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How can the channel get to grips with device as a service?

HP claims the majority of its customers are interested in device as a service, and nearly half are already using it. But what opportunities, and challenges, does this bring for the channel?

Is device as a service (DaaS), sometimes called PCaaS, the wave of the future? HP Inc CEO Dion Weisler certainly...

seems to believe that it’s a matter of when DaaS happens, not if. That’s perhaps not so surprising when the vendor claims as many as 60% of customers are interested in the service and 40% have already engaged with it.

If HP is right, what opportunities can DaaS present for partners and what do they need to do to ensure they can capture those opportunities? And if the sceptics are right, what should partners be offering to clients instead of DaaS?

Outlining HP Inc’s case for DaaS at Canalys Channels Forum in October, Luciana Broggi, enterprise solutions general manager for the EMEA region, said it included hardware and lifecycle services and its purpose was to “make a company more efficient, improve the employee experience and free up IT resources to drive growth”.

As DaaS was not confined to HP and Microsoft, but required a multi-vendor, multi-operating system approach, she revealed that HP had become a preferred service provider for Apple devices in its customer environment.

Broggi argued that 80% of a device’s costs were incurred after purchase, and the total cost of ownership (TCO) was increasing from year to year. There was a significant opportunity “to be captured by our channel partners and ourselves”, she said. While HP could deploy DaaS to customers direct, “to scale this business we need to partner with channel partners,” she added, revealing that HP was looking at whether it should introduce a specific certification for DaaS.

Speaking earlier at the same event, Weisler said it would be up to partners to decide whether they wanted to participate in DaaS, but he emphasised it was much more than just finance or leasing.

“I think financing is a simplistic view. It’s almost back to the early days of managed print services, when we started out,” he commented, stressing that DaaS was not just about simple leasing and what we have all done for a long time – selling extended warranties and asset tagging. That’s stuff we have been doing for 20 years. It’s about incredible hardware platforms and building a layer on top that’s intelligent.”

He claimed that HP’s DaaS pipeline was the fastest growing business across its partners. “We have over a $2bn pipeline of device as a service,” Weisler added. This was giving rise to certain tensions between channel partners and the vendor’s finance arm, HPFS, which he admitted was “not completely geared to be able to address that.

Do I think they can get there? History has shown they have. Having said that, we need them to get there faster. We will talk to them about that… We recognise it’s creating tension in the system. We want to remove that tension,” added Weisler.

He compared DaaS to the vendor’s shift to managed print services. “You get time to prepare the channel community for it and your own corporation for it.” He added that it would lead to “better, stickier business”.

Speaking later, Broggi said there were some differences between MPS and DaaS in terms of the level of maturity of the market and where the two services were bought.

Natural fit for SaaS providers

Julien Parven, Daisy SMB services marketing director, believes that with many business customers already operating on an as-a-service basis for mobile and cloud telephony, “having customers that are already in that mindset creates a DaaS opportunity”. For those partners providing Software as a service (SaaS), it should be a natural fit to attach hardware that is updated, refreshed and renewed without any need for upfront costs, or costs to change.

“Out of everyone operating in our industry, partners are best placed to have these conversations with users, as they are already in the midst of them,” he states.

Commenting on Weisler’s remarks, Dave Sobel, senior director of community at SolarWinds MSP, says: “Dion is right, but also wrong – DaaS is already here and forward-looking MSPs are already offering it.” For solution providers, there is a benefit in delivering the entire solution and owning the entire stack but “the problem is that many customers don’t want to buy their devices this way”. While MSPs should normally do all they can to simplify their product range, in this case “they need to offer a number of options to capture this opportunity: a subscription where the device is subsidised, financing or leasing the device, or for customers who want to own their tin, traditional resale”.

Richard Smith, regional manager at SOTI, agrees with Sobel that there is “a distinct move towards DaaS”. Many small firms don’t have the capital to invest large sums in mobile devices “so a monthly fee makes this feasible without impacting cashflow too heavily”. He points out that companies like Apple “are already taking advantage of this emerging trend, so adding value is key for channel partners moving towards a subscription model. Rather than simply offering a device, it’s vital they explore the extent to which customers will be relying on devices and provide the added-value solutions that will support them for the long term”.

There’s also a value in the convenience of DaaS to the customer, Smith argues: “By uncovering the strategic needs of the business, channel partners can identify and provide critical business software alongside additional hardware in one monthly fee. It’s this level of convenience which will be the basis for a long-term relationship, while ensuring a continued monthly income for the reseller.”

Tariq Saied, CTO at Jigsaw 24, warns it would be wrong to dismiss DaaS “as part of the as-a-service fad”. He agrees with Weisler that it’s a matter of when, not if, DaaS happens. “It’s something we’re already seeing happen with a lot of enterprises, particularly in relation to DaaS for Apple,” he adds.

