Hardware-as-a-Service came on the scene in 2006 as an intriguing new way to expand a managed services business.
But many MSPs that tested the HaaS waters have stepped back to safer, more traditional vendor leasing and financing programs to affordably fulfill their customers' hardware needs.
As a concept, HaaS is still recognized as the summit of managed services. It is a risky approach that takes the recognized value of offering remote IT monitoring and proactive network management and then throws into the mix the expenses of hardware procurement and replacement.
Correctly balanced, a HaaS offering should deliver PCs, servers, storage and networking gear under an affordable, fixed monthly MSP subscription rate. But financing the cost of hardware in a way that debt maintenance stays low enough to keep a HaaS customer's remittance affordable presents a significant challenge.
Two pioneering HaaS solution providersMSP On Demand and Master ITtackled this equation using third-party bank financing. Together, they represent two bold schools of thought.
The approach of MSP On Demand dictates that a HaaS provider purchase for the customer incremental portions of that customer's IT network hardware as that hardware ages or falls out of warranty. MSP On Demand, Hickory, N.C., mentors MSPs into HaaS providers, but only 22 pupils have launched HaaS businesses. The HaaS approach of Bartlett, Tenn.-based Master IT is to go in and buy a customer's entire network then manage it from there on out. Master IT marshals significant third-party financing, and its service is not for resale.
Leasing and financing options from IBM, Cisco Systems and Microsoft may make more sense for delivering hardware that can be paid for over long periods of time, said Paul Fisher, purchasing agent at Warner Connect, a solution provider and MSP in Fridley, Minn. "We have been going with the different vendor financing programs," he said. "I have found that most will finance an entire projecthardware, software and allwith third-party products included and often with better financing rates."
IBM put a new twist on its financing and leasing program in October when it introduced the Express Managed Services program, which provides discounts and longer-term payment options for MSPs that buy IBM's midmarket-targeted Express line for their managed services businesses or MSP customers, said Mike Regal, director of managed services at IBM, Armonk, N.Y.
When you get right down to it, HaaS is just a new way to define long-term leasing and financing of hardware, said Leonard DiCostanzo, president of Turnkey Computer, Staten Island, N.Y. "Every service can be combined with a hardware product at a price, then you can go and finance it," he said. "You can go grab IBM or Ingram Micro or any of the vendors with leasing programs. Whereas in the old days, vendors only liked to finance hardware, now you are pretty much able to finance as many services as you need."
To this end, the appearance of resalable Software-as-a-Service MSP monitoring and management platforms from distributors such as Ingram Micro and Bell Microproducts, which also offer hardware leasing programs, could make driving hardware sales as part of an MSP offering a very lucrative proposition.
Ingram Micro will become a one-stop-shop for MSP monitoring tools and hardware financing when it begins to offer a resalable MSP platform called Seismic. The platform will lend itself to HaaS MSPs in several ways, said Justin Crotty, vice president of services for Ingram's North American Services Division, Santa Ana, Calif. The heart of Seismic is a hosted version of the MSP platform from LPI Level Platforms, Ottawa. LPI not only has a hardware vendor certification program that maximizes the integration of certain hardware with LPI software, but in December, it upgraded version 5.2 with Intel VPro support. Both of these features present a solid argument that MSPs running Seismic should persuade their customers to deploy a significant refresh of VPro-based hardware, which Ingram can finance on terms that could accommodate a HaaS-style provider, Crotty said.
Traditional leasing options and distributor financing may appear safer to some interested in building HaaS businesses, but MSP On Demand is ginning up a new formula that could be a game-changer, said Ramsey Dellinger, president of MSP On Demand. At least four major hardware vendors are in talks with him about how they could offer enhanced technical support offerings to HaaS providers, he said.
Still, what makes next-generation HaaS architectures almost no different from traditional leasing and financing options is that in the end, equipment is being bought and must be paid for, said Brian Mullaney, vice president of sales at Aegis Associates, Waltham, Mass. No matter how you do HaaS, he said, "the trick is, 'How do you get profitability per user up high enough to cover HaaS expense?' "
-- Dan Neel
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