While many of us still enjoy the inky stains that remain on our hands from a good read of the Sunday paper, cutting down on paper in favor of automation and electronic delivery can help foster a more intelligent enterprise that optimizes its business efforts. More importantly, online efficiency expedites business decision making and can actually fuel the economy by putting businesses in a position to respond more quickly to a market opportunity.
As citizens of a fast flattening planet, we want our information literally at our fingertips. We want to touch it, crease it, fold it, fax it, scribble in the margins and slap it onto the front of the refrigerator.
Futurist Alvin Toffler in his 1990 book Powershift estimated that in one year the United States produced 1.3 trillion documents — enough to wallpaper the Grand Canyon 107 times. Some 15 years later, today’s capital equipment leasing and lending companies can be seen as a major contributor to the “paper trail,” collectively generating hundreds of thousands of paper invoices daily.
The good and bad news is that leading IT analyst firm IDC expects this industry to see more success, especially as more and more companies realize that leasing and financing can help companies simultaneously manage costs and fund their growth agendas. IDC estimates the financing of hardware, software and services will increase to more than $100 billion by 2010 from the $72 billion worldwide figure represented in 2006 — at what cost to the environment in terms of felled trees?
There is hope however, as governments and societies sit up and take notice of environmental issues. Today, the notion of the “paperless office” is garnering more attention, especially in the financing industry, where significant innovation is transforming the way invoices are handled.
Today, technology is making a difference. Innovation around Internet delivery and Service Oriented Architecture (SOA) are making processes simpler and more efficient while reducing our industry’s dependence on paper. This issue is especially important to small businesses and start-ups. The easier it is to obtain leases or loans, the more likely that small businesses will take advantage of credit opportunities to build new business and fuel the economy.
The paperless office represents a significant simplification of the business processes behind obtaining credit. For that reason, companies like IBM Global Financing (IGF) are making it a priority to apply process innovation towards the simplification and “de-papering” of the leasing and lending business.
This is not the first time that businesses have toyed with the idea of the paperless office. Back in 1975, Business Week magazine promoted the ideal of the “Office of the Future.” This idea became the topic du jour for many around the water cooler, and business owners everywhere heralded it as the coming Shangri La. It would be IBM’s introduction of the first generation of personal computers that would pave the way towards the fulfillment of a key Business Week prophesy: the gradual disappearance of paper altogether. In the modern office, most memos and letters are read, edited and passed along from computer screen to computer screen and this progress is continuing.
We are witnessing the emergence of a number of trends that rely less on paper as businesses integrate their operations more globally to meet client demands more efficiently. Today employees are reducing fax paper use by conversing freely through always connected, mobile devices. Our messages are shorter, thus decreasing the need for physical printouts. Our once paper-laden executive board rooms are being replaced by Web conferences and Web seminars. Meeting participants around the globe are viewing multipaged presentations via Internet-based conferencing programs and Web files.
Some 30 years later, it is debatable whether as a business community we have achieved this ideal of the paperless office. However, within IBM Global Financing, the lending and leasing business segment of IBM, paperless is no longer an ideal of the future; it is a business transformation that is happening now.
A few years ago, IGF processed more than 6,000 inbound paper invoices each month from its various suppliers in the U.S. alone. These paper invoices accounted for some 20% of the annual inbound invoices processed by IGF but contributed to almost 80% of the work. Every day, IBM’s lease generation staff was tasked with the cumbersome chore of manually inputting information from reams of paper invoices onto computers. This task was not only cumbersome, it was error-prone.
By leveraging new technology to automate the manual processing of inbound paper invoices, IGF was able to reduce this workload by as much as 95%. Through a partnership with Virginia-based Razorsight Corporation, IGF utilized technology that enabled paper invoices to be read optically and then automatically entered into their leasing systems. This further enabled IGF to manage its accounts payables and billing processes more accurately and efficiently for its affected customers.
Streamlining processes and effectively storing and indexing documents electronically can lead to productivity, efficiency and service gains. This can impact the bottom line with increased revenues. As companies become more globally integrated, time and resource pressures make the paperless office more critical to business success. Electronic interactions can enhance collaboration within business teams, while reduced data entry verification can result in general reductions in cycle times for business partners and IGF customers.
