WWW.FLEXLEASE.

NL Electronic Leasing of your Company Car

Prepared by Thomas Kern and Marc Dekker

The Dutch electronic leasing firm, Flexlease, defines a flexible, novel and innovative approach to leasing, managing and paying for your company car. All processes and information concerning the potential car you might be interested in leasing is made available via the World Wide Web (WWW).

Figure 1 www.flexlease.nl

Flexleases conceptualization and development has demanded thinking beyond the boundaries of the leasing process and involved visionary planning of integrating this process with the new electronic commerce, i.e. WWW, medium. This is Flexleases story, focusing in particular on the processes and technology involved.
Professor Thomas Kern and Marc Dekker prepared this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The statements and opinions contained in this case are those of the individual contributors or advertisers, as indicated. The Publisher has used reasonable care and skill in compiling the content of this case. However, the Publisher and the Editors make no warranty as to the accuracy or completeness of any information on this case and accept no responsibility or liability for any inaccuracy or errors and omissions, or for any damage or injury to persons or property arising out of the use of the materials, instructions, methods or ideas contained on this case. This case may not be downloaded, reproduced, stored in a retrieval system, modified, made available on a network, used to create derivative works, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except (i) in the United States, as permitted under Section 107 or 108 of the 1976 United States Copyright Act, or internationally, as permitted by other applicable national copyright laws, or (ii) as expressly authorized on this case, or (iii) with the prior written permission of the Publisher. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 605 Third Avenue, New York, New York, 10158-0012, USA, (212) 8506011, fax (212) 850-6008, email: permreq@wiley.com. Copyright 2001 by John Wiley & Sons, Inc. All rights reserved.

Company Idea And Background It all started during a winter vacation when a senior manger from an Internet Service Provider (NetlinQ Group) and a senior leasing company (Personal Leasing Company) manager by coincidence started talking about their own particular business pressures. Before long, it dawned on Christian Boelen, the senior manager from the leasing firm, that the Web offered the kind of medium that would allow him to provide flexible and short-term car leasing contracts that leasing companies were currently unable to offer. The problem to date with offering flexible and short-term leasing contracts had always been that sales channels were just too expensive in terms of overheads. However, during their discussions about the potential of the Web and electronic commerce, it became obvious that this medium defined a sales channel that would eliminate many of the overhead costs in leasing cars, thus enabling a company to offer such flexible short-term service contracts at no extra cost. As a result the joint venture Flexlease was conceptualized based on the following business vision: To fulfill the need for flexible and cheap lease contracts by the use of electronic commerce as a new distribution channel1. The company structure of Flexlease would involve an even share distribution, as the knowhow to operationalize the concept and the definition of the services would essentially depend on both the ISP and the leasing company (see figure 2).
Personal Car Lease

NetlinQ

50%

50%

Flexlease

Figure 2 - Company Structure of Flexlease

An essential overhead was to recruit a marketing manager that could handle the demanding day-to-day business and sales of the car services and spearhead the firm in the Dutch market: I was then attracted to put Flexlease in the market. Thus promoting the company, visiting customers and maintaining the database. (Jeff Visser, Flexlease) To free the necessary cash to fund the venture, third party funding was procured and Flexlease was subsequently launched in September 1998. Interestingly, before undertaking the venture the industry belief at the time was that the product of leasing cars could not be innovated any further. The resulting industry-wide effect at that time had been a steady
1

Based on company document provide by Jeff Visser, Flexlease.

