Hardware-as-a-service, or HaaS, is an option that a growing number of organizations are moving to. The most basic way to understand this service is that a company will rent hardware (PCs, servers, storage devices, routers, switches, etc) rather than buying them. This has many different impacts to the way the company can use technology, the way things are financed, and much more.
Of course, there are pros and cons to the HaaS model that should be evaluated before making a decision about whether or not it is the best option in a given situation. Getting answers to common questions about the hardware-as-a-service model will help you to make an informed decision.
Where HaaS Hardware is From
There are a couple of different options when it comes to actually procuring the hardware that you need when using this model. The first option is to contract with the major hardware manufacturers and work directly with them to get what you need.
For example, you could work with Dell to set up a contract for all your PCs, Cisco for routers and switches, EMC (which is now actually a part of Dell) for storage solutions, and much more.
Virtually all major hardware companies today offer a number of different HaaS options to choose from. They are generally very easy to work with because these companies are able to make a large amount of money through this business model. Of course, the downside of this option is that you need to set up and manage multiple contracts through multiple different companies.
The other option is to work with a vendor that offers all the different hardware you need. There are a growing number of companies out there that specialize in HaaS solutions. You will contract directly with them, and they will then make the purchases of the hardware you need.
They will then rent you that hardware for the amount of time that you need it, and accept it back at the end of that contract. These companies often then resell the used hardware to help boost their bottom line.
Both of these options can provide you with the hardware you need, when you need it. Small businesses will often want to work with just one company since that is an easier option to manage and can help to ensure you are getting the lowest prices possible. Large organizations, on the other hand, may benefit from working with the major hardware manufacturers directly to get what they need.
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Advantages of HaaS
There are quite a few different benefits to the hardware-as-a-service model to be aware of. Of course, each company is unique, which means that how important each of these advantages is will vary greatly based on your situation:
- Easy Hardware Refresh Schedule – Perhaps the biggest benefit to HaaS is that it has a built in hardware refresh schedule. If you have a three year contract for PCs, for example, at the end of that three years, the PCs will be replaced (assuming you renew the contract). This type of hardware refresh can be built right into the HaaS contract to streamline the process.
- No Need to Manage Tax Impacts – When a business purchases hardware they will typically buy it as a depreciating asset, which has important tax implications. To get full advantage of the tax benefits, you need to track and manage the assets properly. With HaaS, you do not own the hardware so you do not need to worry about the tax implications associated with them.
- Avoiding Unexpected Hardware Costs – When you own hardware, you are responsible for maintaining it and replacing it should something break. With HaaS, on the other hand, if a piece of hardware goes bad, the company that you are leasing it from will simply replace it. This helps to eliminate the large unexpected costs of this type of hardware. You are left with a predictable monthly or annual expense that can be budgeted for.
- No Major Up Front Costs – You can avoid the major up-front costs of purchasing all the hardware you need at once. Instead, you just begin paying your monthly or annual contract for the service.
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Disadvantages of HaaS
Of course, there are some significant downsides to the HaaS model as well. Knowing these added risks is critical for making the right choice when it comes to how to acquire the equipment you need:
- Higher Overall Cost – While the monthly cost is lower, the cost over the life of the hardware is going to be more. This is because you have to pay not only for the hardware itself, but also the profit that the company you are contracted with has to make.
- Reduced Tax Benefits – While dealing with the depreciation of assets for taxes can be a hassle, it can also save you a significant amount of money on your taxes each year. You can lose some or all of these benefits when harnessing a HaaS model.
- Paying Interest – While technically part of the higher overall costs, it is important to be aware that most HaaS contracts will include some type of interest or fee when you receive the hardware up-front and only pay for it over the course of the contract.
- Less Flexible – If your hardware needs change suddenly, you may need to renegotiate your contract or set up new contracts, which can be time consuming. When you simply buy your hardware, you can make purchases at any point, giving you a greater level of flexibility.
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Is HaaS Right for Your Company?
There is no one right or wrong answer when it comes to whether hardware-as-a-service is right for a given company. Evaluate your current technology needs, financial situation, and other factors to determine if this is a good idea for you.
Also, keep in mind that you can use a HaaS for some types of hardware, and then purchase other hardware directly, based on your needs. In the end, it is just another option that is available when you need it.
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