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Servitization Required Modern-Day Asset Management Tools That Provide Flexibility

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Odessa

Today's leasing customers are not satisfied with just financing an asset, as they were in the past. They want maintenance and service included, and they expect flexible payment plans. For lenders and lessors, adopting a servitization financing model is not easy—it impacts all aspects of the business, but it is the future of financing. 

A transition toward a service business is accelerated by changing market conditions and customer expectations, while new digital technologies offer endless possibilities. 

Customer benefit is the starting point for product and service development in traditional businesses. As a result of servitization, companies can build a lasting and ongoing relationship with their customers beyond the transaction. Companies that adopt this approach can differentiate themselves from competitors, increase customer value, reduce purchase barriers, and increase customer loyalty.


What do we mean by servitization? 

The concept of servitization, which refers to the sale or leasing of bundled assets and services, is not new, but it is gaining traction across many industries, including auto and asset leasing. Financial organizations retain ownership of any physical goods and responsibility for operating costs, while customers pay for a unit of service or outcome. 

Service-as-a-service (PaaS (platform as a service)) is a term used to describe the simplest form of service product, which relates to individual products. Most often, it involves packaging a product with related services, but in some cases, it may mean replacing the product altogether with services. 

The software industry is undergoing a transition from traditional models to software-as-a-service (SaaS). For example, customers that ‘buy’ Office 365 applications pay a monthly fee or an annual fee and receive a bundle of applications for their use. Customers always have access to the latest version and new features thanks to free updates. 

Printers and copy machines are an example of PaaS in the auto and asset leasing sectors. The buyer typically pays a per-copy subscription rather than having to purchase the machine itself. By offering state-of-the-art maintenance, the provider minimizes its operating costs while ensuring reliability for the customer. 

A more complicated form is servitization of the business itself—business servitization. As a result of this type of servitization, the entire business must be reoriented to focus on services rather than products. It involves significant changes to business and pricing models and a broader transformation. 

Businesses that provide full-service leasing for cars, which includes oil changes, tire replacements, fuel costs, and insurance, use a business service model. 


Why is servitization taking off? 

Several trends are causing financial services organizations, including auto lenders and asset leasing companies, to rethink their financing strategies. 


Customer expectations today are growing and evolving: As customers, we are all familiar with modern digital-first companies like Amazon and Apple and the experiences they provide, and we want the same level of personalized service from each organization we interact with. In our favor, flexible pay-per-use models and bundled services are saving us money and simplifying our lives. We expect to be able to get fast credit decisions, quick turnarounds, reliable billing, and excellent customer service. Additionally, we want an experience that is seamless across multiple channels. 


The need for dynamic security and governance: It is becoming increasingly important to emphasize environmental, societal, and governance (ESG) initiatives and sustainability in financial services. Customers are demanding that companies be transparent about these initiatives, and regulatory requirements are changing to reflect this shift towards a circular economy that is more efficient. 


Modern-day technologies are opening avenues for innovation: As opposed to fixed on-premises systems, cloud-based asset leasing software enables businesses to scale in ways that are not possible with fixed on-premises systems. Cloud solutions can also be more efficient and provide better customer and employee experiences. 

Machine learning and artificial intelligence (AI) are enabling businesses to automate more complex tasks, allowing workers to focus on innovations that add value to the business. 

By connecting devices and equipment to the Web, the Internet of Things allows us to access their data. To improve customer experiences and make better insight-driven decisions, financial services companies are using this data along with powerful analytics. 


Gaining a competitive edge: A new generation of fintech and digital natives are developing new product lines and niches that meet customer demands at competitive prices. Lenders and lessors in the automotive and asset finance industries are responding by attempting to sell, lease or loan more complex offerings faster while keeping costs down. 

However, to accomplish this, they need to reduce their reliance on outdated legacy technology, increase their refresh rate (how often assets are replaced with newer models), match their payment streams to customer needs, and find ways to finance products and services for borrowers with a poor credit profile. 


There is a clear path forward with service-based financing models 

A recent survey revealed that 79% of respondents would prefer equipment, asset-leasing software, services, and maintenance as part of their future ‘pay as you go’ requirements. The need for more flexible finance solutions is clear, but what is the right model to choose? Are you capable of developing a robust implementation plan? Do you have the necessary technology, processes, and talent in place across your organization to ensure a successful transformation? 

To build a successful servitization strategy, you would need to team up with a technology partner who can not only build a solid tech foundation to run your business but also provide the support and necessary tools to manage your entire ecosystem. Asset management tools like Odessa provide a cloud-native, end-to-end integrated platform that enables asset finance companies to leverage features like pay-per-use, automated payments, customer and partner self-service portals, mobility, and integrations- all capabilities that are core to building a servitization model. Global businesses like Lenovo are choosing Odessa to augment their as-a-service offerings worldwide.  


About Odessa 

Headquartered in Philadelphia, USA, Odessa is a software company exclusively focused in the leasing industry. The Odessa Platform powers a diverse customer base globally, providing end-to-end, extensible solutions for lease and loan origination and portfolio management. Odessa facilitates business agility through rich feature sets including low-code development, test automation, reporting and business intelligence to ensure organizations can more effectively align business and IT objectives.  

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