With the popularization (and even consumerization) of cloud computing, the as-a-Service (-aaS) business model has emerged as the predominant choice for enterprise software. The ability to bundle core software with value-added features and services for an ongoing fee has proven valuable for vendors and customers alike. As-a-Service delivery of software (SaaS), platforms (PaaS), and infrastructure (IaaS) are now common market offerings, while other examples including communications (CaaS), databases (DBaaS), and networks (NaaS) are emerging as viable business models.
More recently, as-a-Service nomenclature has begun to permeate the marketing materials of IT hardware Original Equipment Manufacturers (OEMs), taking the form of Device-as-a-Service (DaaS). Large OEMs such as Dell and HP are pushing their Value-Added Reseller (VAR) partners and corporate customers toward this new business model. For an industry which has until very recently adhered to traditional sales and operations, this is a welcome change. Beyond the device hardware, DaaS bundles the added benefits of expert setup and deployment, centralized device management, maintenance and repair services, and end-to-end product lifecycle management.
Procurement should consider the following advantages of the DaaS model:
1. OPEX vs. CAPEX
Instead of committing significant capital expenditure (CAPEX) to acquire devices through an upfront purchase, organizations can instead choose to free up their financial resources by switching to an operating expense (OPEX) cost model, thereby both reducing and normalizing capital outflows.
2. Demand & Budgetary Flexibility
When corporations build budgetary forecasts, they don’t typically account for new employees and replacements for broken/outdated devices. This also includes the disposal and redeployment costs of devices left behind due to employee turnover or workforce downsizing. Opting for the DaaS model reduces unexpected fluctuations in demand and budgetary forecasts. Old or broken devices are replaced at the same monthly charge, and devices no longer in use are recycled or redeployed by the service provider at no additional cost to the corporation. Additionally, the service charge already accounts for technology refreshes due to obsolescence (see next point).
3. Timely Technology Refreshes
Historically, one of the biggest headaches for corporate IT departments has been the rapid refresh cycles of IT hardware because they require a periodic overhaul of the corporate device fleet. Outdated equipment can result in issues with software compatibility or security and affect end user productivity. DaaS allows users the flexibility of changing existing devices and upgrading to newer product models while minimizing the time spent disposing existing devices and acquiring new ones.
4. Reduced Personnel Commitments
Since DaaS providers also provide all of the management, maintenance, and disposal services associated with a client’s IT device fleet, organizations can reduce their internal IT personnel requirements.
For IT procurement professionals, the rise of DaaS signals a shift in the approach taken to procure IT devices and should warrant serious consideration for hardware-related contracts. DaaS provides customers the flexibility to obtain everything from hardware to services through each device’s lifecycle to reduce TCO, improve efficiency, and free up internal IT resources. As companies like HP and Dell continue to expand their DaaS equipment offerings and service coverage, we are likely to see a broader market shift towards this new end-to-end business model for corporate device fleets.
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