Selecting a software system – either an upgrade or a
brand new implementation – is a major challenge for a leasing
company, Brian Rogerson finds
Marriages made in heaven?
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Selecting a software system – either an upgrade or a brand new
implementation – is a major challenge for a leasing company,
Brian Rogerson finds.
Software companies and their asset finance customers do not
always see eye to eye. Software companies invariably believe that
lessors consistently underrate the importance of updating their
systems. Jens Christian Vigulf, marketing manager of Banqsoft
explains: “Clients invest too little time on how a new system can
improve their operation.”
“Certain clients,” James Powell, business development manager at
Fimasys says, “underestimate the amount and level of resource that
will need to be assigned to a system implementation. At this key
part in any system upgrade there should be close collaboration
between the client and the software provider.”
Olivier Joly, sales manager at Linedata stresses that clients
often underestimate the benefit of relying on a standard software
solution. “They seek the easy solution by asking for specific
developments rather than adapting their internal processes for
change.”
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By GlobalData“A common misconception amongst lessors,” says Gary
Strickland-Clark, marketing director of TietoEnator, “is that
systems, once installed, don’t actually need updating. The other
misconception is that upgrades are significantly more time
consuming and demanding on internal resource than they are in
reality.”
Nevertheless, Brendan Gleeson, group sales, marketing and
strategy director at White Clarke Group observes that once a
decision to update has been made, lessors are invariably impressed
with “the ease, including low cost and speed of implementation,
with which new developments can be added to their systems”.
Taking the plunge
Once lessors have decided to update their systems most software
companies are united in the criteria upon which their industry
rests. Mark Johnson, marketing manager at APAK believes that the
people, the product, the track record and the financial strength of
the software company should be the selection determinants.
Vigulf says: “Lessors should look at systems that make the
offering of new financial products easy to handle. A technological
platform supporting new sales channels is equally important. With
interest margins coming increasingly under pressure and the ability
to handle a higher volume – without increasing staff numbers –
becoming more important, flexible workflows are increasingly high
priority for asset finance companies.”
Andrew Denton, sales and marketing director at CHP Consulting
urges lessors to investigate the track record of potential software
partners. “The IT industry in general has a record of failing to
deliver, so choose a system and vendor than can offer a list of
happy customers to talk to. Deliverability combines excellent
software and capable, strong management – so look for those
characteristics in your vendor as well as a strong track record in
your sectors of activity.”
Cost is not the sole option
Selecting a software system by cost alone has never been a valid
decision for lessors. Richard Carter, director at icenet explains:
“Over the past year we have spoken to a number of companies that
have purchased primarily on the basis of cost – and an “optimistic”
implementation plan. As a result, they have found that
implementation has been significantly delayed and has placed the
business under increased pressure.”
Software company staff are also crucial in the selection
process. Tony Langford, product sales manager at NetSol
Technologies comments: “Often the ‘people’ aspect is overlooked.
Which is a great shame because, after all, people deal with other
people and a strong joint team always produces a successful
implementation.”
Johnson adds: “Client-facing staff should be able to demonstrate
industry-specific knowledge and a detailed understanding of their
customer’s requirements. This will help the supplier to provide the
best business-focused and technically-apt solution.”
Geography to the fore
The globalisation of leasing and, consequently, leasing software
providers, has been a feature of recent years. Are software
companies with a global footprint more likely to provide better
service levels?
Powell opines: “Increasingly we are experiencing a shift towards
genuine cross-border operations within the market. As a
consequence, one of the key criteria for system selection is the
ability to handle multiple-country portfolios in a single solution
for easy international deployment.
“In reality, this means one instance of the database and
software application configured in order to manage multiple tax,
legal and currency factors.”
Pointing the finger
When a system implement fails to deliver the expected results
the fall-out can be catastrophic for both lessor and software
provider. What are the likely causes and who is to blame,
asks Brian Rogerson.
It is an unfortunate fact of life that not every system
implementation will result in success for both lessor and software
house. Gary Strickland-Clark, marketing director of TietoEnator
believes unjustifiable optimism can lie at the root of many
failures.
“Like builders,” he says, “software people are born optimists.
They want to succeed and believe they will. Combine this with a
reluctance to say ‘no’ to any key requirement during a competitive
sales situation – and many vendors over commit themselves.”
Henrik Schroter, sales director at Northern Arch observes that
failure is often caused by the lessor being sold “something which
the supplier cannot deliver”, which the lessor has not got the
resources to “take on board” successfully and where the lessor has
not “got buy-in from everybody in its organisation”.