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increase in terms of price competition and only minimal service improvements a real loss for leasing customers. Therefore, when Christian Boelen and Jeff Visser introduced Flexlease it caused a considerable stir of both disbelief and belief that this could work. The vision that the leasing product could be further innovated by applying, for example, flexible lease terms, short-term contracts and increased car availability times seemed very innovative and possibly risky to most industry players. In fact, Flexleases approach highlighted that most large leasing firms were too locked into their own business processes to be able to respond or adapt to Flexleases service innovation. Even Personal Car Lease (a smaller leasing firm) was unable to adapt its business process and operations to match or compete with Flexleases sales approach. This proved Flexleases potential, that by applying and using the Internet as a new sales channel, it became possible to offer a new way of selling a product that existing brick and mortar firms found very difficult to compete against. According to Jeff Visser it is a product innovation by sales innovation. Flexlease Services2 - Leasing You Company Car Via The Web Flexlease is the first car leasing company in the Netherlands that offers attractively priced contracts together with a flexible lease contract via the Web. A car leased at Flexlease can be returned after a minimum lease period of three months without incurring any extra costs. What makes it special is that the flexibility does not make it anymore expensive than standard leasing contracts. The System Processes Flexlease offers a wide range of new and used cars. As part of the Internet services a customer can search the virtual showroom for a car that has the particular specifications required. Once a car is identified that is to the liking of the customer, he/she can request a leasing quote for that particular model. Customers are then provided with further information about the different pricing options through the Web site. Currently, Flexlease offers monthly price arrangements for all its models according to three different annual kilometer ranges. Figure three below illustrates the choices:

As stated on Flexleases homepage.

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Figure 3 Car leasing price structures

Having chosen a car, the customer next has to complete a leasing application in which he/she has to provide various personal and company details. All the details of the selected car will already be listed on the screen. Once the send button is clicked, the information is directly entered into Flexleases database. The customer is then automatically notified by E-mail that his application has been received. The credibility of the company for whom the individual is intending to lease a car is credit checked via Dun & Bradstreets (D&B) and the Credit Registration Agencys (BKR) information service in Tiel, Netherlands. At present, this process will on average take one to two days per request. Once the application is approved, Flexlease will send the leasing contract and a company blanket agreement by E-mail to the customer. The customer has to sign these and send them back to Flexlease, commonly using a fax machine or mail. The company blanket agreement will generally only be signed once, no matter how many cars are subsequently leased. This agreement outlines the main leasing regulations, while the leasing contract will be car specific. The blanket agreement is a contract between the customers company and Personal Car Lease (an established business founded in 1980). After the receipt of the signed contracts and the approval for financing Flexlease contacts the dealer to order the car. The dealer will then contact the customer once the car is ready to agree to a collection or delivery date and time (see figure 4).

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Customer Sends lease application

Flexlease

Returns receipt notification Checks credibility Sends contracts Returns signed contracts Arranges Financing BKR / D&B

Finance Company Gives approval

Buys car Notifies customer

Dealer

Contacts customer

Car collection or delivery

Figure 4 Complete order process overview

The Information Technology (IT) Backbone The IT backbone at Flexlease is fairly straightforward. Based on a direct Internet connection via NetlinQ (ISP), Flexlease hosts a web server and a database server to compile customer information and car data. Due to the limitations of the current digital infrastructure and applications, Flexlease for now still uses primarily a fax machine or regular mail to send the final documentation to the customer for signing. Although Flexlease is working toward an online contract signing arrangement, though digital signatures are not legally binding for now. Flexlease hopes, however, that in the near future digital signature will become acceptable, thus enabling it to automate the whole process. This clearly defines in terms of technology a key short-term objective for innovation to fully automate the process, in which contracts are signed digitally and then the car will be made available the next day. At present this limitation causes a considerable delay in the processing time of orders. The effect is a five-day delivery period.

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I want no interference with the order process; the only part that I want to do is marketing the product and Flexlease. (Jeff Visser, Flexlease). Workflow Management Systems - Staffware To shorten the order period, Flexlease is working on integrating an extensive workflow management system called Staffware. This application will facilitate various integration links between the underlying applications that are involved in the lease order process, like order tracking and cost calculations. One of the problems that Flexlease has been working around in the past months is the integration of the cost calculation program in the ordering process. Momentarily, the lack of full integration has implied an independent cost calculation has be done and then fed back to the interested customers. To automate this process a program is planned to receive direct information from the Staffware workflow management system, which will allow customers to calculate their leasing costs directly online at their leisure. This improvement in the process will then give the customer a fast and direct response to his/her particular leasing requirements and hence instantaneous service quotes. At this point, the information the customer has entered will be further used to complete his order if he/she should decide to go ahead with the quoted leasing offer. An example of what the workflow management process may look like is visualized in Figure 5 below (see the appendix for the Staffware terminology).
Send notification Arrange financing

