Almost everybody is going through a digital transformation right now, but at LeasePlan, we’re handling two at once. For over 50 years, we have run increasingly efficient versions of more or less the same business — leasing and managing car fleets. In fact, we pride ourselves on saying that we founded this industry. This means we face a double digital challenge today: in addition to tackling the same kind of enterprise digitalization initiative as everyone else, we have to keep up with the enormous changes that are underway in transportation.
The good news is that we are operating from a position of strength. LeasePlan is the world’s largest car leasing and fleet management company. We have over 1.8 million cars on the road in over 30 countries. For a long time, we were owned by Volkswagen, but in 2016, we were acquired by a consortium.
On the mobility side, we are preparing for a number of big trends. One the transition from ownership to subscription models, and as part of this we expect to see a higher level of vehicle utilization. Right now, fleet utilization is typically less than 10%: I take my car to work, I park it, it stands there for eight hours, and then I go home. Maybe I’ll drive a little bit on the weekend. The actual use of this fairly expensive asset is very low. For economic and environmental reasons, this has to change.
A second, related, development we are watching closely is the progress being made toward autonomous vehicles. My best guess is that within the next three years we will see the first truly autonomous cars, and within five years, we’re going to see them really start to take off.
A third trend is the move away from the traditional combustion engine towards electric or hybrid-powered vehicles. We expect these vehicles to come on very strong beginning in 2019, as the OEMs introduce electrics with high mileage batteries. The move to Electric Vehicles (EVs) will change how we manage fleets going forward as we start to think about things like charging infrastructure. LeasePlan is leading by example in this area, with the ambition to transition our employee fleet to EVs by 2021.
Externally, we are trying to keep up with the changes through a number of strategic partnerships. One is with Uber. For Uber it’s not only about getting customers in backseat. It’s also a question of securing enough vehicles – people in the driver’s seat. In a number of cases the problem is that some of these potential drivers don’t have cars. So we’re looking at how we might help Uber help more of these drivers get cars in a way that is relevant for Uber, relevant for us, and affordable for the drivers.
We are also working with external partners that are rolling out charging stations and developing a new maintenance system that takes us out of the maintenance business and gives it to OEM garages and independent garages. Finally, we’re involved in EV100, a UN initiative to convert the world to electric vehicles.
Transformation at home
Internally, we are also facing a lot of changes. Our first challenge is to reorganize what had operated essentially as over 30 different companies into a single entity. Within IT, this has meant a lot of streamlining. Two years ago, we had 1500 different applications supported by 830 employees and governed by 18 different governance bodies. We are continuously reducing complexity and number of application. Ultimately we will have around 150 applications, 500 employees, and one global IT organization.
At the same time, we are thinking about how to take advantage of new opportunities. Traditionally, we saw the cars when we delivered them, then for maintenance, and then when we picked them up three years later.
Soon, we will be in constant contact through telemetrics devices and we are in the process of installing these in our fleet. This will give us 28 gigabytes of data every day, some of which we use to optimize internally, but also to generate new services and improve customer service and driver satisfaction. A lot of the stuff that might not be interesting to us is interesting to Bosch, say, which can find out how its fuel injection system is working, or Goodyear, which might be able to learn, for example, how particular demographics wear out its tires.
For insurers, too, data could be very valuable. If we know how people drive we can better evaluate what your insurance premium should be as an individual, and maybe we can give drivers insights into their driving style and show them ways to improve their driving and lower their insurance premium.
We’re managing all this change in two streams. The optimization side — all the consolidation and rationalization — we’re outsourcing. This is allowing us to concentrate most of our attention on the future side, which we call the Power of One LeasePlan.
Selling the Change
Beyond the technological challenges, all of this involves change management, which is an issue I’ve dealt with my whole career. Getting this right isn’t easy, but one thing that helps is thinking of something someone told me when I was at a Nordic based food company called Arla: all this talk about people not wanting to change is not true, he said. They just don’t want to be changed.
Basically, this means you have to make sure people are on the journey with you. You need to explain to people where we are going, you need to explain why, and you need to let them know what’s in it for them. If you’re not open and transparent, they’ll turn against you. People are smart. They know what’s happening. They can put two and two together. And if you withhold information, they will answer their questions by creating their own truth, and it’s usually the worst-case scenario.
People sometimes ask, aren't all these changes a big threat to you? And yes, you could say that. But the way we view this is: imagine there’s a long-term forecast for more storms. Most people will seek shelter, and a few will build wind turbines. We’ve decided we want to do the latter. Yes, it is a threat, but it’s also a huge opportunity.
As a company in the auto lease business, LeasePlan faces two simultaneous digital transformations: the company’s operations and the reinvention of the car.
The rise of data means that IT will not only be a tool for increasing efficiencies, but a true enabler for business growth and customer value.
Outsource optimization work. This frees you to focus your best thinking on building your future business.