| • News releases |
| • Articles |
| • Events |
| • Newsletter |
| • Case studies |
Leasing Life, Systems Review
Questionnaire respondent Richard Carter, Director of icenet Limited for Leasing Life magazine, March 2008
Please describe, in layman’s language, what each of your software systems does
The icenet broker solution provides a full solution to finance brokers which allows them to accept finance applications online or though other sources, profile them automatically and submit to a panel of lenders using direct systems links. Funder decisions and documentation is then communicated back to the broker and onwards to the introducer. The whole process is highly efficient and allows the broker to process increased levels of business whilst also improving customer service.
The icenet lender system supports a finance lender from the point of managing introducers, accepting applications and processing through underwriting, documentation and payout. Thereafter, the agreement is managed in the core lending system which controls accounting, customer servicing and debt collection. Full reporting services are also provided.
All icenet software is provided on a fully hosted basis, meaning that it can be priced and delivered as a service rather than as a traditional software licence.
Which, if any, of these systems were created in the past year? If so what was the innovation?
The icenet systems are continually developed to increase processing efficiency for the end-user and generally build on innovations previously implemented such as XML links to external data sources and funders.
In icenet’s experience, the adoption of new technologies by a customer is best managed through an evolutionary approach based on a sound scaleable platform rather than a revolutionary one where they are expected to effectively change systems on a regular basis with the attendant impact on staff and training etc.
In which countries do you currently have live systems?
All systems hosted out of the UK, though these support 11 different European countries
Please list new countries added during 2007
No new countries were added during 2007
Which, if any, of your systems are Basel II compliant?
icenet has invested over the last 12 months to ensure that its products remain fully compliant with emerging legislation such as Basel II and the forthcoming changes to the CCA.
In a maximum of 60 words please describe your most system-integrated product for
the asset-finance sector
icenet allows finance applications to be quoted and entered at the point of sale, passed electronically for automated underwriting and processed through to payout. Thereafter, the integrated account servicing platform allows the customer relationship to be managed in an efficient and timely manner with particular emphasis on arrears management. Additionally, automated accounting and comprehensive management information is provided through the hosted environment.
Please give your company’s most recent 12-month turnover figure
£1,950,000 with £140k profit.
2. Your asset-finance clients.
Please list your asset finance clients.
icenet has a broad range of over 50 customers including both brokers and lenders. Customers include:
St Helen’s Finance
Alliance & General Leasing
Asset Finance UK
Lease UK
Universal Leasing
Lease Portfolio Management
Which new asset-finance clients have you gained during 2007? Please list their name, principal country of operation and then an indication in which countries the system will be operative
A number of new customers have been obtained during 2007 including:
Oracle Asset Finance
Capex Industrial Finance
Bridford Financial Solutions
All of whom will be using the system in the UK
Please breakdown their industry role (e.g. lessor 60% broker 40%) into percentage terms
Excluding motor and retail finance customers the breakdown in revenue terms is broadly 50%/50%, though this changes to lessor 35% and broker 65% in terms of customer numbers. The business has experienced significant growth in broker customer and revenues during 2007 and this is expected to continue in 2008.
Please breakdown their ownership (e.g. captive 50%/bank owned 30%/independent 20%) into percentage terms
Typically 20% captive, 20% bank owned and 60% independent. Most new customers have been independent and it is expected that this level will increase in 2008.
What do you believe to be clients’ greatest misconceptions regarding systems updates?
Over recent years there has been increased understanding between software companies and customers, particularly in this sector where both have a better understanding of how the other operates and how to get the most from the relationship. As a result the number of consistent, significant misconceptions has dropped dramatically.
What do you believe should be the main determinant behind a client’s choice of an asset-management system?
In common with previous years icenet continues to believe that organisations should select their software partners on the basis of the ‘whole product’, i.e. not just the software functionality, but supplier credibility and financial stability, ability to implement, ongoing support, commitment to R&D etc.
Over the last year, icenet has spoken to a number of companies who have purchased primarily on the basis of cost and an optimistic implementation plan to find the implementation of the final solution has been significantly delayed and placed the business under increased pressure.
In the asset-finance industry, when a systems implement fails to deliver, what do you believe are the most likely causes?
Very often this is due to a poorly defined definition of the project. Typically this comes from customer believing that the system will support various functions as they consider them to be ‘standard’ for the industry when in fact they are broadly standard, but partially specific to that customer. Similarly, the software company often doesn’t probe enough into the customer’s business and hence understand the complexities before they become an issue.