Credibility

Receive lease application

Check credibility

Send contracts

Receive contracts

Notify customer Receive Approval

Notify customer

Register lease

Buys car

Figure 5 Flexleases Order process in Staffware

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The resulting core reasons for investing in Staffware were: 1. The resulting system will route all orders through the order process. When all the various steps are then executed automatically, it will speed up the whole process and further minimize the overhead costs. The resulting savings will be ploughed back into the services, which corresponds to Flexleases aim of offering flexible and low priced leasing services. The Internet is seen as a fast order method. People expect that the complete back-office is automated if they can order over the Internet. (Jeff Visser, Flexlease). 2. The workflow management system will further provide the ability to implement other processes more easily. In the future, Flexlease expects and plans to expand internationally, which will undoubtedly require adaptation and adoption of numerous order procedures to offer the same service internationally. 3. Finally, Staffware will assist in developing a reliable system where all processes are automated and where the only people involved are the customers and dealers. Staffware in this logical and physical system design will be essential for keeping a holistic overview of the different processes and integration points of the various applications, systems and partners. In other words, it will become vital to track every action that is performed at anytime in order to ensure system integrity and security. Nevertheless, one of the main problems that remain to be resolved is the third-party ordering process. In the moment, even if Flexlease eventually has the logical and physical design for a fully integrated system, it will not be able to automate or implement it completely as the third-party dealers have not automated their buying and online ordering process. In other words, at present the dealers operations could not be integrated into Flexleases holistic system. Third-party integration will thus present one of the key limitations that needs further careful planning.

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APPENDIX Workflow Modeling Technique The workflow modeling technique provides a tool set to visualize the basic elements of a process. Different kinds of model techniques exist to date, for example a mathematical or graphical approach. The graphical model describes the processes along their activities and information flows, which is the approach used by Flexlease. The tool set used for the modeling language explained here is Staffware. Staffware is one of the largest global workflow management system vendors with a 25% market share.3 Staffware, like other workflow management systems, uses a number of symbols to model different objects in a process. Symbols commonly used are listed in table 1. Symbol Name
Start Stop Step Condition

Description
Begin of the process End of the process An activity of task to be performed Decision about which route to follow (true/false)

Wait

A wait for completion of one step before proceeding to another step

Automatic Step A step that is executed automatically Connection

Table 1: Process modeling symbols

Connects the objects to show the process flow

The object condition makes it possible to route all cases differently, depending on a certain condition or rule. The wait object is used if two or more steps have to be finished before proceeding to the next step. An automatic step is useful to be able to audit the entire process, as various steps may be executed automatically with no direct action being visible.

Information retrieved from Staffware website www.staffware.com

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Credit Given?
Create Credit Possibility

Request for Credit Notify Customer Use Credit

Notify Customer

Figure 6: Example of Process Modelling - Making the process of buying on credit possible

For simplicity, an example is used to explain the modeling technique (see Figure 6 above). Each process starts with an event. This event can be anything, from the overheating of a car engine to the receipt of a credit request. The triggering event essentially starts the process, but may continue beyond the finite steps of a process. Essentially, a process transforms an input into an output. This output will be the result of the last step before the completion of the process. In our example, this will be the approval of credit or not. Of course this is only a simple example. Most processes tend to be far more complex. Nevertheless, the modeling technique visualizes the sequence of a process. The connection of one step to the next highlights the various interdependencies to complete a process. In some cases parallel steps will be operational, before a process comes to its completion. In many instances, all concurrent steps have to be completed, before continuing and here the WAIT symbol visualizes this scenario. The three integral dimensions of entities, objects and activities are not directly apparent in the model. The entities that are in the process are described in the step descriptions. These descriptions state who should perform this step. Who can refer to a specific person, a role or a department or an organization. In the step description it is also stated what object is being manipulated and what activity is being executed. By looking at a step description it is therefore possible to distinguish the kind of entity, object and activity a step deals with.

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