T he glass door hit my face. My nose made a sound. It was a dull thud. I did not see the glass because the glass was clean. The glass was a clear barrier between the lobby and the office. I fell back. My nose began to bleed.

A woman behind a desk stood up. She did not say anything. She handed me a white tissue. I took the tissue. I held the tissue to my nose. The tissue turned red. I sat in a hard chair. I looked at the door. The door was still there. I had ignored the door because I thought the path was empty.

A Path That Looks Clear

A lender has a similar problem with software. The lender sees a path. The path looks clear. The lender has a book of business. The book of business has 19,142 contracts. These contracts are small-ticket contracts. These contracts cover office printers and delivery vans and small tractors.

The contracts are simple. The payments are the same every month for forty-eight months. The lender also has 884 deals. These deals are different. These deals are for regional aircraft and construction cranes and factory lines. These deals are complex. These deals have structured payments. These deals have tax indemnities.

The lender wants to save money. The lender looks at the cost of the software. The lender uses a legacy system. The legacy system is old. The legacy system is heavy. The legacy system costs the lender one hundred and forty-eight thousand dollars every month.

The lender pays this money to keep the 19,142 contracts and the 884 deals in one place. The lender thinks the cost is too high for the simple contracts. The lender decides to move the 19,142 contracts. The lender moves the contracts to a light system.

The light system is new software. The light system is cheap. The light system is simple. The light system handles the 19,142 contracts for a small fee. The fee is two dollars per contract. This costs the lender thirty-eight thousand dollars. The lender keeps the 884 deals on the legacy system. The lender thinks this is focus. The lender thinks this is efficiency. The lender is wrong.

The Machine Begins to Learn

The lender has created a division. The 19,142 contracts represent the volume. The 884 deals represent the complexity. The lender thinks the complexity is the value. The lender thinks the volume is a commodity. The lender gives the volume to the new software company.

The new software company takes the money. The new software company uses the money to hire more engineers. The engineers write more code. The engineers look at the 19,142 contracts. The engineers see that some contracts change. A customer moves to a new building. A customer misses a payment. A customer wants to add a second printer.

The engineers write code to handle these changes. The light system becomes heavier. The light system becomes more capable. The light system is learning. The light system learns from the 19,142 contracts. The 19,142 contracts provide the data. The data shows the engineers what the market needs. The light system adds a module for asset tracking. The light system adds a module for automated collections. The light system adds a module for mid-term modifications.

“The company died because the company kept the heavy assets and sold the light cash.”

Cameron F.T., Bankruptcy Attorney

I spoke to Cameron F.T. about this. Cameron F.T. sees companies when the companies are broken. Cameron F.T. sat in a small office with no windows.

The lender is now in the situation Cameron F.T. described. The 884 deals remain on the legacy system. The legacy system still costs one hundred and forty-eight thousand dollars every month. The vendor of the legacy system does not lower the price. The legacy system requires the same number of servers. The legacy system requires the same number of support staff.

The lender now pays one hundred and sixty-seven dollars to manage each of the 884 deals. The profit on these deals is not enough to cover the cost. The lender looks at the light system. The light system has grown. The light system now handles ninety percent of what the legacy system handles.

The light system is still cheaper. The light system is faster. The light system uses an API. The API allows the light system to talk to the bank. The API allows the light system to talk to the tax office. The staff likes the light system. The staff does not like the legacy system. The legacy system is slow. The legacy system has a grey screen with green text.

A Foundation in Ruins

The lender looks for equipment lease software that can bridge the gap. The lender realizes the mistake. The lender gave away the high-volume business.

The high-volume business was the foundation. The foundation paid for the software. Without the foundation, the legacy system is a ruin. The legacy system is a burden. The lender is stuck with 884 complex deals and no way to pay for the system that manages the deals.

The new software company enters the market for large-ticket deals. The new software company has the data. The new software company has the capital from the 19,142 contracts. The new software company builds the features for the 884 deals. The new software company does not have the debt of the legacy system. The new software company wins.

The Retreat Felt Like Focus

The retreat felt like focus while it was happening. The lender felt light. The lender felt smart. But the lender was leaving the market. The lender was giving the market to the new company. The new company started at the bottom. The bottom is where the simple work is.

The simple work is easy to automate. Automation creates margin. Margin creates the ability to move up. The new company moves up the ladder. The lender stays at the top of the ladder. The ladder is on fire.

The legacy system is a technical debt. Technical debt is like a loan with a high interest rate. The lender pays the interest every day. The interest is the time the staff spends fixing errors. The interest is the cost of the manual workarounds. The 884 deals require manual workarounds. A clerk must enter the data by hand. A clerk must check the spreadsheet. The spreadsheet is the real system. The legacy system is just a database that the spreadsheet uses.

Finding the Handle

The lender should have looked for a system that handles the whole book. The system should handle the small-ticket contracts. The system should handle the large-ticket deals. The system should be one system. One system means one set of data. One set of data means the lender knows the truth. The lender knows how much money is in the bank. The lender knows which assets are in the field.

I looked at the tissue in my hand. The blood had stopped. My nose was swollen. I looked at the glass door again. There was a small smudge on the glass where my face had hit the surface. The smudge was the only sign that the glass was there. I stood up. I walked around the door. I found the handle. The handle was metal. The handle was cold. I pulled the handle. The door opened.

The 19,142 contracts pay for the development of the features for the 884 deals. This is the correct math. This is the way to stay in the market.

The Engine and the Fuel

The market does not stay still. The market moves toward the efficient player. The efficient player is the player with the best software. The best software is not the most complex software. The best software is the software that handles complexity simply.

The software must track the collateral records. The software must track the customer data. The software must track the billing and the collections. The software must do this for a printer. The software must do this for a crane.

The lender who divides the book of business divides the strength of the company. The simple contracts are the fuel. The complex deals are the engine. An engine without fuel does not run. Fuel without an engine is just a puddle. The lender needs the engine and the fuel in the same machine.

The people in the office were still working. They did not look at me. They looked at their screens. They were entering data. They were clicking buttons. I wondered what software they used. I wondered if the software was a bridge or a cage.

I walked out of the office. I walked through the parking lot. I found my car. I looked in the mirror. My nose was crooked. I touched my nose. It hurt. I had learned a lesson about transparency. I had learned that a clear path is sometimes a wall.

Choosing the Right Partner

The lender must choose a partner. The partner must understand the whole book. The partner must understand that a contract is a commitment. The commitment must be recorded. The record must be accurate. The accuracy must be maintained for the life of the contract. The life of the contract is four years or ten years or twenty years. The software must last longer than the contract.

The legacy system will not last twenty years. The legacy system is already dying. The light system is growing too fast. The lender needs a system built for the middle. The middle is where the volume meets the depth. The middle is where the business lives. If the lender does not find the middle, the lender will hit the glass again. The glass is the limit of the old way of doing business. The glass is the end of the market for the incumbent.

I drove away from the office. I passed a construction site. I saw a crane. The crane was yellow. The crane was a complex asset. I passed a small shop. I saw a delivery van. The delivery van was a simple asset. Both assets were working. Both assets were generating revenue.

The revenue was being tracked by a system. I hoped the system was strong. I hoped the lender was paying attention to the math. The math is the only thing that does not lie. The math says that if you give away the easy work, you give away the future.

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