Flexible, by design


When manufacturing companies invest in specialist PLM systems, they’re making a significant investment in what is essentially an intangible product. Using Syscap’s flexible finance, solutions provider INCAT were able to build a strong case for leasing as a procurement method – adding value to their sales proposition and removing a key barrier to sale among potential clients.

INCAT is a global professional services consultancy and a leading provider of Product Lifecycle Management (PLM) solutions to the engineering and manufacturing industries. The company has offices in three continents, and their client list includes some of the biggest names in engineering – names like Bosch, Boeing, GKN Aerospace Services and Siemens. In the words of INCAT’s Managing Director, Lawrence James: “We help our clients get more from engineering, re-use design information and realise returns from their IT investments.” One of INCAT’s key areas of expertise is CATIA, a leading PLM system. As CATIA business partners, they supply the technology, but, crucially, they also provide training, support and process re-engineering. That way, they ensure their clients get the best use from what is a pivotal, and costly, investment. Recently, INCAT trained the engineers at Airbus – using CATIA V5, the engineers came up with the revolutionary new super-jumbo the Airbus A380. Whether INCAT’s clients are large or small, their procurement objectives remain the same: to get the best value-for-money and minimise the impact on their cashflow. Offering a flexible payment plan was therefore high on INCAT’s list of business challenges.

By allowing their clients to lease CATIA rather than buy it, INCAT would allow them to acquire the system without the need for significant capital outlay. Although many companies have an automatic policy of buying, leasing makes far more sense from a cashflow perspective. Some leases also allow users to make regularly upgrades, keeping their system up to-date. Offering a leasing option would therefore increase INCAT’s potential client base – it would also give the company an additional value-add; a way to differentiate themselves in a competitive market. Intangible assets, real problems

The first problem INCAT faced was with the very nature of their offering. CATIA is software; for accounting purposes it counts as an intangible asset, as do INCAT’s value-added consultancy services. Traditional financial institutions are wary of lending money for something of negligible resale value – it’s hard to see how banks could extract value from a personalised licence to use software. An additional problem was the complexity of the terms and conditions surrounding CATIA. The system’s worldwide distributors, IBM, insist on detailed documentation – any prospective finance provider would have to put in considerable effort to ensure compliance.

INCAT tried a number of leasing companies, including IBM’s own finance wing, before approaching Syscap, the UK’s leading independent provider of IT finance. Syscap quickly distinguished themselves, not just with their level of specialist knowledge, but also in terms of their whole approach. Managing Director Lawrence James again: “Syscap understand the PLM business, and they’re very flexible. For example, if clients have particular requirements about wanting to have a profiled lease over a three-year period (so they pay less in year one than they do in years two and three) then Syscap are always prepared to propose innovative solutions to suit the client’s finance needs.

“It’s down to the people as well – you can’t take it away from the individuals within Syscap – they’re very responsive, and they work as part of our team. Sometimes in the past when we’ve tried to work with other leasing companies, you might try and contact someone and a week later you still haven’t got hold of them.” Syscap’s approach extends further than just common courtesy. Says James: “They’re just as keen to work on small deals as large deals and that’s of great benefit to us. We’ve had situations with certain clients; start-up companies or companies not having very good credit ratings – obviously it’s crucial to make sure they’re credit worthy to be able to get them the finance. Syscap look at more than just the balance sheet – they take the time to really understand our clients’ businesses. They will liaise with a client’s finance staff and will visit them in person where necessary.” “If we didn’t have a partner like Syscap, it would be more difficult for us to secure business. As in any industry, cashflow remains a potential barrier to sale – Syscap’s solutions help us overcome that barrier.”

Complete solutions


For James, another key benefit was that, unlike many leasing companies, Syscap, were prepared to countenance lease finance for the services side of INCAT’s business. Given that this side is absolutely core, this is vital. As he puts it, “the flexibility that Syscap offer will normally encompass what we need to sell.” Today, James estimates that a third of their CATIA business involves leasing, with Syscap as their sole finance provider. And he isn’t looking to change the arrangement in the near future. “In the past we have used other leasing companies, but we find that Syscap are as good as it gets.”