Situation

A multinational asset finance company sought to improve the effectiveness of its strategic planning activities and engaged Invigors EMEA, part of The Alta Group worldwide (Alta), to undertake a review of its annual planning process. Alta consultants, together with the marketing intelligence executive, identified, among other requirements, the need for a greater external focus to the planning input, especially given the volatile economic conditions prevailing at the time. The business objective was to improve the quality and accuracy of forecasts on which medium- to long-term plans and investment decisions were made. Forecasts needed to reflect the external market environment in which the company operated as well as internally-driven goals and aspirations. Since the company’s operations were spread across North America and Europe, the planning process had to be capable of implementation at a country, regional and corporate level.

Solution

As an integral part of the solution, Alta developed a market planning model to provide a consistent planning framework for market-by-market analysis and forecasting. This combined country-level market data, macroeconomic indicators, and internal new business metrics in a quantitative model that is used for scenario planning and stress-testing as well as shorter-term budgeting and targeting. Input data is derived from public domain sources, national and regional leasing associations, internal management information, and proprietary research. The model uses predictive analytics, based on econometric modeling and time series analysis, to generate forecasts or scenarios for each geographic market in which the company operates.

A dashboard enables the multinational’s CEO and planning team to identify emerging market opportunities as well as prepare for potential risks, and to optimize the allocation of resources at a geographic level. Internal key performance indicators (KPIs) are no longer viewed in isolation but can now be monitored against developments in the external leasing market and wider economy. Richard Ryan, the partner with Alta who headed the project, said that Alta was “uniquely positioned to deliver this solution with our understanding of predictive analytic techniques, process improvement, and deep knowledge of the leasing industry.” He noted that the software technologies and analytic processes have been available to the industry for some years, but “it took an economic crisis for our industry to start taking full advantage of the tools and techniques available.”

Success

The finance company now can make market entry/divestment and investment decisions in both mature and emerging markets more objectively and confidently. Originally developed for the strategic planning team, the predictive analytic model has been made available to risk, marketing, and business unit management, facilitating better decision-making across the organization. From its successful implementation in the complex European market, the solution has since been rolled out in North America.

The company realized significant benefits from gaining a more holistic view across its diverse geographic interests, said Ryan. It is enabling the company to target its allocation of both physical and capital resources more effectively. Because of the increased uncertainty of global events and their impact on the leasing market, predictive analytics have become a critical tool for equipment leasing corporate management in today’s challenging business climate.