Leasing technology shock: feared or welcomed?

The chairman, leasing industry veteran Lord Mitchell, warned delegates that disruptive technologies are affecting every industry and business and said: “Technology is no longer just an industry sector on its own – it’s everywhere. It’s as ubiquitous as the pen and pencil used to be.”

Niall Murphy, founder and CEO of Evrything, highlighted research which suggests that by 2020 there will be one trillion connected devices and pointed out that there are already more objects connected to the Internet than there are human subscribers.

“Now that a smartphone puts Internet access and a screen in every pocket, we will see more and more interaction between people and products directly in real-time. In this new connected world, we will have huge amounts of information about how people use objects which we need to collect, analyse and act on,” Murphy explained.

“This trend will allow brands to interact directly with their customers. It will also change how manufacturers like Rolls Royce operate. The ability to collect real-time data on engine performance will allow them to operate a service-based approach, renting out the engine and tracking its usage so parts can be replaced when their rated hours come up,” Murphy predicted.

Changing the business model

Adding technology to products will change the business model in a raft of industries. By connecting an LED light to sensory technology such as infra-red and motion sensors, it becomes the interface to a range of other applications including fire and intruder detection and energy usage calculations, allowing the light bulb manufacturer to switch to supplying what is now a platform for home security services.

“The challenge is how to operate products not as inventory, but as active digital assets. It’s about how to interface all that data into the business processes of the enterprise in order to add value,” Murphy said.

Maria Hernandez, Internet of Everything Lead, UKI with Cisco Systems, said the company’s latest research suggests there is $19trillion of value at stake in building connected services. Just 1% of objects are currently connected, but 30,000 new objects are being connected every hour.

These connections, and particularly location-based information, are already being used to design new services. In Barcelona, for example, analysis of traffic patterns revealed that a third of the traffic on the roads was down to people looking for parking spaces. Providing real-time information to a smartphone app on availability tackled this issue; similarly the data from sensors in office buildings can be used to improve occupancy levels and tailor the provision of services such as lighting and heating.

“In the past, computer systems didn’t talk to each other. Now they are interacting all the time, so we have the chance to take dumb data and turn that into smart information. In addition, by using cloud-based services, we can do a lot of that analysis locally,” Hernandez said.

Technology such as 3D printing is also changing how companies – and individual consumers – can design, prototype and produce objects for personal use or business supply. Delegates saw a printer from iMakr produce a plastic Coca Cola bottle within a couple of hours.

IMakr CEO Romain Kidd said: “You can have an idea, iterate fast and produce a prototype in hours, which gives you benefits in terms of cost, productivity, customization and collaboration. For standard parts, you can produce as you sell, so there is no stock and no risk. It’s like the moment when we stopped buying software applications on a CD and started downloading.”

Against this background, Andrew Denton, chief operating officer, CHP Consulting (pictured above), maintained it was critical for the leasing industry to consider its position. “Do we see ourselves as a on a single track – like Kodak – or are we like Mercedes Benz, which now views itself as being in the integrated transport industry? We have the potential to support business and customers to acquire and use assets in the broadest sense, so it’s not just about leasing,” he said.

Denton pointed out that in the long term “assets” in the traditional sense could disappear, if users begin to print new parts themselves, making activities such as repossession and inspection redundant. Or leasing could become more focused on intellectual property, given the ability to augment or modify items that have been purchased.

“Vendor finance has traditionally dealt with a few major OEMs. But 3D printing opens up millions of people to manufacturing – so how does that affect our relationships?” Denton pointed out.

Denton argued that the leasing industry’s challenge was to look at how to collaborate using technology. “Monolithic systems are disappearing as Big Data is everywhere. We have the capability to process more data than ever before, including unstructured data from social media. The task now is to build up insights on how to support customers and how to drive innovation, because the rest of what the industry does is now a commodity,” he said.

Connected technology allows leasing companies to manage an asset as it is being used and to assess its operation and analyse its performance. That opens the way to creating new services for customers based on predicting their needs, according to patterns of real-time usage.

“If leasing companies take a broad view and acknowledge the changes in the ecosystem in which they operate and the way they do business, this all represents a terrific opportunity. But if they box themselves in, then they risk being left behind by not only their current competition but also new entrants from the technology world,” Denton concluded.