Susan Hodges 2017-07-28 14:55:55
Disrupt Yourself
Don’t wait for exponential technologies to disrupt your business. Start the process yourself.
By Susan L. Hodges
Back when many in the industry were still trying to wrap their heads around the concept of cloud computing, First American Equipment Finance (FAEF) adopted it. Cloud computing is an exponential technology, one expected to grow and advance dramatically in the future. Growth occurs through the cost savings and efficiencies customers experience by using the cloud to store massive amounts of data and software off-site and access them anywhere through multiple devices.
Mark Tomaselli, CIO of the Fairport, New York–based middle-ticket company, explains how FAEF became an early adopter. “As we considered the pace of change and innovation in the consumer space, we realized that we had to rethink our IT strategy and focus heavily on innovation, speed and disruption,” he says.
By the end of 2009, FAEF had selected SalesForce as its gateway to the cloud. “We brought it in initially viewing it as a replacement to our legacy customer relationship management system,” Tomaselli recalls. “But we quickly realized we could do much more with the platform. SalesForce brought a lot of clarity as to what was possible with rapid transformation and iteration of many legacy workflows and business processes. Not only has it provided us with greater agility but also the ability to take the best-of-breed approach to building out our technology stack.”
First: Boost Your Awareness
If you’re still fuzzy about exponential technologies, their growing impacts and how you can apply them in your business, Daniel Nelson offers a basic roadmap of steps your company can take to learn more and eventually determine which technologies and capabilities will best benefit your firm. The first step: increasing your awareness.
“Do this by changing your routine,” suggests Nelson, President of Tamarack Consulting in Minneapolis and a member of the ELFA Operations & Technology Committee. “Identify news feed that are technology-oriented and not just those limited to our industry. LinkedIn, Forbes, CIO.com and WSJ.com are just a few examples of feeds that offer technology groups. Search, subscribe and then read with an open mind, applying critical thinking skills.” Then if you don’t understand the technology, investigate. Says Nelson, “This is where Google search, podcasts, blogs and white papers can help.”
Nelson also advises monitoring all technology news and information coming from ELFA. “Stay alert for invitations to webinars and download the 2017 Industry Future Council report,” he says. “It contains a great write-up on blockchain and other tech trends that are closer than they appear.” The report can be downloaded at www.store.leasefoundation.org.
Finally, he suggests monitoring near-vertical industries, such as payments and transfers, retail banking and insurance. “Developments in similar asset classes can be great sources of information,” he says. “Google these industries and you’ll find news from applications that can be downloaded to send you news as soon as it happens.”
Tawnya Stone, Vice President of Strategic Partner Technology at GreatAmerica Financial Services in Cedar Rapids, Iowa, cites the Internet of Things (IOT) as exemplary of a trend that’s closer than it appears. “We know sensors embedded in equipment collect huge amounts of data,” she says. “But where does that data go and who services the functionality? What happens to the data when the end-user is done with it, and who has access to it then?”
Stone references a video produced by Xerox in which a hacker uses his phone to invade the operating system of printers at a finance company and steal information (youtube.com/watch?v=DkajtSOAyec). “Most people have no idea about the risks IOT can bring to networks,” she says. “But exponential technologies are increasingly becoming part of the products we finance. As manufacturers embed these elements, we need to know more about the security risks and liabilities they impose as well as the opportunities they bring. We also need to phase in processes that protect and inform our vendors and end-users.”
Second: Get Engaged
Learn how others in your industry and your markets think about exponential technologies by attending conferences, small groups and online discussions. ELFA’s 2017 Operations & Technology Conference takes place Sept. 11–13 at the Westin Charlotte in Charlotte.
Deb Reuben, President of Minnetonka, Minnesota–based Reuben Creative, LLC and Chair of ELFA’s Ops & Tech Committee, says sessions will focus on multiple aspects of advancing technologies. “There’s so much hype out there, we want to educate attendees beyond it to understand the practical uses, risks and opportunities for exponential technologies in our industry,” she says. Interactive sessions “will expose attendees to new ideas and possibilities,” Reuben says, and provide tools companies can use to explore and apply technologies on their own.
Mike Sheehy, Director, Global Retail Operating Platform at John Deere Financial and a co-planner of the Ops & Tech Conference, says a goal of the conference is to increase attendees’ understanding of how they can use technologies to produce new and deeper insights for their companies as well as their customers. “We’re all trying to understand these technologies and their relevance to our organizations,” he says. “Networking with other attendees and presenters helps us learn how others are addressing these trends, and that alone makes the conference worth attending. The networking will last well after the conference.”
Nelson is coordinating two conference sessions that are likely to answer many questions and raise more. One introduces exponential technologies, while the other examines disruptive business-model innovations to understand how they’re likely to impact the industry. “These things are changing business strategies and we have to change to keep pace,” he says. “Imagine the growth we can achieve if we infuse our financial creativity with the technological accelerants already being applied in other markets.”
