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50 Innovative Companies to Watch 2018

LeaseAccelerator, the Pioneer in Enterprise Lease Accounting Software, Bringing the Balance Sheet into the 21st Century

thesiliconreview-michael-keeler-ceo-president-founder-leaseaccelerator-18We are helping Fortune 500 companies implement one of the biggest accounting changes in history, transferring trillions of dollars onto corporate balance sheets: Michael Keeler

A major wave of disruption is hitting the world of accounting in 2018. Two of the biggest accounting changes in history are radically changing the way companies report their financial statements to the SEC and investors. Throughout the year, public companies will be adopting new revenue recognition rules that change the way they account for revenues and expenses associated with new sales. In 2019, companies will have to adopt another major accounting standard that requires trillions of dollars of real estate and equipment leases to be transferred onto corporate balance sheets. Collectively these changes are so significant that many in the accounting profession are referring to them as “New GAAP (Generally Accepted Accounting Principles).”

To comply with these major accounting changes, Fortune 500 companies are turning to new specialized software applications to automate the reporting processes. Historically, every company has purchased software for the general ledger, accounts payable, accounts receivable, and fixed assets. In the era of New GAAP, companies will also need applications for revenue accounting and lease accounting.

LeaseAccelerator is a pioneer in the rapidly growing Enterprise Lease Accounting market, a segment forecasted to grow to over $1 billion in the coming years. With Leaseaccelerator, companies can perform New GAAP reporting for leases as well as digitize business processes for real estate and equipment leases. The Enterprise Lease Accounting application enables treasury leaders to automate lease versus buy analysis automation, procurement professionals to competitively bid equipment financing, and real estate managers to digitize workflows for renewals of property leases.

The company was founded in 2003 and is headquartered in Reston, Virginia.

Interview Excerpt: Michael Keeler, CEO/President/Founder

Why was the company set up? And how did you expand your company and its offerings over the years?

The company was founded with the vision of developing the world’s first software application to automate the end-to-end business processes for Enterprise Lease Management. At the time, there were numerous applications on the market designed to automate sales and servicing at the leasing companies (lessors). However, there were no commercial applications designed to support the lessees – the corporations that use the assets being leased. We believed just as companies purchased specialized applications for managing sales compensation and submitting travel expenses, that they would select a specialized application for enterprise leasing processes.

We released the first version of our Enterprise Lease Management application to the market in 2004. The first release provided a single application to track all of a company’s leases across the enterprise. In 2004, the words cloud computing and software-as-a-service were not yet in anyone’s vocabulary, but our application was designed from the beginning as a hosted, multi-tenant architecture.

In 2007, we introduced our second application - Enterprise Lease Sourcing. The sourcing application was designed to save companies 6-8 percent on equipment leases by leveraging cloud-based procurement strategies. With the Sourcing application, companies could put RFPs for IT, fleet, material handling, and other equipment leases out to bid on a global network of 500 banks and financial institutions.

In 2009, in anticipation of the new lease accounting standards that would be required by the US Securities and Exchange Commission, we introduced our Accounting application. The application can be used by public companies to provide all the reporting needed for SEC filings, such as 10-Ks, 10-Qs, and Sarbanes-Oxley compliance.

Over the past 10 years, we have continued to expand the product features, geographic footprint, and customer experience for all three of our applications.

What challenges did you face in your initial years? What can your peers learn from it?

Like many companies, it took several years for LeaseAccelerator to develop product-market fit. However, perhaps our greatest challenge was market timing. One of the products we developed was designed to support the new lease accounting standards. These new rules were originally scheduled to be published in 2010 but were delayed several times before final release in 2016. Upon anticipation of the new standards, LeaseAccelerator developed its Enterprise Lease Accounting product in 2009. As a result, we had developed a product seven years before the market developed.

While it was frustrating to make such a large investment in a product prematurely, the early development has proved to be a critical advantage. Many of our competitors took more conservative approaches to their product development efforts, choosing not to start writing code until early 2016 after the final release of the new accounting standards. As a result, many of the products released by our competitors are version 1.0 (post Beta) with little to no real-world usage.

Fostering a culture of feedback is crucial to the success of every organization. How is this true for your company?

