Oracle's ''Lease'' on Life

Most American businesses don't buy a lot of heavy-duty equipment, preferring instead to lease. But that doesn't mean the leasing industry is awash with lease-management software. On the contrary, most enterprise software vendors have avoided the space like the plague -- that is, until now. This week Oracle unveiled its Lease Management module as part of its Oracle 11i E-Business suite. What Oracle calls a new CRM product, the lease management module automates and manages the lifecycle of leased products, from loan origination to contract termination, thus reducing risks from lost revenue and lease renewals and cutting costs associated with offline time and labor operations. Lease management traditionally relied on home-spun software or even pen, paper and a filing cabinet. Oracle's announcement drew praise from leasing industry heavyweights such as Cap Gemini and Northern Consulting. "We see companies benefiting greatly from this tool because it is extremely configurable," said Cameron Krueger, spokesperson for Northern Consulting, a provider of systems and operations to the equipment finance and leasing industry, in a statement. "Companies can define their own business rules, calculations and products. In turn, lessors can grow their portfolios and offer innovative financing products while streamlining operations with a well integrated approach to contract management." Indeed, the leasing market is brimming with dollars. According to ELA Survey of Industry Activity, leasing is a $260 billion market in the U.S.. Moreover, leasing volumes grew quarter-on-quarter during the rocky year of 2001. Oracle claims 80 percent of U.S. companies lease equipment, as well as most of Oracle's manufacturing customers. A few vendors such as Infolease, DSI, ThoughtWorks, and Seismiq have planted flags in the lease-management software space. But where are the big ERP vendors, especially given leasing's inherent ties to back-office financial activities such as credit approvals, vendor payments, contract authoring, activation and billing? Shedding light on a possible answer, Sharon Ward, vice president of enterprise applications at market researcher Hurwitz Group, says the leasing business is very different from a product-based business -- the staple of most ERP systems. "ERP is designed around a product as the central field," she says, adding that the software tackles shipping of the product and change of ownership. "But in leasing, it's still your asset. Leasing has a lot of accounting ramifications that ERP vendors didn't want to get into." But with competition among ERP vendors heating up, coupled with Oracle's promise to become an end-to-end e-business provider, the rules have changed, Ward explains. "Oracle has been adding a lot of functionality to E-Business Suite 11i to make it more broadly applicable, and Leasing Management compliments Oracle's contract management modules introduced earlier this year," she says. "This is a good, competitive differentiator for Oracle." Tom Kaneshige also writes for Line56.com