Richard Carter, director at icenet believes that a further
potential cause of failed implementations lies in the requirement
to convert data from the legacy system to the new one. “Typically,
one of the drivers for a new system will be a requirement to
support new financial products that the legacy system is unable to
support effectively. In practice, this problem only comes to light
after the lessor has tried to ‘shoehorn’ the product into the
legacy system which then makes the data conversion more
complex.”
It’s good to talk
Brendan Gleeson, group sales, marketing and strategy director at
White Clarke Group says of his company that “we have not had a
project fail.
“However, experience in the market suggests the following causes
[of failed implementations]: underinvestment, incorrect
expectations in relation to what can be achieved, poor project and
business specifications, unrealistic goals – and vendors themselves
not being clear about what can realistically be achieved.”
In the case of this last cause, many software providers employ
sector-specific specialists that can “talk the same language” as
their leasing clients.
Peter Richmond, business development manager at Welcom Software
explains: “To achieve this, we employ business analysts who
understand the leasing industry and also understand the technology,
thereby ensuring that the right questions are asked, the right
requirements are captured and the right solution is delivered.”
Stephanie Comley, operations director at NetSol Technologies
states: “To ensure a successful implementation clients must agree
and communicate the required objectives, use an agreed process to
measure progress and the final outcomes, communicate progress along
the way and, importantly, ensure that you and your vendor are
prepared to ‘go the extra mile’ to get the success that both
parties seek to achieve.”
“Many lessors,” adds Andrew Denton, sales and marketing director
at CHP Consulting, “assume that systems implementations are
something that their provider ‘does to them’ – which is a recipe
for disaster. Business engagement on both sides is vital.”
Ian Charik, director at Copernicus, says: “Unrealistic goals and
a breakdown in relations between software provider and lessor can
be caused by many reasons on both sides. In all cases, however,
these can be overcome by common sense and open discussions.”
SEEKING PARTNERS
The increasingly complex and demanding nature of leasing
software – coupled with the need for greater cost effectiveness –
has led to some partnerships between software providers. Leasing
Life asked software providers for their views.
Q: Do you believe that partnership arrangements between
systems providers are a viable route for the future?
A:
“In a competitive market it is
essential to provide to our customers a full 360° solution for
their business. Most of the time we only achieve this objective in
a product/services partnership” – Vantyx Systems
“Sometimes it is necessary to engage a number of vendors which
have complementary skills or products” – White Clarke
Group
“Through building long-term relationships we have progressed
beyond individual project successes to become a business partner
valued by all our clients and third-party suppliers” – Welcom
Software
“We have partnered with SunGard Data Systems because; it is the
fifth largest global finance software and consultancy companies
with 15,000 staff and over $7bn turnover , it has world-wide
representation and our staff have worked together for more than 10
years” – Northern Arch
“Partnering allows providers to extend their global reach so
reducing the risk involved in entering new markets further afield.
Customers are much more likely to be persuaded to deal with a
partnership where the touch point is a nominated contact and where
the responsibility for problem resolution lies with a single
organisation” – NetSol Technologies
“Over the last 10 years software vendors have tended to focus on
products where they can add value, for example no-one would dream
of writing a general ledger product these days when there are
plenty to choose from Sage to SAP. This is also true of the asset
finance sector where we see increased opportunity to partner with
providers of niche products, this being supported by the increased
use of ‘open’ solutions. Time will tell whether these partnerships
will extend to one asset finance systems provider partnering with
another unless it is a precursor to a strategic re-alignment of
their businesses” – icenet
“Copernicus is very open to partnerships between systems
providers so long as this is for the benefit of the client” –
Copernicus
“Partnerships can certainly be made to work. Effective
partnerships can bring together technology and skill sets that are
complementary and add up to more than the sum of their parts” –
CHP Consulting
“We do not see this happening on a large scale as most companies
are doing their utmost to expand their own offerings” –
Banqsoft
THE KEY PEOPLE
Correct-calibre staff are notoriously difficult to obtain for
software providers – and the problem is getting more acute. What
are companies doing to remedy the problem?
Where do they come from?
Recruiting staff with relevant skills and experience is always
one of the biggest challenges facing a software company –
particularly those requiring a combination of business and
technical competence. James Powell of Fimasys believes that a first
step is to “establish a good reputation in the market which will
help to attract the right people”.
Some 36 per cent of software providers’ staff are recruited
directly from university, whilst 27 per cent join from financial
services companies and 19 per cent from competitors. Recruitment
companies only supply around 12 per cent of suitable staff (see
chart 3).
