Hardware as a Service

A:  Hardware as a Service (HaaS) is a method of procurement used by many industries, but in the world Managed IT Services, as well as the entire IT Support Los Angeles Community, it specifically concerns network hardware, such as workstations, laptops, servers, data storage units and peripheral networking gear.

A: There are two different models - based on hardware ownership:

1) The most common is that the IT Services firm, typically a Managed Services Provider, places needed network hardware in the clients’ offices, but very importantly, it is on a licensing or leasing basis, wherein the IT Support company retains ownership of the hardware, and the leasing/licensing
cost is reflected in the clients’ monthly retainer.

2) This model, which IT Support LA practices, is exactly the same in every respect except one: Once the hardware is installed in the clients’ offices, the clients take ownership. They still pay the licensing leasing fee as part of their monthly payment, but we do not hold hardware hostage – if a client chooses to cancel our agreement (which they are free to day at any time with 30 days’ notice) they retain ownership of their office hardware.

The reason not many IT Support and Services providers offer this model is that if their service is poor, they stand to lose a considerable amount of money. This is also the reason most IT Support companies require a hard contract, lasting from 1 to 5 years. IT Support LA goes out on a limb: No contracts - just a cancellable Service Level Agreement (SLA), and we do not retain ownership of
any installed hardware. We have to earn our clients’ business every single day by giving excellent and prompt service, or we stand to lose tens of thousands of dollars – that’s the kind of faith we have in our abilities.

A: The underlying concept is that customers are paying for the service rather than the hardware itself. This helps both the client and the Managed IT Services provider:
The client is saved from the capital expense, which generally involves huge 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 both maintenance and security challenges.

A: Offer it as a choice – the old sales trick of only giving two options (where more exist). Then ask “So, which do you like better?” One does not offer what one does not want to sell – the offer is simply the first selling point.

Advertise it in simple terms, as a bullet item in a list of offered services: “Hardware included” - nothing more than that. If your advertising material spells out every detail, you leave the ‘sales’ job in the hands of the prospect – NOT in the hands of your experienced and persuasive salesperson.

A: The old saying in sales is, “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!” Seriously, your prospective client doesn’t care what’s under their workers’ desks – they just want everything to work – at a quick pace with no disruptions.

Offer them two options in your proposal: One with HaaS, one without. However, the ‘without’ option will necessarily have a sub-section showing the initial cash outlay for upgrading the system, and it is rare that this amount is less than five figures. You give the client the option of forking over ten to twenty thousand dollars or more up front, or paying a very reasonable increase in the payment for the ‘with’ option – and it’s not just the money – the ‘with’ 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 MSP than a big moneymaker. The mistaken assumption is that the higher monthly retainer will pay off the hardware and then the HaaS provider keeps collecting the cash like it’s gravy. It doesn’t work like that, because that hardware will need to be upgraded on an ongoing basis.

A: As with anything, we are not qualified to give tax advice, so consult your tax accountant or attorney. The general rule of thumb is that products are taxable, whereas services are not. Each state has its own way of handling these taxes.

A: It is the same as in non-cloud computing – utilizing the ‘old-school’ localized network. The difference is, that once in the cloud, your office computer really 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 needs far less IT support.

A: In the world of IT, especially in the IT Support Los Angeles Community, with which we are most familiar, there are two main categories of IT Support:

1) Time and Materials: Or ‘Break & Fix’ as it is known in the industry. 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 average ‘garden variety’ provider of this outdated and obsolete service model. This is ‘pay as you go’ – HaaS is a difficult fit.
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 HaaS. The ‘B&F Guys’ get paid more when things break down – see how that works?