Asset management is evolving to focus less on residual value of equipment and more on assessing value, writes Christopher P. Nugent, our vice president of asset management, in a recent article in the Equipment Finance Advisor.
Here's an excerpt:
Although the role of the asset manager is changing, the skill sets needed remain the same. Our primary responsibilities require the ability to evaluate equipment and determine how essential that equipment is to the operations of the company. However, the conversations around value and the way we determine it are changing significantly.
Technology remains one of the most important sectors in the equipment finance industry. With the decrease in the number of operating leases used to finance technology expenditures, the role of the asset manager has become more focused on essential use than the traditional role of discussing and evaluating residuals on hardware.
The cloud services market is expected to grow from $80 billion to $200 billion over the next few years. As the market continues to shift from “owning” equipment to managed services and cloud providers, the equation changes drastically for asset managers. I anticipate that more and more, our responsibilities will lie in analyzing essential use and vendor recourse as we move away from conversations about residual value. Where we used to look at how much resale value a piece of equipment would have at the end of the lease term, we’re now placing value on the importance of a specific software installation or cloud solution to the overall success of the company.
While the shifting technology industry is having a big impact on the role of the asset manager, technology is also making some aspects of asset management easier than ever. For example, over the last 20 years, technology has made it substantially easier to collect market data points. Data that used to take hours on the phone with brokers to obtain can now be found online in three minutes. And many service providers, like aircraft and medical valuation consultants, have made their services available online, which creates additional efficiencies for asset managers.