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Financing the Managed Services Offering

27 Jul, 2012 By: Miles Herman, LEAF Commercial Capital, Inc

It is hard to open a technology trade journal or speak with industry experts and not read or hear about the movement to more comprehensive offerings in the office automation marketplace. As technology continues to evolve, it also continues to converge. The explosion of the Internet and related technologies, cloud computing, and extensive third party services has become today’s technology standard. 

Savvy business owners are embracing a new paradigm—total solution offerings rather than the traditional individual product acquisition strategy of the past. To complement the new direction, forward thinking leasing companies are racing to offer comprehensive leasing services which will provide the proactive equipment dealer with new ways to support their customers and increase their own profitability.  As a result, tech-savvy dealers and their supporting teams create strong partnerships with leasing companies who strive to operate within the new and extensive market place.

Managed Services—The Future of Customer Relationships

The new model for customer relationships is based on a single point of contact management concept. Managed Print Services (MPS) is expanding into what is now called Managed Services (MS) with traditional copier dealerships either building tech teams within the dealership or forming alliances and tying up relationships with technology VARs and other third-party service and technology suppliers. A managed services offering is a bundled package that brings together the VAR and any other necessary service provider with the copier dealer to offer the customer a turnkey, single point of contact for all internal technology services.

With all technology systems integrated—copiers, printers, document management, information technology hardware and software (desktop, enterprise and cloud based offerings), telephony, Internet, security and all accompanying usage components-network management and optimization—a business can achieve significant increases to efficiency while simultaneously reducing costs. A growing number of office automation dealers are already taking advantage of this trend by bringing comprehensive solutions to market.  Bundling the technology is the future of the market place.

A bundled services solution benefits everyone involved. Closed loop asset tracking is extremely efficient by providing comprehensive life cycle support for all of a customer’s technology systems, from the planning and the acquisition stage through to deployment/redeployment and ultimately addressing technology obsolescence through the asset refreshment and disposal stage. The new model evolving is one that offers a consolidated solution. Single Points Offering Programs (SPOs) are those being delivered today to offer these comprehensive plans.

The concept of managed services elevates a simple procurement process into an integrated solution that becomes a strategic competitive advantage for a business. It is a multi-faceted approach that transforms the three-dimensional concept of basic leasing and cost per copy programs into a multi-dimensional business model.

Multi-dimensional Financing

The leasing industry today has evolved well beyond the traditional offerings. Historically, leasing was delivered in the analog copier and products space more than 25 years ago to minimize the shock of business owners having to write a large check. It also enabled the copier dealer to better control its customer base. Over the years, the lease offerings continued to evolve to keep pace with technology advancements and meet the growing needs of the marketplace. Such examples are the evolving cost per copy programs.

The key to a robust, comprehensive managed services program is partnering with a leasing company that can support all aspects of the transactions that result from the integration of disparate systems and services. The forward oriented leasing company will finance it all…the hardware (copiers, printers, telephony, network backbone) and the software (desktop, enterprise, cloud-based). The proactive leasing company will finance all of the offerings of the dealer and VAR which includes the full range of professional services being delivered (upfront and ongoing). 

To find the most advanced leasing partner, look for a company that can deliver the full suite of financial tools and solutions. From online quotation tools for pricing the transaction to simplified documentation to streamlined processes, the leasing company should provide support throughout the life cycle of use to compliment that of the dealers. The interactions with the leasing company should be set up to meet the dealer’s requirements—online web based portals, as well as comprehensive mobile solutions coupled with proactive sales will provide the upfront support initially required to close the transaction. But it can’t stop there.

The leasing company’s back end support is so crucial today. Many customers are turned off by billing errors. The cause of these errors is often due to lack of integration and monitoring. These results mean copier dealers often have to bill the usage based components, thereby not meeting the needs and requirements of the customer. 

Sophisticated leasing companies have built solutions to overcome these billing issues. Through electronic feeds and various error billing check points, lessors are improving the accuracy of the bills being sent to the customers. These invoices to the customer are blended and bundled in any way the customer wishes to see the detail—bundled to a single cost per use or to greater detailed breakouts by departments, offices, and so on. The lessor collects the payment from the customer and then distributes the appropriate payments based upon the guidelines established up front.

Complexity That Drives Simplicity

The acquisition of equipment should no longer be viewed as a price-based commodity process. Instead, businesses need to understand that a well-engineered solutions-driven offering effectively becomes a tremendous strategic advantage. The challenge of course is in coordinating all of the pieces of the solution itself. It is no longer a matter of simply financing the equipment and then business as usual. An integrated, automated business has a lot of moving parts and individual components that must all be tied together, both operationally and financially. Additionally, this is an end-to-end, lifecycle management process. The dealer, the VAR and all of the other third party providers must form a virtual partnership with the leasing company supporting the offering.

With so many pieces to keep track of, customers can outsource this headache to the team providing the solutions. By embarking on such a change, the complexity can be simplified and turned into an opportunity to create tremendous value both in the solution and from it. Increased efficiencies help reduce costs and drive profits. Instead of vendors standing around pointing fingers at one another when there is a problem, the team simply arrives to resolve it. This is the new model for doing business and it is here to stay.

An Open Door To Vast Opportunities

A managed services contract opens many doors for the dealer and all of the partners involved. Because it is a lifecycle approach that includes planning, acquisition, management, maintenance and replacement, a managed services contract is a relationship builder. Doors to every department in an existing customer’s operation will open to take advantage of the new program.

In addition to the existing customer, other new customers can be created. The marketplace is virtually untapped because few dealers are positioned to offer managed services solutions. Needless to say, the opportunities to penetrate and grow this business are immense.

The smart solutions providers today see an immediate opportunity to capitalize on growing market share and profits; in the future, it may transform from an option to becoming a requirement if you are to remain competitive and financially viable.

Author: Miles Herman is President and COO of LEAF Commercial Capital, Inc. (“LEAF”) an independent equipment leasing and financing company headquartered in Philadelphia, PA. LEAF serves the small-to-mid-ticket equipment finance marketplace, specializing in information technology, telecommunications, office-automation, light industrial, healthcare, and other business essential assets. LEAF assists vendors to transform sales financing into a revenue generating strategy. For more information about LEAF, please visit http://www.LEAFnow.com

About the Author: Miles Herman

Miles Herman

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