How can you speed up the implementation of a multi-country solution for leasing companies?
by Ongjen Radovic, Head of leasing and Factoring, Tietoevry Banking
WHEN A MULTINATIONAL LEASING company expands its business across borders, the path from targets and planning to execution has its twists and turns. Frequently, there are several business, regulatory and IT challenges that need to be addressed.
According to our experience, the company can simplify things by selecting a proven and scalable solution and implement it with key drivers for success.
THE SEVEN KEY FEATURES OF A MULTI-COUNTRY SOLUTION.
Cloud makes it easy to scale.
A cloud-based multi-country solution allows a growing multinational company to scale and helps to keep focus on the business instead of IT. A cloud-based solution enables
to deliver functionality faster, with a rich set of add-on services that are typically not available in on-premise installations so the go-to-market time can be reduced significantly.
Automation to boost effectiveness. Since we talk about a global solution, contract volumes tend to be huge and bring complexity and cost. Besides technical scaling, the solution should use digitalisation and automation, i.e., process more items without adding
the same amount of manual work. This means that the more contracts you have, the less work you have per contract and the solution allows you to grow and process contracts
with less work. Automation should be used when making credit decisions, running reports, generating invoices, sending reminders, making payments, and other use cases.
Easy and real-time APIs for interoperability.
In a world of constant need to exchange and synchronise data with external parties and solutions, the ability to integrate the solution with other solutions becomes critical. As we know, most of the external integrations are usually completely different in new markets, for instance, just think about different credit bureaus, accounting systems and e-signature solutions.
There has been a big emphasis on APIs for 10 years, but during the last few years producing consumable events from systems has become equally important in real-time integrations.
Real-time data empowers decision-making.
The nightly batch job to crunch data or even worse, the manual work needed to extract and transform data, is a big cost for global companies. Therefore, a multinational leasing company should seek a solution that can generate and publish the correct data in real0time. This will enable access to data on demand and without any lead times, leading to more informed and faster business decisions and savings.
Solution available 24/7 boosts business.
Large-scale international leasing businesses operate 24/7 including work performed in different geographies, time zones and legal entities. To support this, the solution must have a proper design that enables around-the-clock operations and does not require time-consuming batch jobs. Also, the infrastructure platform should scale up and down without a need for downtime as that would have a negative impact on business operations.
Partner-readiness ensures effective cooperation.
To launch operations in a new market, lease companies frequently struggle to understand all parts of the local market context including local regulations, local products, and terms as well as integrations with local service providers.
Finding a suitable partner can help to provide the missing local context. In this case, the lease company needs a partner ready solution. It must enable quick implementation by using a pre-configured country template and solid documentation that is easy to understand and use by all parties.
We have witnessed many times that solid plans and design and system documentation
form the basis for successful implementation, and this is especially true when seeking help from local partners.
Off-the-shelf brings faster onboarding.
In the past, lease companies frequently made huge upfront investments involving internal resources and assets to implement new software. These investments have been dropping for several years to mitigate that up to 50% of implementations fail. Challenges include time, budget or fulfilling requirements.
In our experience, the best way to resolve challenges is to be well-prepared in the requirements phase and select off-the-shelf solutions with standardised onboarding, rich functionality and configuration options paired with ready-made country templates to speed up the implementation.
Country templates typically bring out-of-the-box functionality for local processes, products, language, currency and data providers such as credit decisions and asset liability management. Off-the-shelf solutions also allow to work agile with iterative phases where the solution is configured step by step towards the full requirements baseline.
RESULTS OF OUR ANALYSIS: THE ORGANISATIONAL STRUCTURE IMPACTS THE IMPLEMENTATION.
When planning for a leasing modernisation with a multi-country solution, a leasing company should also put thought into implementation. How to execute in the best way?
The key message from Tietoevry Banking’s analysis of multiple multi-country implementations is straightforward – the organisational structure of the leasing company has a strong impact on the implementation success.
Before going into the results, a summary of the various organisational structures is
The centralised company has a single legal entity based in one country extending its
financing operations across multiple countries. This structure is typical for captives, who use a sales network and multiple repair and maintenance shops.
The decentralised company uses a separate legal entity responsible for financing in each country. This approach may have been chosen due to the potential tax benefits coming from lower transaction volumes, better understanding of the market and thus
better sales and growth potential.
The hybrid company has a separate legal entity in each country but uses a Center of Excellence (CoE) for running parts of the leasing process from a centralised team. It means that one part of the company takes care of accounting, reporting, payments, credit
decisions and many other supporting back-office activities for all countries.
Part of the organisation can be virtual and operate in different countries. The hybrid organisation is typical when a decentralised company starts to grow and needs more structure.
STANDARDISATION SPEEDS UP ANY IMPLEMENTATION.
Our data shows that a centralised organisation is typically able to implement faster. A centralised organisation accelerates implementation speed by greater decision power and less stakeholders, and thereby reduces the possibility for project failure.
However, if business standardisation is missing then the pace slows down. Business standardisation refers to financial products, accounting, processes, and ways of working.
On the contrary, the implementation in the decentralised organisation usually takes longer due to more stakeholders and business variation across countries. The same applies to
hybrid companies although the changes can be smoother with a Center of Excellence providing a level of standardisation across the organisation.
It is important to consider your own organisation structure with its relative benefits and weaknesses as part of planning the implementation to reduce risks and maximise the likelihood of success.
STANDARDISATION ALSO SPEEDS UP DATA ANALYTICS.
It is good to keep in mind that regardless of company structure, processes, financial model and such, a higher degree of business standardisation always makes the implementation journey smoother and ensures faster integration of data sources across stakeholders and markets.
This also opens the use of more aggregated data leading to better strategic decision-making as well as optimisation of day-today operations. The ability to gather, consolidate and analyse data from different stakeholders and markets is highly valuable for any
company and frequently something that causes pain.
On the other hand, if a leasing company gets this right, it has a relative advantage compared to competitors and might be one of the key enablers for a successful market entry, i.e., by being able to quickly analyse and optimise selected channels, products, prices, and terms.
SUMMARY: THE RECIPE FOR SUCCESS.
The challenges faced by multinational leasing companies are multifaceted. By adopting the right mult-icountry solution and leveraging on local insight/expertise complemented by a structured and fitting implementation approach, the organisation can maximise its chances of getting on the right track.
Ognjen Radovic – Head of Leasing and Factoring, Tietoevry Banking
Gustav III:s Boulevard 130
169 74 Solna
Tel: +381 69 779 124