Is ‘Revenue Control’ an Oxymoron?
By Dennis Cunning
"Revenue control.” “Military intelligence.” “I’m from the Government and I’m here to help.”
What can these three things have in common? Two things come to mind: They are all oxymorons and they are all “urban legends.” I can hear some readers crying out, “Blasphemer” and “Heresy” – let the PT inquisition begin!
Now that I have your undivided attention, let me preface my comments as to what makes me qualified to address this matter: 33 years of “hands-on facility-level experience” (13 of those years with national parking operators Edison, Meyers and Kinney). In my career, I have been involved in almost 1,500 different parking facilities around the world, with more than 1,000 of these facilities having some form of Parking Access Revenue Control System (PARCS).
The facilities range from the small 100-space one lane in/one lane out up to facilities with 6,500 spaces and beyond or the shopping center that does an average of 20,000 tickets to 45,000 tickets a day from Black Friday to Three Kings Day. (Yes, that’s more than 8 million tickets a year, about 700,000 pesos [$60,000USD] in daily cash and at times almost 300 transactions a minute; this does not include the 2,000 monthlies each day.)
First and foremost, most parking facilities kind of run on their own. Parking equipment simply brings order to the perceived random movements of vehicles into and out of the facility. Any equipment you buy will help the operator capture 70 cents on every dollar that is there to be collected (not necessarily reported, but collected).
With a little work and thought on what equipment and what software options are purchased, the numbers can be greatly impacted. Ninety cents on every dollar is not difficult to achieve with a little more attention to the details and the right system and software. Now this is where you separate the “boys from the men.” (Sorry, gals, but this traditionally has been a male-dominated industry back to the stage coach days, but I will tell you the best garage I ever was involved with was in Dallas and managed by Ms. E. Barr.)
Now, about collecting that last dime!
Owners, pay attention, since all of the money is yours and unfortunately not all of it is collected or even attempted to be collected. There are many reasons that collecting that last 10% of the revenues is difficult:
• Many revenue control systems simply do not have the design or software to do so, regardless of what the manufacturers will claim.
• Many operators do not collect that last 10%, 5% or 3% because doing so makes them work much too hard for the pittance of the management fee that owners pay them and they have to do it every day.
• Operators have an agenda, often with an particular manufacturer.
• The better the system and software control are, the harder the operator has to work to account for the revenues. Systems that leave an unimpeachable audit and accounting trail thus require an operator to become accountable.
• With accountability comes responsibility.
• With responsibility come the operator’s fiduciary obligation and liability.
• And with responsibility, plausible deniability is no longer an acceptable response to audit findings!
Parking systems today are advancing at a far greater pace than what was imaginable just a decade ago. Computer speed is doubling about ever 24 months. Memory is cheap! A terabyte of memory that once was available only to the rich and famous can be found today by simply walking into any Costco, where you can buy an external terabyte drive for about $500. Bluetooth, RFID, “smart cars” with soon-to-be-government-mandated transponders, GPS tags, etc. are all changing what the PARCS of tomorrow will be, and tomorrow is only a few years away at best.
The parking industry in general (other than the system manufacturers) assumes that all the systems are about equal. What sets them apart are price, color schemes, and the “bells and whistles” that are offered.
I once asked the president of one of the companies I worked for if he had a preference for a system manufacturer. His response shocked me: “As long as the gates go up and down and I don’t get complaints from the customers or the property owner, I don’t care ...” A “Bonzo the Chimp” system would have met his criteria (no offense, Bonzo), and this was the president of a national parking company!
Today, PARCS are as much about data mining as they are revenue control. Reconciling the data and then using that data to better manage, operate and maximize the revenue potentials based on that data are what should really be considered as a PARCS is purchased.
I was able to sell 1,225 monthly passes in a 640-space facility at a New York City area hospital simply by data mining and understanding how to assign parking.
Owners, take note! Each PARCS manufacturer has proprietary software to make its hardware and reports function. You do not buy a Federal G89 Gate with an Amano TD, collecting the ticket with a WPS POF unit using Skidata revenue-reporting software, running on an S&B controller.
When you buy a system, you are entering into a 15-year marriage with your manufacturer. Do not buy a system simply because it is the “flavor of the month” being supported by the current operator. Maybe next month your operator will be someone different, but you will still be the owner!
Owners, develop a relationship with your manufacturer. After all, you have just invested hundreds of thousands of dollars in a system to control and count your dollars. Other than my wife and children (and I still have to ask for the change back from my children), who else are you going to trust for the next 15 years counting and reporting your money?
I am sorry to say this, but operators have an agenda when recommending equipment. (See the sidebar nearby.)
Training! I repeat, Training. Oh, have I mentioned Training? None of us in a stable state of mind would get on the new Airbus that carries 800 passengers flown by a pilot whose “training” was a few hours playing Nintendo Wii’s “WWII Aces.” Well, the same is true on your PARCS.
The bigger the facility, the more volume of vehicles per day, the complexity of rates and validations, and the almost unlimited tenant-landlord lease deals as they relate to monthly parking require specific training and reoccurring training on that particular PARCS software and system in the facility.
Simply because the operator runs the same brand system on the other side of town, the next city over, or somewhere in its overall national network does not mean the operator has the knowledge. That knowledge resides with the manager of the facility, and it is not a transferable item. Even how an operator audits the system is different from one manufacturer to the next. The reports are different; accessing the reports requires knowledge and skills; and detecting administrative changes in each system is a learned skill!
Aside from the daily (transient) money, the monthly portion of the system is of crucial concern. Owners, your building-access control system retrofitted to open and close parking gates is nothing more than mental gyrations. You can use the same access card; just use a parking system to control the parking gates and the building system to control doors, elevators and HVAC.
The parking operator doing the monthly invoicing from a central national or regional office is an illusion of revenue control. (It is, however, a profit center for an operator.) In 32 years, I have never seen an invoice from a central or regional office open a gate. It is the on-site PARCS that should control the card access and determine if the card is paid for.
Systems today do have complete A/R accounting software and invoicing – but that now makes your operator’s corporate invoicing system obsolete (maybe an agenda issue?). The monthly payment should be posted at that system and contained in that system that controls the gates, and you, the facility owner, should also own and control the accounting documents. That makes life much easier when you want to change operators as all of the records and history are at your site and owned by you.
Use credit cards on file, electronic funds transfer, even online site-specific web-based payment applications – anything to get cash money out of the facility. What you pay in bank fees for credit cards is more than offset by labor cost to count money, transport money and replace “manipulate/lost” money.
In the end, only three people will make the difference as to how well the PARCS performs:
• The on-site manager.
• The owner and his amount of direct involvement in the facility.
• The manufacturer’s local service personnel.
Any one weak link and you have a poor system. If two of the three links are weak, then you have compromised the system integrity and revenue control is simply an illusion.
Is there more? Of course. I have only scratched the surface and not even deep enough to require a Band-Aid. I am sure others are seeing blood gushing, but that’s a subject for another article or eight or nine more of them!
Dennis Cunning is a consultant in revenue control. He can be reached at email@example.com.
Operators may have an agenda when recommending PARCS:
• Sometimes it is financially beneficial to them, but at the owner’s expense.
• Sometimes it is economically advantageous to the operator over their competitors based on the system configuration and reporting capabilities.
• Sometimes the operators have their own in-house service department (read that as profit center).
• Sometimes there simply needs to be an opportunity for plausible deniability when an independent audit is done.
Article Abstract from January, 2009