1. Creating and Fostering an Innovative Leasing and Finance Company52nd Annual Convention Monday October 21, 2013 2:30 to 4:30 p.m. Orlando, FL

2. Creating and Fostering an Innovative Leasing & Finance Company Moderator: Scott A. Thacker CEO Ivory Consulting CorporationPresenters: John C. Deane CEO The Alta Group Mark Tomaselli CIO First American Equipment Finance, A City National Bank Company Michael Donnary Senior Manager Capgemini Financial Services USA Inc. 2 3. Creating and Fostering an Innovative Leasing & Finance Company Agenda CREATING Innovation Innovation Outside Our Industry Innovation in Leasing & Finance FOSTERING An Innovative Lessor The 2013 Business Technology Performance Index (BTPI) Applying Innovation Concepts to the BTPI Findings3 4. Creating and Fostering an Innovative Leasing & Finance Company Agenda Innovation Innovation Outside Our Industry Innovation in Leasing & Finance An Innovative Lessor The 2013 Business Technology Performance Index (BTPI) Applying Innovation Concepts to the BTPI Findings4 5. Creating and Fostering an Innovative Leasing & Finance Company Profitable innovation is a dynamic process of continually creating new business models, improving customer experience, and opening new markets as well as launching new products. Growth solid organic growth depends on innovation. Yet the kind of innovation that drives sustainable growth is much broader than the disruptive "eureka" moments of technology legends.The University of Pennsylvania, Wharton School Executive Education.5 6. Creating and Fostering an Innovative Leasing & Finance Company What distinguishes organic Growth Leaders from Growth Laggards isInnovation ProwessThe University of Pennsylvania, Wharton School, The Mack Institute for Innovation Management6 7. Creating and Fostering an Innovative Leasing & Finance Company Strategic Growth Seeking Discipline Leadership Sets the ToneInnovation Ability Culture and Leadership Adaptive Capabilities ConfigurationDevelop and Launch Only Best Opportunities The University of Pennsylvania, Wharton School, The Mack Institute for Innovation Management7 8. Creating and Fostering an Innovative Leasing & Finance Company An "Innovation Toolkit" (is used) to design a flexible innovation process that lets your company quickly adapt to, and profit from, changes in customers, competitors, or markets. use it with your team to fire up your innovation processes and improve your organization's innovation DNA. unearth the best ideas through innovation tournaments, a part of your Innovation Toolkit. The University of Pennsylvania, Wharton School Executive Education8 9. Creating and Fostering an Innovative Leasing & Finance Company Access 10 minute YouTube: http://www.youtube.com/watch?v=eEYi8e6dNHQKarl T. Ulrich is Vice Dean of Innovation and the CIBC Professor of Entrepreneurship and e-Commerce at the Wharton School of the University of Pennsylvania.9 10. Creating and Fostering an Innovative Leasing & Finance Company Operational innovation is notoriously difficult. What is the secret to success? 1. Process Focus ...the creation of an enterprise process model, which describes a business's operations in terms of a small number of value-creating end-to-end processes 2. Process Owners A process owner is a senior executive empowered to make the changes needed to the process across the enterprise as a whole. Michael Hammer is president of Hammer and Company, a management education and research form, and the author of four books, including Reengineering the Corporation: A Manifesto for Business, with James Champy. He can be reached at MUOpinion@hbsp.harvard.edu Reprinted by permission from "Making Operational Innovation Work," Harvard Management Update, Vol. 10, No. 4, April 2005. See the current issue of Harvard Management Update. 10 11. Creating and Fostering an Innovative Leasing & Finance Company 3. Full-time Design Team Part-time assignment to a process redesign team is an exercise in frustration. 