We have a long history of open communication between management and employees. For the past 10 years, I have hosted monthly Bottoms-Up (BUP) calls in which employees provide updates on their projects and share ideas and questions with senior executives.

In 2018, one of the focal areas of employee feedback is with recruiting and new hires. As we enter hypergrowth mode we have an aim to double the size of our employee population over the coming year. As a result, the employee onboarding experience is an important focus area for company management. We conduct quarterly surveys of all new employees to understand the strengths and weaknesses of our interview process, benefits enrolment, corporate orientation, and job-specific training. We also encourage employees to provide feedback in the public domain through reviews on sites such as Glassdoor.

We currently enjoy a rating of 4.8 out of 5 stars.

“How do you think the relationship with customers is evolving in the twenty-first century as companies shift more from transactional, product-centric approaches to longer-term, subscription-style business models.”

Customer success is an important aspect of our culture. Historically, in the software industry, there has been an imbalance of accountability between the vendor and customer. Until only a few years ago, the business model employed by most software vendors was to sell perpetual licenses to applications that they had no real accountability for deploying. The customer was left with the short-term challenge of getting the software to work and the longer-term goal of achieving the return on investment. The majority of the financial risk for the transaction historically rested with the customer. The vendor received the license fee whether the customer was successful or not.

As a software-as-a-service provider, LeaseAccelerator does not sell perpetual licenses but instead generates revenue from subscription fees. If the customer is not successful, then they will not renew the subscription. To ensure that customers not only purchase our software but that they are successful in achieving their business goals is one of the top priorities at LeaseAccelerator. Our product development, technical support, quality assurance, finance, and marketing teams all follow the lead of an independent customer success organization that is charged with helping companies achieve their objectives.

How do you and your company contribute to the competitive global IT platform at large?

One of the largest categories of leased assets is IT and data center equipment. Many of the world’s largest companies lease (rather than buy) the laptops used by their sales teams, the photocopiers in their break rooms, and the switches in their data centers.

Many IT organizations are being asked to deliver more and more projects with less and less budget each year. A well-managed IT equipment leasing program may provide some much-needed financial relief. Leasing effectively expands your IT budget. You can hold onto your cash and instead spread payments over the term of a three-year (or longer) lease. With ‘fair market value’ leases, you may only pay 80-90 percent of the purchase price for a piece of hardware during the lease.

Many companies are struggling to keep up with the non-stop pace of hardware innovation. The laptops and servers you bought three years ago are already becoming obsolete. IT equipment leasing programs, if managed effectively, can provide much-needed relief. Imagine replacing your laptops, servers, and storage devices every three years with the latest and greatest technology. A leasing program can help you outrun technology obsolescence and save you money in the process.

Although leasing offers Corporate IT organizations the benefits outlined above, many of even the most innovative companies struggle with the day-to-day management of technology leases. For example, many companies do not return IT equipment at the end of the lease term, instead paying expensive month-to-month fees to keep the assets for an extended period of time. LeaseAccelerator automates the management of IT and data center leases thereby ensuring that companies receive the true economic benefit that comes from leasing.

As a question on sustainability, where do you see your company a couple of years from now?

LeaseAccelerator is growing rapidly. We expect to double the size of our team in the next 12 months as we continue to grow our customer list and partnerships. We will be expanding into Europe during 2018 and perhaps the Asia Pacific in 2019. In 2020, we will shift from our short-term strategy of helping companies to comply with the new lease accounting standards towards our long-term strategy of enabling finance organizations to leverage their leasing programs as a source of competitive differentiation in the marketplace.

The Man Behind The Operation: A Brief Background

Michael Keeler, CEO/President/Founder: An expert in lease accounting, Michael Keeler has been the primary force behind the growth and vision for LeaseAccelerator and Enterprise Lease Accounting. He has more than 20 years of experience building software businesses. Prior to joining LeaseAccelerator, Mr Keeler served as President of Onmark Corporation, an international IT leasing company. Before Onmark, he founded and managed two software companies – Ecologic Corporation (1993-1999) and DataZen (1999-2002).

“LeaseAccelerator is the industry’s first software application developed specifically to automate the enterprise leasing business processes at Fortune 500 companies.”