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. Last Updated: 07/27/2016

Automation of Leasing: National Peculiarities

UnknownDmitry Kurdomonov, Director, Homnet Leasing
When creating representative offices abroad, transnational leasing corporations solve the problem of automation at an early stage. It would seem that the simplest solution is to implement in affiliate companies the same information system as in the parent organization, but most international leasing companies take a different approach.

Russia: Point of Attraction

Today a large number of Western companies are represented in the Russian leasing market, and their interest in Russia can be easily understood. Russia's leasing market is rapidly developing. Since 2000 it has doubled each year. According to the rating agency "Expert RA," in 2007 the Russian leasing market grew by 165 percent. The total volume of leasing agreements signed in Russia last year amounted to $39 billion, and there are grounds to think it is not an end point. The economic situation in Russia is stable enough, and it would be quite logical to expect new international leasing companies in Russia in the near future.

As a rule these companies are well experienced and actively implement high technologies, first and foremost — integrated information systems. Nevertheless, most often large corporations do not transfer ERP systems used in the head office to regional representative offices, but prefer to implement local developers' solutions. As a rule, it is an industry leader in leasing automation. For example, most foreign leasing branches in Russia are automated using "Homnet Leasing 8" solution. International practice shows that this situation is typical not only for Russia, but is a common trend. Why is it so?

Carrying Coals to Newcastle

When an information system is exported from the leasing company's headquarters, it is first necessary to study the region's business situation, as the ERP system must consider the peculiarities of each country's business processes. But this preparation might require efforts and resources exceeding other implementation stages.

Differences in statutory accounting are another problem leasing companies face when they come to new markets. In Russia, just like in many other countries, laws are regularly amended and new reporting forms are implemented. They must be monitored and reflected in the information system. It has little practical value to send experts from the headquarters, and deploying a support team in each branch is too expensive.

That is why transnational leasing companies usually follow the English proverb "One should not carry coals to Newcastle." When the customer buys an information system developed in the country, he obtains a complete solution to all above-mentioned problems, including system support by the developer's professionals.

Of course, not all local ERP systems are good enough to implement in a leasing company's foreign representative office. A solution is chosen according to five basic criteria.

Draw Not Your Bow till Your Arrow is Fixed

The first aspect leasing companies pay attention to is the degree of correspondence of the automation system to local legislation peculiarities and local leasing business practices. Ideally, when the customer acquires an IT solution, he receives some part of the local industry experience accumulated in the product along with programming code.

The next important criterion is the possibility of reporting according to international standards. Even Russian enterprises require automation systems to include this feature, and IFRS compliance is crucially important for foreign company affiliates: when reports are prepared, the head office collects data from all of its representative offices.

Another significant aspect is the use of the platform on which the solution is based. The platform may be known only in one region (e.g., nowadays "1C:Enterprise 8" is the most widespread platform for enterprises' complex automation in Russia and other CIS countries) or all around the world. The platform offers a number of capabilities that play an important role when choosing an automation system, such as: integration with third-party software products (especially important for automation of representative offices), scalability, sophisticated data security system, support of Web access to data, etc.

Moreover, a leasing company is interested not only in the proper functioning of its integrated information system, but also in its evolution. A software product cannot be developed "once and for all." Even software for military and space complexes is updated after it is implemented. The system's ability to be upgraded is the fourth criterion when choosing an automation solution.

Finally, reliable support is last but not least in a list of essential requirements for information systems. An ERP system's reliability is directly related to the support team's qualifications, support specialists' knowledge of the particularities of the leasing business and their experience in working with leasing companies, as well as their response to the leasing company's requests and recommendations.

Stake on the regional favorites

It is a common international trend for niche IT markets that the first company to offer a suitable software product and develop it into a complex information system actually eliminates its competitors after time. Enriched by successful implementations, the leading solution becomes an industry standard and dominates its market. Transnational leasing companies apply pragmatic IT policies, and are ready to consider different variants in their foreign offices automation. But they always choose the best solution.