We attended the International Asset Finance Network conference in London earlier this month where we had the opportunity to connect with colleagues from the European asset finance community. As the largest conference of its kind in the region, there was ample knowledge sharing amongst more than 400 representatives from various firms, vendors, and regulators. In hearing from speakers, there is peak interest in understanding how the industry is taking on large-scale technology projects to modernize their business operations. And the results are staggering. While there is a desire to modernize, there is also widespread skepticism.
This isn’t surprising when you consider the facts. Failed technology projects across the leasing landscape in Europe have been extremely costly. According to Growcap, a European consultancy that presented at IAFN:
- Failed digital transformation projects across Europe cost an average of €1MM
- 75% of FS leaders are put off by above cost
- 70% of FS leaders admit to canceled projects
But as daunting as the numbers are – high risk yields high reward, and inaction isn’t an option for companies that want to stay competitive. Successful technology projects require business alignment deeply rooted in a commitment to change, and selecting the right vendor partner to go with on the journey.
If your business is ready to talk modernizing your technology stack, there are a few underlying activities that you can prioritize to put yourself on sound footing for your transformation project.
First, define your own digital philosophy
The Harvard Business Review notes that digital transformation is far from just something you can plug into your organization and turn on. It is a purposeful integration of digital technology across your business. Critical to this shift is identifying stakeholders, what their needs are, and how your future solution will support them (typically through revenue growth, efficiency, and scalability). Consensus building around this philosophy ensures higher engagement and a sense of collective ownership – it isn’t a top-down edict.
Use the core priorities you’ve identified to develop a specific, actionable set of goals for your system implementation. Deloitte, in a 2018 report on digital transformation risks, noted that one should take an ‘enterprise view’ of transformation, creating goals around strategy and vision, implementation, and program management. Developing this early on will help to create a structure during the vendor selection process that keeps the focus on your priorities.
Meet your needs today, but plan for continuous change
Business goals, priorities, and resources can all shift – they will all shift in time. Start by looking internally. Create communication and work-flow signoff channels to enable your team to make fast, agile decisions. Next, begin your external evaluation of technology solutions available. Consider how to prioritize business requirements to first launch a Minimum Viable Product (MVP) grounded by functionality available ‘out of the box’. Plan for long-range change enabled by self-service capabilities from the technology solution you choose. Ensuring you are choosing a flexible platform is the difference between a projects initial on-time success and future extensibility or its expensive failure.
Don’t be blinded by a big name
In addition to planning for dynamic business shifts, few things matter more to your project’s success than choosing an innovative and adaptable vendor with deep industry knowledge. For asset finance companies, it is vital to pick a vendor dedicated to the domain. The allure of large services brands is understandable, they can put up big numbers of consultants available. But all that glitters is not gold. Bringing on a team of consultants that aren’t specialized can mean bringing on a ‘yes-man’. You think you need more customization? They’ll do the work – but what happens a year down the road when you want to make a business shift? You’ve built yourself onto a private product island. Enterprise firms will promise to meet all your requirements, but they often need to build the software from scratch. This not only costs more money, it also means they will likely spend your resources building systems with redundancies since they lack industry expertise – and perhaps more frustratingly still, you will spend your time training them on basic asset finance concepts.
Ultimately, the vendor you select needs to have a strong understanding of your specific sector, industry and business case – and the technical expertise to support you. The better your vendor understands your challenges, the more effective they will be at reducing possible risk.
Finally, select a vendor with a track record of recent success
What better way to ensure a project’s success than to choose a vendor that can deliver. How many installs do they have in the asset finance space? How many new leasing customers have they signed in the last 3 years? How many implementations have they successfully completed in that time? How frequently do they issue general commercial releases for their product to their wider customer community?
Look not just at statistics, but relevant statistics. Do they demonstrate a strong regulatory understanding? How long have their employees worked in the asset finance industry? Ask the questions up front. If you’re looking for more guidance on how to conduct a vendor selection, we can send you an RFP quick start guide to help you get started.
While every technology project has inherent risks, ignoring the need for digital transformation is almost certain to hurt your business in the long-run. The biggest pitfalls to avoid are failing to define an internal strategy, not planning for project adaptability, and choosing a vendor without industry expertise or a stable ‘out of the box’ offering. While choosing a new ERP system to support your asset finance business is a large decision, proper planning and partnership can help you reduce your project’s risks and better meet your goals. Building a strong, flexible, and educated team with a dynamic plan will ensure your project succeeds the first time.