A further complexity with implementations is the requirement to covert data from the legacy system to the new one. Typically one of the drivers for a new system will be a requirement to support new financial products that the legacy system is unable to support effectively. In practice this problem only comes to light after the lessor has tried to “shoehorn” the product into the legacy system which then makes the data conversion more complex.
icenet’s R&D investment continues to focus on achieving rapid delivery of functionality, part of which has been to remove the technical infrastructure element from the customer’s critical path through the provision of a fully hosted system. This allows icenet to deliver a fully working system within 4 weeks of contract, enabling the customer to achieve a rapid return on investment in both monetary and performance terms.
Do you outsource any services? If so please explain which - and how it benefits your clients
Through its parent company icenet is able to provide a range of outsource services ranging from managing direct debits and debt collection to a full business outsource from application processing and underwriting through to debt collection.
Do you believe that partnership arrangements between systems providers are a viable route for the future? – and if so please say why you believe so
Over the last 10 years software vendors have tended to focus on products where they can add value, for example no one would dream of writing a general ledger product these days when there are plenty chose from ranging from Sage to SAP. This is also true of the asset finance sector where icenet sees increased opportunity to partner with providers of niche products, this being supported by the increased use of ‘open’ solutions. Time will tell whether these partnerships will extend to one asset finance systems provider partnering with another unless it is a precursor to a strategic re-alignment of their businesses.
From which source do you principally source staff? (E.g. university 50%/ competitors 40% etc)………………………………………………...........................
icenet has recently recruited a team of resources from a number of different businesses which share the icenet’s business ethos and plans for changing the asset finance software market. Where additional staff are required, then in common with other vendors, icenet tends to recruit direct from university or searches for staff who have appropriate skills, though perhaps from a different industry.
Critical to icenet’s success is keeping staff numbers small which ensures all staff are fully involved in the business and hence staff attrition is low. icenet’s business model is such that its future growth and profitability is not predicated on a significant increase in staff numbers.
Are correct calibre staff difficult to obtain? If so what can be done about it?
Good staff are very difficult to find and hence significant emphasis has to be placed on training and supervision.
What percentage of your company budget goes into staff training annually?
This forms part of the R&D budget which amounts to 25% of icenet’s turnover
What percentage of company budget goes into product research and development?
icenet has a aggressive growth plans which can only be achieved through intensive investment in R&D as it continues its growth in the asset finance sector. Investment in 2006 was circa £550k with circa £470k invested in 2007. The R&D budget for 2008 suggests a similar level of investment.
What will be the main features of a global leasing system?
I have a real doubt that a competent, global leasing system will ever be introduced that is capable of being efficiently implemented in medium to large size local finance companies, though certainly an opportunity to provide a bespoke solution to a global multi-national does exist.
As lessors themselves continue to consolidate, what is the future evolutionary path to be for software companies?
As the larger businesses merge, the scale of an IT project to consolidate the systems becomes larger and hence more likely to be postponed in favour of maintaining the status quo and implementing a common reporting and risk management framework.
Interestingly, whenever two businesses merge, this always seems to spin off a number of start-ups where sales staff become disenchanted with the new entity and decide to strike out on their own.
This scenario has been the same for the last few years which has given rise to an increased number of start-ups all of which require competent, competitively priced IT solutions to be made available out of the box. As a result it could be argued that large scale consolidation in finance companies requires software companies to ‘productise’ their solutions more effectively for new start businesses. Certainly at icenet this is a dynamic we recognised some time ago and hence our investment in being able to provide fully hosted, functional solutions very rapidly and cost effectively.
What are the principal challenges for software companies seeking to expand into
China and India?
Any business seeking to expand whether into new sectors or geographies must ensure that its core business and customer base is secure. So often we see stories of businesses over-reaching themselves and potentially gambling all for international growth.
What do you believe to be your company’s biggest corporate challenges for 2008?
Inevitably the credit crunch will bring its own set of challenges to our market with some prospective customers either delaying or deferring systems implementation projects and others potentially disappearing. Naturally there will also be an upside where certain business have strong liquidity, they will able to capitalise on the market and may accelerate systems projects.
icenet has strong recurring revenues which positions it well to ride out any downturn in discretionary spending in the leasing sector.