Apple leads the race to DaaS

According to Saied, many businesses want to offer Apple products as a choice for employees and this is being driven by a number of factors. “One important demographic having a profound impact on the adoption of DaaS for Apple is the millennial,” he observes. “This tech-savvy generation, who are entering the workforce and becoming key decision makers, have grown up in the age of digital and iOS. So they demand technology that is either equal or superior to what they have available at home.”

Another key factor, he believes, is that “more and more enterprises are releasing Apple applications, so are needing access to back-end systems in order to develop these. We’re seeing a rise in the number of Windows developers morphing into Apple developers in response to this”.

Offering Apple via DaaS also helps to “normalise the price difference between Windows and Mac. Traditionally, buying a PC can be cheaper but DaaS offers a business the option to deploy Mac for a similar price, paying a fixed fee for a set number of months. Not only this, but the residual value of a Mac is a lot higher. A PC is usually obsolete in three years but a Mac doesn’t go ‘vintage’ for at least five years”.

The widespread adoption of the subscription model by consumers is an important trend, notes Paul Timms, managing director at MCSA, and it is no surprise that some IT service providers “are reacting to this change in buyer behaviour in the commercial environment with an increasing number of ‘as a service’ offerings”. The DaaS model has a number of positives for companies: greater visibility and stability on IT costs by moving to OPEX, along with the ability to deploy devices as needed and scale them up or down as required.

“In a downsizing situation, a DaaS provider takes back surplus devices, potentially redeploying them with another client, and can also manage the safe retirement of devices including deletion of sensitive data,” Timms says. The DaaS model also means organisations can refresh devices faster and upgrade to new technologies more easily.

In addition, DaaS can free up the IT team to focus on other aspects of the business: “Ultimately, free from the day to day burden of managing and maintaining devices, the in-house IT team can focus on looking at how the current world of IT can help and improve the business.”

That’s a point echoed by Jigsaw 24’s Saied, who argues it can make implementation of Apple equipment easier for enterprises that are unfamiliar with the Mac environment. “Whilst there are established rules and methodologies for PC Windows deployment, there is currently still little perceived wisdom on how to deploy Mac in many enterprises,” he notes, “so it’s not easy for IT departments to discover a blueprint for Apple adoption. A good DaaS provider will have already put together an Apple adoption methodology, so overall implementation is much more efficient.”

It also provides flexibility in terms of Apple products because there is little scalable Apple support in enterprise IT teams. “DaaS plans are completely customisable and scalable depending on the technological capabilities of a company,” Said states, “whether it requires implementation, mobile device management, warranty or maintenance. Once organisations get their heads around DaaS, they will begin to purchase it as a much more modular concept.”

Finding your niche

From a business perspective, Parven at Daisy argues that DaaS helps partners break out of the model where software and IT services are procured in one place and capital expenditure is approved by finance. It gives them the opportunity to “open conversations at multiple levels across the organisation, which allows the business to really establish its needs as opposed to just the business requirements”. He adds that “by controlling the services deployed, as well as the infrastructure that they sit on, savvy partners can establish a real niche”.

Parven has no time for those inclined to be sceptical about the DaaS trend. “Let’s look at what the sceptics might be saying,” he remarks. “Business customers will never consume hardware on a simple to buy, easy to refresh, secured and maintained model. Business customers do not want the security and simplicity of a manageable cost base with no hidden extras or nasty surprises. Business customers are not prepared to engage with a partner to deliver them added value of service and continuity. Really?”

He is very clear that Daisy’s business is built, “and built successfully, on all of those concepts”. He claims that organisations traditionally modelled upon a CAPEX model “are looking enviously and ambitiously at how Daisy can help elevate them into the XaaS space, and how this will be translated to partners”.

Timms at MCSA says it’s important not to get too carried away and that people need to remember ‘as a service’ is a broad-brush term, “with DaaS joining the ranks of multiple as a-service offerings including everything from cloud to infrastructure”. Companies can choose to own their IT outright or lease it over a period of time and it has become commonplace to spread some IT costs, such as Microsoft and other software application licences, on a monthly subscription basis. 

“One size certainly doesn’t fit all and we are seeing IT managers look for flexibility and the best service for the best price – however that is achieved,” he adds. “There is a service model out there for everyone, dependant on their risk appetite, budget and the drivers for change. The service providers who will succeed in this brave new world are the ones who adapt both to the industry changes and to their customers’ needs.”

But Smith at SOTI warns there are very real dangers for channel businesses who ignore the subscription model, claiming they “are in serious danger of becoming irrelevant. Why would a business spend millions on upfront costs when others are offering a more manageable monthly fee? They wouldn’t. Those currently burying their heads in the sand will soon find out exactly how wrong they are to ignore DaaS”.

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