Hardware as a Service: Page 3
"Different Approaches"

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MSP On Demand helps finance HAAS and approves providers' clients on a per-deal basis, according to Dellinger. "We also fund these deals on a single contract that has the reseller's name and logo on it," Dellinger said.

Atrion's Hebert has worked each HAAS deal differently. In one model, Atrion leases the equipment for the customer and provides managed services. The client gets two bills, one from the leasing company and one from Atrion. "I wouldn't call this HAAS because the title to the equipment belongs to the customer," Hebert said. The other model Hebert has used calls for Atrion to lease the equipment and own the title, providing both the equipment and managed service to the client. "The customer gets one bill from us," he said.

Both models require a managed services contract with strong language, Hebert said, adding that using legal help, the contract language puts the responsibility for payment for the equipment on the customer.

However, Hebert clients pay Atrion for each year of the contract on an annual basis, so the provider recoups a large chunk of the service contract costs upfront. "Most of our clients like paying annually. However, if a client wants help with cash flow, we'll bill quarterly or even monthly," Hebert said. Atrion charges a higher percentage to clients for additional payments because it costs more to manage billing.

Hebert admitted that the financing piece is difficult, and he has explored financing options at commercial banks, investigated lines of credit and talked to leasing companies, mostly with no success. "I end up educating them about HAAS," he said. "It's hard for them to get it."

To date, though, Hebert said he has leveraged different leasing options and lines of credit to extend financing to customers.

MasterIT's Drake said he believes strongly in what he calls "controlling the debt desk."

"We control the financing, and we move equipment in and out of our clients' sites on a regular basis," said Drake, whose background in financing helped him develop the company's HAAS approach. MasterIT has the backing of a number of banks that look at the willingness of clients to repay in case of default.

Providers have had to be creative with HAAS because few financial institutions have agreed to support it, although that is changing.

At National City Commercial Capital, Terry Karageorges, vice president of National City Managed Service Solutions, a provider of financial solutions for managed services, said the company recognizes that when it comes to HAAS, it will work with individual solution providers to solve the capital problem. But not in every case.

"We look at the contract, the customer and the equipment needed to see if we can provide the solution provider with financing," said Karageorges in Cleveland.

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If National City can strike up a deal with the provider, the question of who assumes the risk, lease and obligation varies from deal to deal, according to Karageorges. To date, National City works mostly with larger companies, he said. However, Karageorges said, National City has been working on a deal with a distributor that will fund HAAS for smaller solution providers, which typically are the companies delivering IT services and equipment to SMB customers.

The distributor's role

Peter Sandiford, CEO at Level Platforms, a managed services platform vendor, said the financial barrier to entry to HAAS for providers can best be addressed by distributors that understand capital. He's not alone.

Ingram Micro, the world's largest IT products distributor, expects to make an announcement this quarter regarding HAAS, training, education and financing, according to Justin Crotty, vice president of services.

Tech Data's Scott Tillesen, director of credit for SMB ac­­counts, said the distributor, which is second to Ingram Micro in size, has partnered with four financial services companies and has always offered to work with resellers on financing.

However, when it comes to HAAS, Tillesen sees a new role for the company. "We think there's a role for us to play providing tools, marketing approaches and selling leasing," he said. Tech Data will make a move in this area in coming months, he added.

MSP On Demand's Dellinger said the trick for HAAS providers is to be able to deliver a single contract branded in the provider's name, funded without cross-corporate guarantees-meaning the customer is responsible for the debt-and have an operations center that makes sure bills go out on time and the monies are paid to the reseller and finance company.

"True HAAS is transparent to the client," Dellinger said.

by  - eWeek

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Source: http://www.esp.eweek.com/c/a/Archive/Hardware-as-a-Service-Are-You-Ready/2/