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nevaehodyssey · 3 years

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The Impact of Servitization in asset finance and how to prepare for it

Servitization, digital servitization, pay-per-use models, consumption-based pricing- call it what you may but the shift from ownership to usership is an industry trend that you cannot afford to ignore.

In the last decade, the rise of digital disruptive technologies like cloud, mobility and IoT has enabled a set of capabilities that are redefining consumer expectation. The digital age has ushered in an era of flexible, consumer-friendly services that are accessible 24/7 along with the convenience of mobility. And this trend is growing at a rapid pace. The ELFF forecasts that managed solutions are on track to reach 22% or more of the total equipment leasing and finance industry volumes over the next three to five years.

Servitization is definitely not a plug and play solution. It’s a transformation journey that holds immense potential for asset finance and auto leasing companies. The post-pandemic world is more ‘digital’ than ever, and it’s a great time to start building strategies and transitioning to this new normal. Asset finance companies that succeed in developing the required capabilities to deliver customer-centric solutions will see more customer retention, an increase in customer satisfaction levels, and a certain edge over their competitors.

Servitization in Asset Finance and its Impact

Servitization is not a new concept, neither it is a mere industry hype. The concept had been around for more than three decades now. A study published by the Equipment Leasing & Finance Foundation credits the Xerox Corporation as the first to offer fixed-term financing contracts for copiers on a cost-per-copy basis back in the ’80s. Since then, the trend has spread to other asset classes, including technology, fleet services, and healthcare.

Servitization in asset finance provides flexible and consumer-friendly consumption models that enable customers to benefit from equipment/asset usage sans the related burdens and responsibilities of ownership, lengthy long-term fixed contracts, and paying for underutilized assets. It encourages companies to focus on delivering not just a product, but rather a more comprehensive customer experience based on usage/outcome and performance-based business models. It can include auto leasing services offered on a pay-per-mile basis, medical equipment such as scanning machines leased on a pay-per-scan basis, and robots on production lines offered as pay-per-pick.

Based on the product-service system ( PSS), these models can be broadly classified as:

· Product-oriented offering: The customer buys the equipment and owns all risks and rewards with the option to add a service package at additional cost. These services include installation, after-sales, maintenance and/or repurchase agreements.

· Use-oriented offering: Billing is based on the specific amount of time or ‘usage period’ (e.g. hours, prints, scans, mileage) on predetermined rates. The service pricing is often bundled together with the product, making it easier for the customer to gauge the predictable costs of usage.

· Result-oriented offering: Also known as managed services where billing is based on a specified business result or output. Here the customer only defines the desired outcome/end-result irrespective of the product/configuration/means to achieve the same. The onus of delivering those outcomes lies with the Lessor along with the product- and service-related performance risks and rewards.

Irrespective of the model that you adapt, any servitization strategy must have a digital transformation at its core. Paperwork-based processes or rigid legacy systems hamper the speed and dexterity that customers demand today. Without flexible and agile systems, these models will fail to yield the expected results.

Building better customer experiences

To adapt to this new shift, Lessors will have to rethink their core strengths and offerings, develop new customer-facing processes, and build a more customer-centric culture. Asset finance companies will have to rethink and reimagine the backend systems that form the backbone of their business processes and operations. Companies will need more than just basic asset management software, but systems that are truly agile, automated, and flexible.

To prepare your organization for this change you must:

Build agile and flexible systems: Servitization truly is a ‘digital’ concept. A successful servitization model rests on two key requirements- speed and agility, something that manual processes and legacy systems inherently lack. To deliver a superlative customer experience, there must be a seamless transition between your backend systems that support the customer-facing processes.

Move to the Cloud: A truly cloud-enabled and cloud-delivered business model enables Lessors to adopt to offer a high-level customer experience, increase operation efficiency, and provide 24/7 access and availability of information and services for customers and employees.

Focus on automation: Processes that rely heavily on manual intervention are time-consuming and prone to errors. Automation brings a level of sophistication to your everyday business operations, making processes faster, frictionless, and error-proof.

Rethink Pricing and Offerings: With consumption-based leasing, it is difficult to predict what portion of the fixed expenses such as tax, insurance and asset depreciation should get allocated to every customer. Lessors will have to find ways to predict asset usage to set their price and contract terms and conditions accordingly.

Increase cross-functional collaboration: Servitization is a model that requires multiple lines of businesses to collaborate and work without any friction. Before you develop any strategy, it is important to get all stakeholders on board, understand how the new system will impact existing processes and make changes accordingly. Bringing all key stakeholders and LoB heads ensures that everyone within the organization understands the requirements, implications and desired end-results of the exercise.

