Is Hardware as a Service (Haas) a Good Idea?

A: In the world of IT, especially in the Charlotte business Community, with which we are most familiar, there are two main categories of IT Services:

1) Time and Materials: Known in the industry as ‘Break/Fix’ (B&F). This not the arena of HaaS – these
‘B&F Guys’ wait for a call, then drive to the client, see what broke and then fix it. HaaS is far above      the sophistication level of the low-level providers of this outdated and obsolete service model. HaaS is a difficult fit in this ‘pay as you go’ model.

2) Managed Services: This ‘all-inclusive’ model is where you will find HaaS. They have both the
infrastructure to accommodate HaaS, and a more vested interest in the ease with which they can
maintain a network with up-to-date hardware installed. The ‘B&F Guys’ get paid more when things break down – see how that works?

A:  The underlying concept is that the clients are paying for the use of the hardware rather than the hardware itself. This helps both the client and the Managed IT Services provider: The client is saved from a huge capital expense, which generally involves large periodic cash outlays to keep the network hardware up to date. The Managed IT Services Provider is assured of an up to date and easily managed network and spared having to ‘nag’ the client to spend money as aging, obsolete hardware presents deepening challenges to both maintenance and security.

A: Naturally, we are not qualified to give tax advice, so please consult your tax accountant or attorney. The general rule of thumb is that products are taxable, whereas services are not, but this varies from state to state.

A: It is the same as in non-cloud computing – utilizing the legacy local network. The difference is that once in the cloud, your office computer just acts as a terminal to the cloud, rather than the self-contained little ‘factory/storage warehouse’ it was on a local network. You still have to have something at your desk, but it’s less expensive and typically needs much less maintenance and support.

A: This Q&A is geared towards fellow IT companies: As the old saying goes, “Sell the sizzle, not the steak.” Don’t roll in a shiny new HP Workstation and say, “Look! This is what you get with our HaaS deal!” This isn’t a Porsche - your prospective client doesn’t care what’s under their workers’ desks – they just want it to work – at a quick pace with no disruptions.

Offer two options in your proposal: One with HaaS, one without. However, the ‘without’
option will necessarily have a section showing the initial cash outlay for system/hardware, and if this amount is less than five figures, your business – and the number of workers – is too small to bother with HaaS anyway. You give the client the option of forking over upwards of ten to twenty thousand dollars or more up front, or paying a very reasonable increase in the payment for the HaaS option – and it’s not just the money – the HaaS option ensures better service and less disruptions, because the network will always be state-of-the-art.

The reason why the two monthly payment options offered shouldn’t be worlds apart is because HaaS    is more of a convenience to the Managed Services Provider than a big moneymaker. The assumption that the higher monthly retainer will pay off the hardware while the HaaS provider keeps collecting the cash like it’s gravy – is mistaken. That is not how it works, because that hardware will need to be upgraded on an ongoing basis.