One reason Linedata finds it difficult to find staff of the
correct calibre is because it is looking for people with multiple
skills such as finance knowledge, project management process
experience and technical skills. Olivier Joly says: “We have
appointed a company which specialises in recruiting IT and finance
specialists.”
Vantyx Systems is actively seeking new staff on a pan-European
basis while White Clarke Group adopts a policy of developing its
own staff from within. Welcom Software uses local advertising,
recruitment agencies for high-calibre experienced staff and, more
recently, “industry-leading websites” to source applicants. Results
are such that the company won “Best Company to Work For” award in
Yorkshire in 2007.
Jan Bouckaert, business development office at Sofico explains
that good staff are difficult to find because of the small
marketplace. He says: “We participate in job fairs, direct mailings
to potential clients, specific advertisements in specialised
newspapers, our own website, as well as maintaining contact with
colleges and universities and offering apprenticeship possibilities
to last year’s students.”
“The biggest single issue,” says Schroter, “is that we require
staff to be able to travel abroad extensively and that is sometimes
difficult to resolve.”
And how do you keep them?
Comley says that NetSol Technologies endeavours to retain staff
through competitive benefits packages and “excellent” staff
management. Johnson, however, contends: “Correct calibre
staff are actually not difficult to obtain. Nevertheless, the
challenges reside around salary expectation which is usually higher
than industry guides would suggest.”
CHP Consulting has a strong track record of employee retention
and good staff relations, with the company making it onto the The
Sunday Times’ Best 100 Small Companies to Work For in 2005 and
2006, receiving “Best Companies Accreditation” in 2007. Denton
confirms: “Our people are the most important component of our
success. Our recruits tell us that training, quality of work,
career development and working culture are equally as important as
the rewards package.”
Investment in staff
Most companies are shy about revealing the exact percentage of
their budget that is ploughed back into staff training – and no
doubt some confusion with research and development budgets
generally lies behind this.
Nevertheless, Vantyx claims to spend 10 per cent of its company
budget on staff training and development, CHP Consulting spends “up
to 10 per cent”, Fimasys 5 per cent, Sofico 4 per cent, Linedata
3.5 per cent, Banqsoft between 3 and 4 per cent, NetSol
Technologies 3 per cent and APAK around 1 per cent.
Welcom Software has an ongoing in-house training and development
programme that runs throughout the year and is open to all staff.
Peter Richmond says: “We look at new ways to deliver training to
address all skill sets, not just for Welcom employees but also for
our clients. For example, new graduates and service desk employees
spend a day on customer sites to ensure that they see the software
working in a live environment. The feedback from clients has been
excellent.”
Schroter sums up the position at Northern Arch which is
doubtless echoed around the industry. “The budget for formal
training is very low. However, informal on-going training, coaching
and mentoring is an integrated part of all staff’s activities and
forms part of the individual’s goals and achievements.”
A shrinking customer base?
As lessors consolidate, Brian Rogerson asks
what the future evolutionary path for software companies will
be.
Scalability – the smart word
As leasing companies continue to consolidate, and grow larger,
so the software infrastructure behind them requires greater
capacity. Scalability has become the smart industry word and in its
shadow has come several industry acquisitions – especially from the
US outwards.
A certain critical mass is increasingly deemed important for
credibility. Tony Langford of NetSol says: “Those software houses
that do not currently have the critical mass to service this more
demanding future may themselves have to consider
consolidation.”
Northern Arch’s Henrik Schroter explains: “The consolidation of
lessors is largely a NW Europe/US issue. Germany still has almost
1,500 lessors and in the central and eastern European (CEE)
countries (with national variations) the number of lessors is
increasing every year. As far as we can see future paths will be
the provision of IT support for small niche-focused organisations
that will service the large asset-finance companies.”
Brendan Gleeson of White Clarke Group, meanwhile, believes that
consolidation will inevitably bring “greater process
standardisation, further automated decisioning, more use of modern
workflow processes, tighter integration with third-party systems
and pro-active capabilities for new business development.”
Putting a good spin on it
Johnson stresses that despite ongoing consolidation amongst
lessors, the overall requirement for asset finance software has not
diminished. He observes: “What has happened is that the software
renewal lifecycle has been extended in recent years and new
technology products are now forcing software upgrades.”