Doing business via the Internet is also helping to greatly reduce paper use in business today. Online financing means that IGF is open for business 24 hours a day, seven days a week in any part of the world. That means IBM customers have easy access to credit because technology has made the lending and leasing processes far more efficient, far less people intensive, and far more expeditious to the customer who wants to respond quickly to a market opportunity.
Recently, IGF introduced the IBM Rapid Online Financing (ROF) tool, an Internet-based funding system developed especially for resellers financing technology equipment and solutions priced in the $500,000 and under range. With ROF, resellers can quickly generate financing proposals, submit credit checks, produce electronic documents and track payments right from the Internet browser of their computer.
In just a few minutes, the ROF user can tailor a proposal to meet their clients’ needs. In fact, the entire transaction process can be completed without having to contact an IGF representative, thus firmly putting the business partner in the driver’s seat. Once finalized, a reseller can e-mail it to their client for signature. ROF transactions can typically be processed in less than an hour.
Since its launch in the U.S. in 2006 and in Europe a few years prior, the ROF tool has funded $2 billion in financing deals for IBM Business Partners and resellers. It has been used to qualify more than $10 billion in equipment financing deals for the IBM channel and is deployed in 32 countries and in 17 languages with almost 8,000 users actively enabled on the platform.
The execution of deals via the Internet is fast becoming a key sales channel enabler. Resellers are demonstrating through ROF’s success that getting lease rates and contracts immediately via the Web is important to them. Less paper means less outside intervention and the opportunity to get paid quickly.
Another key paperless solution for IGF, its business partners and resellers is the IBM Flexible Credit Program. IBM Flexible Credit can help qualified resellers make purchases from authorized suppliers through a credit line established over the Internet. Under the program, resellers can benefit from no-interest payment charges for amounts ranging from $100,000 to $500,000 with varying financing periods of 30, 45 or 60 days.
In addition, IGF has an Internet-based lease management tool called Customer Center. This solution enables customers to accept their contracts, manage their assets, make end-of-lease disposition decisions, and even initiate product returns online. Predefined or custom reports allow lessees to manage their leases and make end-of-lease decisions without the paper contracts previously required.
SOA can largely be credited for IBM Global Financing’s ability to offer more paperless solutions to its business partners and customers. SOA isn’t a new concept, but because of today’s rapidly changing marketplace, complexity in information technology infrastructures and the race to remain competitive, SOA has emerged as a key tool to help clients become on-demand businesses.
With SOA, IGF can manage and execute increasingly complex transactions by sharing data applications and accountability across the entire transaction process. By linking complex transactions together across a horizontal integration model built on open standards, IGF is able to bypass paper-based needs and automate transactions more efficiently electronically, regardless of platform, vendor or data source.
IBM is committed to expanding the spread of SOA-based technology tools, not just in financing, but in all parts of the business transformation process for its customers. IBM recently beat out all competitors in an industry benchmark that measures high-volume transaction processing. IBM’s record-breaking benchmark performance and scalability results involved more than 15,500 concurrent clients and produced more than 1,197 complex business transactions per second, which translates into more than 4.3 million transactions over the course of the benchmark’s run time.
Paperless solutions have actually put IGF on track to greatly expand its ability to manage peak loads, improve data quality and support ongoing compliance initiatives. For IGF’s customer base, going paperless has empowered them as well. IGF customers can now accept many of their contracts and invoices over the Internet, thereby lowering the time it takes to exchange business documents. Going paperless is also accelerating IBM’s payments to business partners. Now, with everything electronically available and online, customers are able to more efficiently manage all of their IBM and OEM assets worldwide.
So while many of us still enjoy the inky stains that remain on our hands from a good read of the Sunday paper, cutting down on paper in favor of automation and electronic delivery can help foster a more intelligent enterprise that optimizes its business efforts. More importantly, online efficiency expedites business decision making and can actually fuel the economy by putting businesses in a position to respond more quickly to a market opportunity.
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In his latest update on the IASB Leases Accounting Model, Bill Bosco reports that the IASB report ignores important issues that IASB preparer CFOs will face in operating under their proposed one lease model.