intuitive. Good-quality estimators are hard to find. The estimator needs to be able to go into a system and be able to use it quickly. I’d be looking for a system to do that for me. We’re shop managers, not rocket scientists.”
Although all estimating systems produce some version of the Collision Industry Electronic Commerce Association (CIECA) Electronic Management Systems (EMS) standards, it’s also important to ensure the system adheres to these standards so it’s compatible and can function as necessary. Most shops don’t have and aren’t able to afford several different estimating systems, but the CIECA EMS standard format allows anyone to read these estimates and documents, helping detract from the compatibility problem. However, CIECA standards don’t completely eradicate all problems.
There are other issues, such as what ADP’s Tuuri discusses. “There are problems with redoing estimates for supplements that are not solved by CIECA standards,” he says. “The problem is that if I want to take an estimate and do a supplement, then I have to have the original database calculation and formulas to disassemble an estimate and reassemble it. That cannot be done just because we have the CIECA standards.” However, he is quick to say that the problems don’t necessarily outweigh the advantages.
Chris Andrews, director of marketing for Mitchell International, says you also need to ask how the system is supported. “Will customer support be able return calls and provide the right training?” he questions. “Is there a lot of training available? What about online? Look at what the online content is. Shops are so busy. They only have so many guys. Does the estimating provider allow for online courses so people can be trained when not working?”
Comp-Est’s Argento adds, “The objective from the shop’s standpoint is higher turnover resulting in more revenue. If the current handwritten system stands in the way of those increased revenues, it is time to purse a computer application.” Price, features and product support are key factors in a purchasing decision for software, he says. “If I were a shop owner or manager, the first thing I would do is call for written quotes from all four or the estimating system solution providers.”
From there, Argento says, the shop owner or manager should ask them to provide a list of features included in that price and what costs extra. From this, the shop owner or manager should create a list of all the possible features and make columns for each provider and place a checkmark next to the systems including those features.
“This will allow for an ‘apples to apples’ comparison,” he says. “But then I would call several referrals the companies should provide as well as associates in the business to get feedback on the product and individual’s reputation in the marketplace.” These questions are all determinants for choosing the right system. “Once an owner or manager has added up these factors, [he or she] should be able to make a well-informed conclusion as to which provider to select.”