“In Banqsoft’s experience,” Jens Christian Vigulf explains,
“major software companies with leasing software as only one of
their products have failed to benefit from the mergers among
lessors. On the other hand, we believe that new players in the
market will find it increasingly difficult getting into the market
as lessors demand proven track record from relevant projects in
order to be considered as a supplier.”
Consolidation, as well as presenting a challenge to software
companies, can be viewed as a market opportunity. Fimasys’ James
Powell explains: “The consolidation of the market gives rise to a
smaller number of large global players, placing more emphasis on
the need for enterprise solutions that support global strategies,
harmonised processes and common systems across multiple businesses
and geographical markets.”
“Interestingly,” Richard Carter of icenet says, “whenever two
businesses merge there always seems to spin off a number of
start-ups where sales staff become disenchanted with the new entity
and decide to strike out on their own. This has been the same for
the last few years – and has given rise to an increased number of
start-ups that require competent, competitively-priced IT solutions
to be made available ‘out of the box’. As a result, it could be
argued that large scale consolidation in finance companies requires
software companies to ‘productise’ their solutions more effectively
for new-start businesses.”
A slice of the “Chindian” cake
Most leasing companies worth their salt are looking to China and
India. In their wake, software companies are sure to follow, says
Brian Rogerson.
No doubting the potential
China’s software industry saw an increase in revenue of more
than 20 per cent during 2007, boosted by particularly swift growth
in income from financial services and state media. Furthermore, the
Chinese software industry is reported to have generated revenues of
$81bn (€54bn) in 2007, up 20.8 per cent from the previous year.
China, now the world’s fourth largest economy, has vowed to raise
its contribution to growth from technology-intensive industries
such as software.
Whereas in 2001 the sale of equipment assets in China totalled
$123bn (€82bn), this was predicted to have reached $500bn (€335bn)
by the end of 2007. With leasing penetration in China currently
only at 1 per cent, compared with 9 per cent in Japan and 14 per
cent in the UK, the possibilities for lessors to expand into the
market are enormous. Similar, although not quite so dynamic,
attractions apply to India.
Henrik Schroter of Northern Arch reveals: “In China asset
finance may be in its early days, but volumes are virtually
exploding. One example we have is of a lessor starting up with
1,200 contracts in year one, 20,000 in year two, and 100,000 in
year three. This can present quite a challenge for a software
supplier – not least because the client has difficulty in
maintaining that rate of growth.”
No doubting the challenge
“In China,” Banqsoft’s Jens Christian Vigulf says, “the main
challenge is the lack of experience with leasing as a product. In
India the market is well regulated and functional. However, both
markets do, in our opinion, require local presence through
partners.”
Andrew Denton reckons that both counties represent huge
opportunities for CHP Consulting. “The first challenge,” he says,
“is to have the organisational and product capability to enter
these markets successfully. In this respect we are well placed.
Secondly, local knowledge of business practices, financial products
and the regulatory framework is essential to implement software
successfully. This can be achieved by partnering with firms with
this knowledge – or by recruiting local experts.” Schroter agrees.
“Accounting, regulatory and reporting frameworks are still being
developed,” he says.
Fimasys established an office in Beijing in 2006. James Powell
comments: “The lack of leasing experience in China places a larger
than usual burden on the amount of expert business consultancy
which must be provided for clients. There are many legal regulatory
and practical obstacles to the establishment and growth of western
leasing companies – challenges that must be shared by software
companies. And, of course, the cultural aspect has a great impact
on the way business is done, making it essential to train and
employ local resource to work in commercial, consulting and project
roles.”
Not all software executives are quite so bullish about global
expansion. Richard Carter of icenet argues: “Any business seeking
to expand whether into new sectors or geographies must ensure that
its core business and customer base is secure. So often we hear of
businesses over-reaching themselves and potentially gambling all
for international growth.”
Extra cultural hurdles for software
companies
If anything, cultural challenges for software companies seeking
to enter China or India are greater than for lessors. Schroter
observes: “Chinese language and mentality are (not unsurprisingly)
very different from other Asian countries – and also vary within
China. Local co-operation partners, which are essential, are, of
course, also Chinese. Our partner is SunGuard Data Systems with
about 400 staff throughout China.”
Welcom Software has worked on projects in both China and India.
Peter Richmond confirms that by far the biggest issue is business
language. He says: “Written and oral English in both countries is
excellent. The stumbling block comes when explaining industry
jargon, for example what an ‘accrual’ is. Or what a ‘re-schedule’
is. Or the difference between an operating and a finance lease. As
a consequence, the time difference for the working day when both
parties are in the office is also vastly reduced.”