Make the internet of things (IoT) your best friend: IoT is an umbrella term that includes multiple technology concepts. However, for the asset finance industry, IoT is best defined as a set of interconnected assets embedded with sensors, software, and other devices that can communicate and exchange data over a network. IoT could be a game-changer for leasing or lending companies looking at servitization. It enables companies to monitor, meter, and track assets/equipment for more real-time pricing of services.

Leverage analytics and data intelligence: IoT enabled assets are continuously sharing a stream of real-time data that is a treasure trove of information. With the smart application of analytics, asset finance companies can analyse trends, gauge customer behaviour, identify patterns, and predict asset usage. Companies can then use this data to make more informed business decisions and provide customers with more personalized service offerings.

Think value-added services: Asset finance businesses must contemplate how they can augment pay-per-use models with other offerings that complement each other. Companies must consider a smart use of APIs and application development capabilities that can help them enhance their core solutions. For example, an intuitive and well-designed customer portal can enable customers to self-serve, view their asset/equipment usage and invoices, get tips on how to maximize asset utilization, provide transparency over usage and billing, and options to make payments faster and easier.

Build a customer-centric culture: Perhaps the most critical and difficult yet overlooked aspect of servitization- developing a customer-centric approach. The shift from a product mindset to a customer-experience mindset requires a massive change in the way people work within the organization, the processes they follow and the end-goals that they try to achieve. Business and IT leaders must come together to provide relevant information, create awareness and provide necessary training in the new skill sets required in a service economy.

To begin with, companies need to evaluate their current technology capabilities and fill in the gaps wherever necessary. To remain competitive in the age of servitization, asset finance businesses need comprehensive asset management software that can help companies build the required levels of agility and flexibility.

Odessa’s asset finance software is an asset-based end to end management platform that tightly integrates with a host of complementary surround capabilities and a comprehensive digital transformation experience. To know how Odessa is working with some of the leading equipment and auto finance businesses in the world to build the next-gen digital companies of tomorrow and how we can help you embark on your transformation journey, click here.

#servitisaton #autoleasing #autofinancesoftware #asset finance #Asset Management #asset leasing software

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nevaehodyssey · 3 years

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Reimagining Product Innovation with a Smart Asset Finance Software

We are witnessing a paradigm shift in the asset finance industry, a shift from traditional finance and leasing to delivering a more customer-centric holistic digital experience. Customers today want the ease and convenience of doing business on a channel and medium of their choice, and your employees need a platform to collaborate and add value to the business, irrespective of their physical location. 

Lessors today recognize that to survive in this digital age they need to constantly re-invent and become a more agile and smarter version of themselves. Your asset finance business needs to go beyond the restrictions and rigidity of legacy systems that are impacting your business growth. From application development to business operations- speed, efficiency, and scalability have become the cornerstones for success today. But while this leads to the belief that rethinking the technology landscape is an existential imperative, simply upgrading the “as-is” business via a new software suite or product is not enough.

To understand how asset finance leaders envision the future, how they plan to build for it, and what capabilities they need to be able to do so, we brought together a panel of industry experts, leaders and solution providers in a two-part webinar ( To watch webinar click here). As a part of the webinar, we also asked industry leaders strategies on adapting to this digital revolution. Read to find what your peers think are the top capabilities that a smart asset finance software should be able to essentially deliver.

1. The Shift to Consumption-friendly Pricing

The current shift toward more agile and flexible business models are pushing Lessors to build new products and services. Lessees today want to have the flexibility of paying only for what they consume and avoid getting into significant upfront capital investments. Under-utilized assets may come out cheaper for customers when compared with conventional leasing.

From an economic perspective, it means that lessors now will have to find ways to predict asset usage to set their price accordingly. This is because, with consumption-based leasing, it is difficult to predict what portion of the fixed expenses such as tax, insurance and asset depreciation should get allocated to every customer. 

Needless to say, that this culture of product servitization is difficult to drive with manual or legacy systems. As these consumption models change the form, lessors will be left asking themselves – how

do we build core systems that provide enough flexibility and enables us to make corresponding changes as these newer consumption models develop and mature. 

A smart asset finance software will provide a coherent platform ecosystem that helps you to build stability for your core business operations today while provisioning for iterations and incremental changes in the future without upsetting the entire tech stack. A centralized, platform-based approach will streamline your current operations, provide a granular level view across all stages of a customer’s end-to-end journey so that you can monitor, measure and build transparent pricing models. 

2. The Rise of the Low-code Platform

Gartner forecasts low code to increase its share in application development activity to 65%, with three-quarters of large enterprises running on multiple low-code development tools by 2024. Low- code development platforms provide organizations with the much-needed agility and speed that have become the cornerstone of modern-day app development. 

