Dec. 29 2006 09:49 AM

Acquiring, servicing and retaining customers is imperative in today's highly competitive, information-rich business environment. In response, marketers are making demands of every department from IT to document output, which is increasingly being used for the gathering of detailed customer information and leveraged as a vehicle for specialized one-to-one marketing campaigns.


When document output managers are unable to support such revenue-enhancing initiatives or respond to market challenges in general because of budget restrictions or lack of capital, there can be serious consequences. The result may be the loss of customers and, with them, long-term revenues that are vital to the company's future.


Organizations that depend on customer loyalty are continually looking for ways to streamline and improve communication processes even as they seek to control costs. The need for improvement drives continuous investment in highly specialized technologies and hardware. But because mail and document production is largely non-core to the business, alternatives to operational spending such as outsourcing these processes always loom ominously as an option.


Organizations that want to keep integrated document output in-house will find that the industry has matured through market consolidation, channel partnering and enhanced solution sets. In some cases, true end-to-end solutions are available, which is an advantage for enterprises seeking to upgrade their capabilities or regain a competitive advantage after years of coping with austerity budgets. In fact, after years of touting automated document factories, leading analyst groups are now advising organizations to migrate from automation to intelligence via a more cohesive and integrated output called customer communication management (CCM).


CCM increases profitability via one-to-one customer cross marketing, while reducing operating costs and complexity. Competitive organizations need a CCM capability. They also need an effective financing strategy to pay for it, a strategy that will also meet another important business goal of maximizing the return on investment (ROI) or return on assets (ROA).


Benefits of Leasing

Lease financing plays an important role in providing · expanded opportunities, higher profit margins and more value to stakeholders. For many businesses, the use of equipment, rather than the ownership of it, provides the most value. It is usually more economical to lease equipment and use cash for other needs. Financing allows the organization to stretch payments out over the term of the agreement, which improves liquidity and frees up capital. In fact, profits from the investments often offset the cost of the lease.


Leasing also provides protection against obsolescence due to rapidly changing technology, without the economic constraints of ownership. As the business changes, expands, contracts or becomes more complex, a new solution may be needed to handle larger or more complex applications. Unlike bank financing, on the other hand, which can lock up flexibility through the end of the lease, some mail finishing vendors allow customers to upgrade before completing the current agreement.


Capital is a corporate asset and must be deployed by the enterprise to obtain maximum benefit via ROI or ROA and must create shareholder value. Leasing provides an alternative source of capital. It allows the enterprise to leverage existing capital and enables departments to work within pre-defined budgets.


Selecting the Right Partner

Ideally, the enterprise should select a company that is capable of functioning as a true partner, one that will consolidate all financial requirements and negotiations. A leasing entity that cannot accommodate all of the requirements of an organization is probably not viable enough to support the future needs of your enterprise.


So potential partners should be sufficiently large to allow the enterprise to consolidate all financial requirements. They should be familiar with the needs of your organization as well as the products and services required. Just as there is no single off-the-shelf customer communication management system, no single financial structure exists that meets all needs. Your financial partner must be willing to meet the special requirements of the client organizations.


Most equipment manufacturers offer some kind of leasing program and will engage in productive partnerships with an enterprise interested in upgrading to a customer communication management strategy. Manufacturer-sponsored programs are often used to support product replacement and often offer the best total value to the enterprise. Manufacturers are often willing to work with the enterprise to accommodate special needs with ancillary services negotiated and included in the final price. Mail and document output managers must work in concert with the financial group and their own procurement managers to discover hidden costs and revenue opportunities to make leasing the equipment a viable proposition.


Enterprises no longer buy, hold and depreciate assets over an eight to 10 year life cycle. Leasing is often an off-balance-sheet event. Consequently, it does not deplete the balance sheet and may provide a greater ROI or ROA for the enterprise. Leasing also enables an enterprise to respond more rapidly to technological advances and gain a significant advantage over enterprises that must wait for traditional capital approvals before they can acquire technology that will bring important business enhancements.


In addition, leasing has always served as a protection against technological obsolescence. In today's high-tech environment this benefit continues to be of prime importance. But today, managers face another type of obsolescence, application obsolescence. The mission of the enterprise may evolve. As market demands change, the enterprise must in turn change, and so must the products and services it delivers. The enterprise must therefore be flexible enough to accommodate and adapt to any number of changes. Leasing can pay to redesign the integrated output architecture to react to such changes and so reduce any disruption to production and minimize the wait for the capital needed to fund technology and its new or revised applications.


Obtaining Buy-In from the CFO

The Chief Financial Officer (CFO) has many objectives, which can sometimes appear to be in conflict. The CFO has to weigh all facets of corporate capital allocation and the return it is expected to yield. As the company approaches document output financing, the challenges facing the CFO and print/finish executives include the following:


  • True costs of mail generation are spread over many budgets and departments.


  • Inefficiencies in the current environment are sometimes understated.


  • There is an existing investment in equipment as well as facilities.


  • There may be no model to estimate anticipated costs or payback associated with the output strategy.


    Having advanced control and management tools in place will mitigate this last factor. The days of measuring output efficiency with a clipboard and excel spreadsheet are over. But the first bullet may be the most difficult one to overcome. Nobody owns billing. There are many stakeholders, each with a relatively small but significant interest in the final product. Until Chief Content Officers or Chief Document Officers are established, this will continue to be true.


    In short, building a CCM strategy is cost-effective because it generates efficiencies that lead to lower costs while it increases revenue opportunities. Leasing allows the enterprise to offset expenses by generating greater value. These are some of the considerations to bear in mind when thinking of CCM strategy and the financing of the equipment, software and services that support it.


    Tom E. Sullivan is the vice president, Sales & Marketing, for Pitney Bowes Global Payment Solutions and Financial Services. For additional information on leasing, contact

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