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( Part 1 of 3 ) Taking a cue from the software end of the business, some solution providers have started selling equipment as a service, but they are finding implementation poses some challenges. As the fixed-fee models of managed services and software as a service gain momentum in the IT channel, applying the same approach to hardware sales was inevitable. But providing physical assets to customers as a service billed monthly, quarterly or even yearly poses a special set of challenges requiring careful coordination among solution providers, customers and financial institutions. Few financial institutions have jumped on the model; figuring out who should own title to the equipment is an issue. It's no wonder, then, that only a handful of solution providers so far have figured out how to bill customers on a regular basis not only for IT services and software but also for hardware. "We've done about five deals that fall into managed services that include hardware. But we still need to learn how to make what we do more repeatable and how to handle all the variables," said Tim Hebert, CEO of Atrion Networking, a solution provider in Warwick, R.I. "But our biggest challenge is finding financing sources." Despite the inherent complications of implementing hardware as a service, proponents herald HAAS as an idea whose time has come. It is, they believe, the next logical and profitable step in managed services, through which providers take over some or all of their IT environments and bill them utilitylike fees for the service. Because of the promise the model holds in easing the burden of upfront hardware costs for customers and improving providers' cash flow, proponents are working hard to make HAAS happen. Security is big business. Click here for more. Among them are N-able Technologies, a managed services vendor in Ottawa that has taken the lead among vendors in pushing the model. Other managed services vendors are working to figure out how to make the model work. So are distributors, which have a long history of extending financing options to solution providers. And on the front lines are solution providers such as MasterIT, of Bartlett, Tenn., and MSP On Demand, of Hickory, N.C., which are among the few solution providers already using the model. It takes understanding Making HAAS work requires understanding people, processes and technology, said Mike Cullen, vice president of sales at N-able. The vendor has been evangelizing such an approach for more than a year to the solution providers that use its managed services platform, but adopting the model isn't easy, Cullen cautioned. "For providers who want to move to HAAS, there's no silver bullet. It takes hard work and discipline." More specifically, the complexities of HAAS require that solution providers have a firm grasp on fixed-fee value-based contracts and finding the right financier, Cullen said. Selling computers and services has always been about conceptual packaging, beginning with time sharing back in the 1970s and followed by models such as break/fix, solution selling and managed services, contends Bob O'Malley, senior vice president of marketing at Tech Data, based in Clearwater, Fla. "There are several things driving change, which leads to HAAS," O'Malley said. The two big drivers: IT complexity and the digitization of applications or convergence to a single platform. HAAS, O'Malley maintains, is repackaged time sharing. Time sharing, or concurrent use of equipment by multiple users purchased as a service, came about because of the high cost of equipment. "It all revolves around the concept of usage," said O'Malley. As defined by N-able, HAAS is the delivery of support, hardware, software and infrastructure by an MSP (managed services provider) to a customer under a long-term contract. The hardware piece is financed through leasing or some sort of installment-based purchase plan. "In my view, you can't have a partial MSP service. As MSPs mature and move to a fixed fee, they rely on the infrastructure to be profitable," said N-able's Cullen, adding, "HAAS will have a quick adoption rate because it's intuitive to the provider." Still, there is a disconnect with customers, said Fred Reck, president of Innotek Computer Consulting, of Bloomsburg, Pa. "We have the same goals as our customers, to reduce the cost of ownership, but then comes the disconnect," Reck said. "The customer wants us to provide 100 percent uptime and availability. However, as the equipment gets older and as warranties end, it gets more difficult to maintain the infrastructure." Next Page: Old equipment is expensive Selling Equipment as a Service
Courtesy of eWeek Source: http://www.esp.eweek.com/c/a/Archive/Hardware-as-a-Service-Are-You-Ready/ | ||||
