Interview with Ingemar Lanevi, Treasurer, NetApp
Transcript: What advice would you give to other finance and procurement executives? |
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Interviewer: What advice would you give to other finance executives, whether they be treasurers, controllers, or their teams in procurement; people; about how to grow a leasing program efficiently and effectively, or, if they have a leasing program that’s not functioning well, how to fix it.
Ingemar Lanevi: So, a couple of things. Obviously it starts with a whole economic analysis and the modeling thing that I talked about. Making sure that you have an ability to articulate the cash flow value and the benefits for why a lease program is a lot better than a cash capital outlay program that you might be running today if you don’t have a leasing program in place.
It all starts with that. And, again, making sure that your executive team understands what that means and what the value of that whole thing brings.
And, again, the way that I’ve found to be the easiest way to convince people was really getting back to the budget discussion again. The way that I convinced the CIO at the time to do the first deal that we ever did, which was a service renewal, I got it done at 0 percent financing and it saved about $4,000 a month because of the 0 percent financing.
And, again, we were able to negotiate the purchase price up front that was very aggressive and the whole thing. But at 0 percent financing, again, comparing it to what he would have seen in his budget beforehand, it was a much higher number.
So, all of a sudden by just seeing that savings that I presented him with, I got him over the hump.
And he had had some bad experiences in the past with leasing where, again, he had been taken advantage of at the end of term. Things kept going. And he wasn’t informed by the leasing company and six months later he recognized that he had paid whatever: six, seven, eight months extra worth of rental payments unnecessarily.
But this is, again, why the misperception or misconception about the value of leasing comes into play.
And, again, I do; somebody may point fingers toward third-party leasing companies because again, this is typically how they try to make money. It’s all on the back end, typically.
And I think captive programs have a slightly different bias and a slightly different way of looking things that is not really about making money necessarily on the leasing piece; it’s, again, more about selling more equipment.
But, again, the way that I really saw people taking to this concept initially was when I could show the budget savings on a deal-by-deal basis, that’s really where it started resonating with the business owners.
Again, a lot of them didn’t want to listen to the economic discussion: “OK, great, it makes sense when you talk about it the way you talk about it, but I don’t really fully understand what that really means and why that’s a good thing for the shareholders.”
But the one thing they do understand is if I paid a hundred dollars before and now you’re making me pay 87, I’ll take 87 all day long.
Interviewer: So, to summarize what you’re saying, it’s a combination; you used a combination of top-down clear policy mandate, but bottoms up education about the benefits, and then inserting kind of outsourced administration and systems to make sure you never have the evergreen problem again and you’re tracking and measuring the whole time. So, those three components.
Ingemar Lanevi: Correct. Correct. So, again, going back to your original question in terms of the advice, it’s really making sure that everybody understands the value from an economics point of view, because that is, then, what forms the basis for the mandate.
I mean, you can mandate things all day long, but if you can’t support why you’re mandating something, it is hard to convince people that that’s the right thing to do. I can mandate this thing and I can back it up with hard-core numbers that says, “Here is why I’m mandating it.”
It saves us money, economically speaking, for the corporation and shareholders, and by the way, for you Mr. Business Owner, I will save your budget dollars. So, I’m hitting a lot of constituents in the process.
I get the business owners from a budget point of view. I get the executives from an overall cash flow, shareholder value point of view and that forms the basis for why I can now go and mandate this stuff.
And it has been much more accepted by the businesses as a result of that analysis, effectively.
Lastly, again, to your point, obviously making sure that you can manage this whole thing, because if it does take off like ours did, making sure you have enough people to support it is critical.
Because you don’t want to make it blow up, obviously, and have issues and mistakes and challenges because that’s a disaster just waiting to happen immediately.
So, having somebody who can help you facilitate it really helps a lot. And we’ve had great help from our outsource provider who has the system and the infrastructure in place and the knowledge and the know-how to be able to do this very well for us and has become a very integral part of my operations group, making sure that we manage this on an ongoing basis.
Having access to our internal accounting system, having access directly to our business owners, and etcetera, etcertera.
So, that’s a next phase of the whole thing that becomes very critical to making an overall leasing program internally work very well.
Interviewer: Ingemar, thank you.
Ingemar Lanevi: You’re more than welcome.
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