John Deere Financial in Johnston, Iowa, is doing just that. Chief Architect Matt Bednar says the company converts data to insights by capitalizing on the interconnectivity of systems and devices. “As a captive finance company, one of our key differentiators is the power to integrate our finance business with the innovative equipment and intelligent solutions offered to our customers,” says Bednar. By combining agronomic information with machine data, for example, John Deere Financial can help customers better manage the use of their equipment. “Knowing how many hours a harvester has been used can help with maintenance scheduling,” Bednar says. “Applying that data across a fleet of harvesters can help even out usage across the fleet. We recognize the power of exponential technologies and have developed capabilities we believe add significant value to our business.”
Because technology is lowering the barrier to entry in so many fields, Bednar notes that competitive advantage is no longer limited to organizations of a certain size, makeup or industry. Increasingly, competitors can and do come from nontraditional positions. “Ironically, the technologies being used to disrupt have been around for a while,” he says. “Now systems and devices are simply being leveraged in far more diverse ways.”
Third: Identify and Study Disruption in Near Verticals
As a CIO, Mark Tomaselli makes it a priority to connect with some of the most innovative companies in the world. Recently he made in-person visits to Box.com, Facebook, airbnb and Uber to examine their cultures and innovation. Most interesting to him was that each of these relatively young, digital-native companies has already moved on from its core product set to aggressively drive new products and services.
“They are, in effect, disrupting themselves,” says Tomaselli. “Some of the technologies they’re working on are far outside what you’d associate with these companies. The key takeaway is that we need to be willing to continuously disrupt ourselves to stay competitive.”
Tomaselli sees artificial intelligence and blockchain as the two exponential technologies with the greatest potential for impacting equipment finance. “Cognitive computing is already being used to gain deeper insights into fraud and credit,” he observes. “It’s also being applied to make us more efficient and targeted in our sales and marketing approaches and better informed in the execution of client service.” Blockchain technology will also see quick adoption and rapid disruption as more use cases become publically proven out over the next few years, he believes.
To be prepared, Tomaselli thinks equipment finance companies should stay connected to peer organizations to find out what’s happening at other firms. “Some exponential technologies are intriguing but not yet ready for mass consumption, so taking advantage of them now can be costly and difficult,” he says. “But vendors and their partners are getting better every day at delivering them. Much like the early days of cloud computing, as these technologies become more refined and easier to deliver and consume, the industry will be able to take advantage and rapidly transform our client experiences.”
Gary Amos, CEO of Commercial Finance Americas at Siemens Financial Services, Inc., in Malvern, Pennsylvania, says interconnectivity of machines, systems and devices is driving considerable discussion among equipment finance companies. “Look at the data out there,” he says. “According to industry research, by 2020 some 32 billion objects will be connected to the Internet. We all have to learn how to harness that information and deliver financing in new models to monetize the services being provided by manufacturers into forward-thinking business models.”
Siemens Financial Services has begun doing this by working with its Siemens Industrial colleagues bundling equipment, maintenance and services for smarter buildings and energy-efficiency models. “By analyzing the series performance metrics of these buildings, we can align our financial model and deliver payment structures based on the realized savings over 5 to 15 years,” Amos explains. “The customer signs an agreement today based on those forward-looking savings and we pay the manufacturer for the required assets to be installed, thus optimizing savings. Working collaboratively with our partners, we reduce the risk of ownership of the assets and the optimized performance leads to guaranteed savings. The close collaboration between financial services and the manufacturer enables the model to be able to do this.”
Amos expects advanced metrics to play into other equipment markets, such as healthcare, transportation and manufacturing assets. “You don’t want to be where the technology is; you want to be where it’s going,” he says. “Selling financial expertise and industrial products as a bundled service will be highly dependent on performance metrics and assets that provide critical data. With the IOT increasing connectivity of devices across industry, business models are rapidly shifting from ownership to usage- and performance-based structures.”
Fourth: Ask Questions about Impacts
To get where technology is going, talk with service providers that could become potential technology partners and discuss service providers with other equipment finance companies. “Do your fact-finding,” says Stone. “Try to understand the solutions these companies can bring and ask, ‘What does this technology mean to my company? To my customers? To me?’ ” Also consider how competitors might use the solutions to gain an edge, Stone suggests, and how other businesses that are not yet competitors could use the solutions to enter your markets.
“The biggest challenge is figuring out which capabilities your company needs,” she says. “Once you know that, you look at companies that can provide them. But don’t look only at their capabilities—look also at their culture,” she advises. “Many projects fail at implementation due to misalignment of cultures.”
When thinking of questions to ask colleagues as well as service providers, Stone offers what may be the most important advice of all: “Just because something is new, don’t assume that it won’t affect you,” she says, “and just because no one you know is doing it yet, don’t assume they won’t be doing it soon. Open your mind, look at the possibilities and ask questions that will help you decide how these technologies can apply to you.”
Susan Hodges writes about equipment finance and other business topics from her office in Wilmette, Illinois.
Learn more about this topic at the ELFA Operations & Technology Conference, Sept. 11¬–13 in Charlotte, North Carolina. See details at www.elfaonline.org/events/2017/OT.
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