4. Managerial Engagement The finest idea will not get implemented unless there is an organizational framework for shepherding it from concept to reality.5. Building Buy-in (Exposure) to the new process as it was being developed, making them feel like participants rather than victims and helping them see both the flaws in the old ways of doing things and the power of the new. 6. Bias For Action Companies that strive to design the ultimate new way of doing things usually do nothing at all; they lose momentum while tinkering and revising, and the resulting solution is too grandiose to be implemented.11 12. Creating and Fostering an Innovative Leasing & Finance Company Changing the way goals or actions are accomplished by using technology for the first time or modifying how technology is being used to make better decisions, enhance customer service, encourage company growth, increase efficiency, and/or reduce costs. Incremental Change Radical Change Disruptive Change12 13. Creating and Fostering an Innovative Leasing & Finance Company Agenda Innovation Innovation Outside Our Industry Innovation in Leasing & Finance An Innovative Lessor The 2013 Business Technology Performance Index (BTPI) Applying Innovation Concepts to the BTPI Findings13 14. Creating and Fostering an Innovative Leasing & Finance Company San Francisco Citizens Initiative for Technology and Innovation, the San Francisco Municipal Transportation Agency and AT&T announced the SMARTmuni transit technology improvement pilot project for the City & County of San Francisco. SMARTmuni (System Management Administered in Real Time) is an iPad-based software application designed to improve the day-to-day operations of the SFMTA. Riders had better access to real-time transit information via apps than agency field staff who rely on clipboards, pencils, paper schedules, and an inadequate radio system to track and manage their fleet.14 15. Creating and Fostering an Innovative Leasing & Finance Company SMARTmuni will give SFMTA line management staff new access to the NextBus data stream generating real-time information, system-wide communication, etc. AT&T made an extremely generous donation to the project of 25 iPads with military-grade cases. SMARTmuni team consists of a geographer, an architect, a transportation planner, a software developer, and an urban planner.15 16. Creating and Fostering an Innovative Leasing & Finance CompanyOriginal concept developed at GAFFTA 2011 "Summer of Smart" public policy hackathon.16 17. Creating and Fostering an Innovative Leasing & Finance Company Other Examples Audi Nest ZipCar Uber LEGO17 18. Creating and Fostering an Innovative Leasing & Finance Company18 19. Creating and Fostering an Innovative Leasing & Finance Company Leaders need to drive operational and technical innovation. But How? Corporate Culture Strategy Development Process Tactical Action Development Process Ad Hoc Activities Innovation Tournaments19 20. Creating and Fostering an Innovative Leasing & Finance Company An Innovation Tournament could include:Predictive Analytics Big Data The Internet of Everything Cloud Computing The Sharing Community Social Media Customer Centricity/Connectedness Risk Assessment - Social Trust Elasticity Pricing20 21. Creating and Fostering an Innovative Leasing & Finance Company Agenda Innovation Innovation Outside Our Industry Innovation in Leasing & Finance An Innovative Lessor The 2013 Business Technology Performance Index (BTPI) Applying Innovation Concepts to the BTPI Findings21 22. Creating and Fostering an Innovative Leasing & Finance Company WHEN CONSIDERING INNOVATIONThe marketplace / customers to address. The value proposition why do business with us?Source information: Frank & Ernest Comic Strip - GoComics.com 22 23. Creating and Fostering an Innovative Leasing & Finance Company WHEN CONSIDERING INNOVATIONHow we sell. How we make money. How we organize and operate including capital sources. Source information: www.dilbert.com 23 24. Creating and Fostering an Innovative Leasing & Finance Company INNOVATE OR NOT Why not innovate? o Not necessary o Cant o Dont know how24 25. Creating and Fostering an Innovative Leasing & Finance Company INNOVATE OR NOTInnovate differently certainly not necessary or desirable to innovate in the same way o Ownership Bank owned Captive Independent25 26. Creating and Fostering an Innovative Leasing & Finance Company INNOVATE OR NOTo Market segment Small ticket Middle market Large ticket26 27. Creating and Fostering an Innovative Leasing & Finance Company WHY INNOVATE? Its fun Integral part of your value propositionSupports an exit strategy Make money or make more money Compete Survive27 28. Creating and Fostering an Innovative Leasing & Finance Company HOW INNOVATIVE IS THE EQUIPMENT LEASING/FINANCING INDUSTRY? A 5 out of 10, according to The Alta Group 2013 Industry Summit delegates Definition o The grading standard is against best practice, not on curve o Must be a game changer o Can happen in a transformational way over time, or in a destructive way right now 28 29. Creating and Fostering an Innovative Leasing & Finance Company WHERE TO INNOVATIVE?29 30. Creating and Fostering an Innovative Leasing & Finance Company Agenda Innovation Innovation Outside Our Industry Innovation in Leasing & Finance An Innovative Lessor The 2013 Business Technology Performance Index (BTPI) Applying Innovation Concepts to the BTPI Findings30 31. Creating and Fostering an Innovative Leasing & Finance CompanyMark Tomaselli Chief Information Officer First American Equipment Finance31 32. Building an Innovative CultureCompanies dont innovate, people do.32 33. Counter Innovation33 34. Change Drives ChangeResists ChangeTolerates ChangeExpects ChangeEmbraces ChangeCreates Change34 35. Distributed Innovation35 36. FAEF Practices Salesforce Improvement Team Model for future teams Peer to Peer Learning & Collaboration Experimentation and empowerment Innovation Committee (employee led) Innovator of the quarter Executive Support Feedback and recognition36 37. Innovate Everywhere Customer Experience Customer portal Service delivery model Virtual meetings Process E-Documentation HR Onboarding Month end close Salesforce Improvement Infrastructure Cloud adoption Backup/DR Security37 38. Be Disagreeable and Urgent38 39. Creating and Fostering an Innovative Leasing & Finance Company Agenda Innovation Innovation Outside Our Industry Innovation in Leasing & Finance An Innovative Lessor The 2013 Business Technology Performance Index (BTPI) Applying Innovation Concepts to the BTPI Findings39 40. Business Technology Performance Index The 2013 BTPI 11th year for the report Serves as the industry benchmark for IT and operations direction and spending Represents a summary of survey responses and an analysis Presents insights into the continuing evolution of technology in the Equipment Finance marketplace40 41. Business Technology Performance Index Innovation and the BTPI We asked survey participants about tool sets and capabilities developed to address innovation in their equipment finance organizations The level of Innovation Maturity remains relatively low in our industry None of the respondents have a formal approach to researching innovative ideas that are happening in other markets or have a formal innovation structure or program60% A more informal than formal approach to innovation 50% A senior leader within the organization that has innovation as one of their key goals for the year 40%A budget allocation for the development and implementation of innovations30%Do not have any tool set or capability developed to create innovation20%A team of employees that dedicates a budgeted amount of time to work on innovation Employee incentives for innovative ideas10% Formal approach to researching innovative ideas that are happening in other markets0% 141 42. Creating and Fostering an Innovative Leasing & Finance Company Agenda Innovation Innovation Outside Our Industry Innovation in Leasing & Finance An Innovative Lessor The 2013 Business Technology Performance Index (BTPI) Applying Innovation Concepts to the BTPI Findings42 43. Digital Transformation and Innovation Other Technology Trends ELFA CIO Roundtable Technology Barriers The Need for an Open Architecture Alignment of Business and Technology Top Technology Initiatives Mobile Devices and Applications Cloud Computing Big Data and Analytics Digital Transformation Research Digital Maturity Digital Intensity Transformation Leadership Intensity43 44. Digital Transformation and Innovation MythRealityDigital primarily matters only to technology or B2C companiesHuge opportunities exist also in efficiency, productivity, and employee leverage Opportunities exist in all industries with no exceptionsLet a thousand flowers bloom; bottom-up activity is the right way to changeDigital transformation must be led from the topIf we do enough digital initiatives, we will get thereTransformation management intensity is more important for driving overall performanceIn our industry we can wait and see how digital developsThere are digital leaders outperforming thereDigital is primarily about the customer experience44 45. Creating and Fostering an Innovative Leasing & Finance CompanyYour Company45 46. Creating and Fostering an Innovative Leasing & Finance Company Thank you for Participating Scott A. Thacker Ivory Consulting Corporation Scott.thacker@ivorycc.com John C. Deane The Alta Group jdeane@thealtagroup.com Mark Tomaselli First American Equipment Finance, A City National Bank Company Mark.tomaselli@faef.com Michael Donnary Capgemini Financial Services USA Inc. Michael.donnary@capgemini.com 46