Equipment leasing and finance industry members constantly talk about the importance of well-trained employees. Yet I would suggest that based on experience, much of this is mostly lip service. We see this in all aspects of operations, but it has become more apparent in the last several years, particularly as it relates to developing and maintaining the skill sets required to fully utilize today’s lease management systems (LMS).

The level of interest in acquiring new LMSs (as opposed to retaining legacy applications) has increased over the last several years. While there are a variety of reasons for this increased interest, one of them is the perceived lack of functionality of the legacy system. The argument is that a new LMS will enable the company to do much more than it currently is capable.

It is this capability/functionality contention that has brought to light issues with the level of skill of the system users. I would argue that, in many cases, the system functionality is in place and that it is the institutional knowledge to exploit that functionality that is missing. If this knowledge truly is missing, why has the shortfall not been noticed? I have one word for you – frogs.

We all are familiar with the studies of frogs that, when placed in hot water, jump out of the pot. The frog that is placed in water that is very slowly heated, on the other hand, blithely sits in the increasingly hot water until it is boiled to death. I attribute this phenomenon to why management usually does not notice the LMS knowledge drain. It is because it is so gradual.

We start off with a bang when the LMS is installed. The vendor provides great training, there usually is someone that embraces the role of power user, and staff members know how to use most of its features. The LMS operation flourishes for a while, at least until nature begins to take its course, which it inevitably does. Nature manifests itself in many ways.

The most common problem that plagues legacy systems is the erosion of system capabilities due to a slow drain in the institutional knowledge surrounding these systems. For example, employees who know the system best may leave the company, get promoted or join another department. The lack of informal guidance these people provided forces remaining staff to cope by adopting shortcuts or alternative data paths. Or, in spite of the best intentions, these high skillset employees may train new employees only partially, resulting in the same compromises to system functionality.

Another cause may be that the procedures that accompany the new LMS were not adequately captured, so the procedures degrade or devolve over time. Let me be clear that this discussion has nothing to do with the quality of the LMS users themselves. The problem is in the failure on the part of management to ensure that the skill sets that were in place when the LMS was implemented are maintained.

Most of us like to think we are on top of things and, as a general rule, we are. The natural drain in institutional knowledge surrounding the LMS is so subtle, though, that it only can be prevented through a high level of diligence and ongoing training and reinforcement. This does not mean that everyone associated with the LMS has to know all the accounting rules, for instance, or the details behind every aspect of the system.

It does mean, however, that the company must establish broad-based knowledge centers and backups that allow it to maintain the knowledge necessary to leverage the required functionality. It also must identify the requisite skill sets amongst its constituents and provide ongoing training opportunities to fulfill those skills.

It is true that a legacy system eventually may fall short of company needs and regulatory reporting requirements. This may be due to changes in technology and business models, or lack of vendor support. One must be familiar enough with the system’s capabilities, however, to make the judgment that the required functionality, indeed, does not exist before embarking on a program to replace the LMS.

My example of the brain drain associated with LMS functionality is just symptomatic of a larger problem, though. We see the same thing with the sales force and credit department. New hires are not given enough training and background, old hands move on, and the requisite skill sets are not captured. Does this sound familiar, or is your company the exception? Think carefully before you answer.