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CIO Conversation: Managing Growth

Flexcar, a car-sharing business, is doubling in size each year, and CTO Luke Schneider is leading the IT charge.

How a car-sharing company uses wireless, the Web and more to accelerate growth.

Luke Schneider is CTO and vice president of strategy at Flexcar, a car-sharing business founded in 1999 as a public/private partnership in Washington state. Flexcar is now a private, for-profit company owned by Steve Case's Washington, D.C.-based investment firm Revolution LLC.

Flexcar is doubling in size each year, Schneider says, and now has operations in more than a dozen large cities. CIO Decisions spoke with Schneider recently about the challenges of the fast-growing business.

Interview With: Luke Schneider
TITLE: CTO and vice president of strategy

COMPANY: Flexcar

IT STAFF: 15

EMPLOYEES: 150

KEYWORDS: Telematics, wireless, application development

BACKGROUND: Mechanical engineering and MBA degrees; worked at Ford, then consulting firm Pittiglio Rabin Todd & McGrath; launched B2eMarkets, a supply chain management software startup; joined Flexcar in October 2006.

Why has the car-sharing business taken off in the last few years?
The advent of reliable telematics. Five, six years ago, folks used to do this manually. There were trip tickets located in the vehicle and individuals would fill out this ticket. [Now they have] the ability to carry around a smart card as the equal of a set of keys. Wireless technology and the presence of reservation and billing systems enable this.

How does it work?
The member goes to our Web site, locates a vehicle and reserves it. The system sends a SMS message that goes to the car. The member presents his smart card to a reader under the windshield.

What are your most critical systems?
At the core is the telematics system. That's the backbone of car sharing. That experience has to be seamless and flawless. There are two parts: reservations and billing. It would seem simple, but when you're dealing with so many institutions it can be challenging. After that it's the management of fleet and member data. Some of it we build, some we outsource.

What did you build yourself?
The reservations system we developed internally. There are a lot of reservation systems out there. When we started out, we thought it was ideal for outsourcing. But as we got into it, car sharing turned out to be different enough that we chose to build it ourselves.

We also built the billing piece. We have a variable pricing concept. We offer different prices depending on the time of day. In addition to helping us manage revenue, it helps manage demand. You can use pricing as a means to level demand. It's the ability to bill and process trips tied closely to the reservation system.

We also did our own DMA, data management application, which is what we call our fleet management system. It allows us to manage member affairs, cross-linked with the vehicle; we also manage fulfillment through there. It's a broad tool that goes pretty deep. I've never seen a tool quite like it. It can tell me so much, but it can be a very nonlinear experience, like surfing the Web. It does a nice job of anticipating what sort of information you need.

Do you outsource any IT?
We do a selective approach to outsourcing. We like to keep the brain trust inside. We partner for certain things -- design, UI [user interface] business intelligence. Less than 20% is outsourced. It's relatively small.

For many of the systems we need, there are providers out there that can offer us economy of scale. Strategic sourcing will get us best of breed at a reasonable cost. We don't want to be a manufacturer of devices.

Other things like how to manage your mobile assets are not so well understood. There's not a ton of practitioners out there. The knowledge and know-how of those sophisticated logistics is something that we really want to own.

What's your planning process like?
We plan very logically. We start with a high-level cycle plan, over the next 18 months. What are the functional areas we want to address? I have a strong project manager who breaks high-level objectives into discrete policies. We struggle mightily to maintain order. Issues crop up regularly that need to be addressed. We have separate daily, weekly meetings that take up triage issues. There's a development panel that looks at bugs and things that crop up.

We adopted Scrum planning this year with a 30-day sprint cycle. It's been a bit of a learning experience for many people. It sounds great, but when you get into the details it requires a very disciplined and conscientious person to manage it and reinforce it. It's not nirvana, do what you want. For a company our size, Scrum and Agile are ideal development processes.

What's your biggest challenge?
The challenges we face are all about scalability. We're doubling every year.

There are all kinds of dumb fleet management services out there. It's not B2B; it has to be responsive to consumers and give them the satisfaction and assurance that they're being properly treated. We spend a great deal of time on tele-matics and things related to members' experience.

What new technology are you excited about?
We're going to see a next generation of chips that will enable near field communication. In addition to bolstering and managing scalability, we're looking for consumer differentiation in everything from fuel purchasing to partnerships. There's a huge opportunity to look at cell phones or mobile devices as car keys for reservation, access. It's all about increasing convenience. That's the No. 1 driver for people to use our products. It will be an interesting new world.

Michael Ybarra is a contributing writer for SearchCIO-Midmarket.com. Write to him at editor@ciodecisions.com.

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