Conventional legacy systems were never built for the kind of changes, speed and flexibility that the market demands today. These monolithic systems are closely interlinked and hence, changes to a single component can impact the functioning of the whole system. This pushes organizations into a vicious cycle of development, tests and fixes, eating into precious time, efforts and resources. 

A framework-based low code environment enables developers to leverage an existing set of codes, behavioural and structural models, and pre-built modules in the development environment. This allows for more automation in the development and testing process, faster development and

delivery, and lesser requirements for resources, skill sets and engineering efforts. 

The right asset finance software is designed as a rich technical ecosystem built on top of the underlying framework so that changes made to functional modules don't upset the core structure. The pre-built system components and the underlying power of the framework enable lessors to configure and customize application on-demand, extend or build new applications, and make quick changes.

3. Adapt, Accelerate, Scale

With more than 60% of the respondents choosing a faster time to market and scalability as some of the biggest business priorities, it is evident that the rigid, obsolete legacy systems are going to be inadequate to meet the demands of the future. An intelligent asset finance software will help transform how you operate, speed up policy implementation and decision making while maintaining strong compliance.

Conventionally, business processes have mostly been built keeping an inward view of a company’s operations- concentrating on optimizing and automating core transactional processes and systems like accounts payable/receivable, order management, procurement etc. However, an architecture that enables companies to perpetually evolve their businesses cannot focus only on the journey that customers use in purchasing their offerings. Many asset finance companies are looking at transforming to an outward view focused on the customer experience online and offline and an IT architecture that reflects a larger journey. 

Technology lies at the heart of this transformation- an agile IT ecosystem that can provide end-to- end asset-based functionalities, data intelligence and extensibility in one seamless platform to bring value across all dimensions of the leasing business. By standardizing and digitizing, companies can remove friction from processes and the time and effort taken in tedious, manual paperwork. By leveraging the power of mobility and APIs and portals, companies can deliver a superlative customer experience- by facilitating transactions from anywhere, at any time. Be a customer who wants to apply for a new lease or a vendor who wants to reduce the time to funding, it’s all down to the ease of the digital experience.

4. Data is the New Oil

Traditional asset finance organizations are realizing that advanced analytics can enable them to make better decisions quickly and consistently. By embracing data intelligence and analytics at multiple points across the asset-management value chain, asset finance leaders can transform business efficiency, from providing valuable insights to customers and help them make better investment decisions to drive changes in the middle- and back-office productivity internally. 

However, to be able to leverage the power of data, the most critical step in addressing the problems of the source data. Data stored in legacy systems, siloes or spreadsheets are poorly documented and formatted and are difficult to collate and integrate. For any data intelligence strategy to work, it is important that there is a seamless flow of business data generated across all business and third- party applications, with minimal manual intervention, and that the data is centrally located and accessible to all in easy to understand formats. 

Companies can then use this granular data to build pay-per-use models or leverage visualization tools to generate reports for critical business insights. 

How Odessa’s asset finance software can help you

Over the last two decades, product innovation at every stage has been guided by us asking ourselves the following questions

· How do we enable our customers to scale their business and operations on demand?

· How do we help our customers deliver seamless digital experiences to their stakeholders?

· How do we empower our users with insights through real-time data analysis?

We knew that to counter these challenges, most businesses would conventionally have to opt for multiple product-based solutions, all bolted on top of each other and creating a complex

environment that is rigid and difficult to scale. 

To solve this we extracted the core technology framework and put it down as the foundation layer. The basic technology framework provides a robust functional core build to global standards. On top of this foundation, we build our functional layer which hosts all our products, functionalities, and the business logic and rules. The topmost layer is a highly user-friendly and intuitive UI that allows for

integration and customization unique to your business.  

The Odessa Core platform is an asset-based, cloud native, end to end management platform that can streamline your business operations, build a centralized database and provide the right platform for your teams to collaborate- saving cost, time and resources and making your business more efficient. By choosing to host your infra on the cloud you can leverage the scalability, agility and cost-

effectiveness of the cloud. 

Odessa tightly integrates with a host of complementary surround capabilities for and a comprehensive digital transformation experience. Odessa Build and DevOps enable companies can

integrate their core platform with third-party applications or build, extend apps and workflows easily without any hassle. Various enablement portals make it easy for the customers and partners communities to do business with your organization. A low-code development platform for applications, mobility, data intelligence and analytics services are some features that cater to all dimensions of a leasing enterprise across captives, large customers, mid-size enterprises.

We are not just another asset finance software. We are a smarter asset finance software. Contact Odessa to learn more.

#asset leasing #asset leasing software #Asset Management #asset finance

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