Luis Dias, director of Vantyx says: “In addition to the cultural
differences and technical quality of human resources in China and
India, there exists a serious concern regarding the protection of
intellectual and industrial property for software providers.”
A mixed bag
With markets hardening and credit becoming tighter lessors may
be seeking economies in their software outlay. Are software
providers worried, asks Brian Rogerson.
Some business disappearing?
Software providers who are crystal-gazing forward into 2008 are
finding the crystal ball even more opaque than usual. Although many
are fully committed to projects agreed over past months, the drying
up of credit funds hardly augurs well for growth prospects for the
credit industry.
For some, the groundwork has been laid. “We at CHP feel well
placed for the challenges ahead,” Andrew Denton says. “We have
continued investment in our software, our people and the company’s
infrastructure. 2008 will see us continue our global growth as well
as delivering a number of exciting new software products and
customer implementations.”
“Inevitably,” icenet’s Richard Carter forecasts, “the credit
crunch will bring its own set of challenges to our market with some
prospective customers either delaying or deferring systems
implementation – and others potentially disappearing. Naturally
there will also be an upside. Where certain businesses have strong
liquidity they will be able to capitalise on the market and may
accelerate systems projects.”
Some companies are facing the implementation of
successfully-achieved deals. Henrik Schroter explains: “Two very
large multi-national asset-finance companies have recently agreed
to use Northern Arch systems to support their business. Our
challenge is clearly to implement these projects on time and budget
– while at the same time capitalising on these recent wins to
expand further.”
Staff –the raw material of growth
Some companies acknowledge that their growth plans are largely
dependent upon having sufficient number of correct calibre staff on
board.
Gary Strickland-Clark confirms that the challenge of growing
organically will depend upon “maintaining the quality of the large
number of new recruits TietoEnator plans to employ”. Jens Christian
Vigulf adds: “Our biggest challenge at Banqsoft will be to recruit
and assimilate enough people to handle the rapidly growing number
of projects.”
Welcom Software plans a modular approach to the hardening
marketplace, Peter Richmond says: “We provide modular alternatives
in our entire product offering. One of our main business objectives
is to discuss with clients what they perceive to be their corporate
strategy requirements for, say, the next three to five years, and
work on pricing models accordingly. Software is an investment, not
a cost, and we seek to ensure that our customers can expect
measurable returns when they come to see us.”
Globalisation – the ultimate challenge for the
future
Geographic expansion can provide great opportunities for growth
– but also the biggest challenges. APAK’s Mark Johnson says: “A
strategic approach is important to ensure that clients are still
fully supported – and the company’s brand name is not diluted by
geographic spread.
“We believe that the main challenges will relate to further
geographical growth and the need to support our clients in their
efforts to deploy a unique common platform for differing countries
– with multiple languages, currencies and so on,” Johnson adds.
Ian Charik emphasises that Copernicus is committed “to continue
our global expansion – and to consolidate in our chosen
markets.”
NetSol Technologies plans “to continue, and even accelerate, our
global market expansion in a year which is looking increasingly
tough for the financial markets,” says Tony Langford.
Cathedral Leasing cleans up with new systems
upgrade
Cathedral Leasing operates rental contracts for washroom
facilities, supplies and services and is the fourth largest
operator in its sector in the UK. It requires all the usual
software features of a traditional leasing company but with the
additional demands of a business with a substantial service
commitment – visiting as it does some 20,000 sites each month.
David Gooder, managing director at Cathedral Leasing
explained: “We have a wide variation in our customer base ranging
from the simplest set up (one customer with one asset at one site)
to the most complex (customers with many assets at many sites and
multi leases). It is vital, therefore, that our software solution
caters for the many complex links and relationships between assets,
sites, contracts, customers, service personnel and service
engineers.”
In January 2006 the company decided to upgrade its NetSol
Technologies’ CAAP system, which it had used for almost 20 years,
to the company’s LeaseSoft Contract Management System.
“What we needed,” Gooder said, “was administration of a
multi-level commission system, a single client view of rental and
service histories, service and installation performance, service
workload measurement, contract profitability and sub-contractor
monitoring and the management of our service teams’ tasks and
times.”
He added: “Making the step-up to an integrated solution
from two stand-alone systems has allowed us to deal more
effectively with business demands, deliver further efficiency
improvements and to provide even greater customer service
value.”
Initiatives currently under review for Cathedral Leasing
include the integration of hand-held devices for the service
engineers and bar-coding facilities for tracking important
documentation.
