The as-a-Service subscription model is quite pervasive today. We subscribe to services such as Netflix or Spotify as consumers and Software-as-a-Service for businesses has been around for years. The last several years has seen businesses embracing this model for their technology needs as well. The benefits SMBs can reap from subscription models such as Device-as-a-Service (DaaS), including flexibility, cash flow management and increased productivity are compelling.
First, let’s define what DaaS solutions entail. Device-as-a-Service is acquiring typical hardware devices (i.e., laptops, tablets, desktops and other hardware) along with a variety of services and software for a monthly subscription fee. This is contrast to a more traditional model where a business would be pay upfront for the device.
But how is a DaaS solution any different than a normal lease agreement? Before we get into a comparison, we will provide the definition of a lease.
According to Cambridge Dictionary a lease is defined as:
“An agreement to pay money in order to use land, a building, a vehicle, or a piece of equipment for a particular period of time.”
This may sound a lot like a DaaS agreement. While a Device-as-a-Service agreement has some attributes of a lease, it also has a lot of other components such as built-in upgrade cycles, service, and device management.
Let’s take a look at some of the main differences between a DaaS agreement and a standard equipment lease agreement.
1. No option to own
With a DaaS agreement, there is no intent or option for an organization to own the devices. They are simply paying to use the equipment for the term of the agreement and at the end of that term they will be upgraded to the most current device for a similar monthly payment. This evergreen strategy is beneficial for several reasons. DaaS agreements simplify the management of the devices throughout the lifecycle of the agreement including procurement, provisioning, managing and the support and maintenance of the devices. This allows businesses to focus on their business objectives rather than the management of their devices. In addition, as equipment ages, the cost of repairs increases and so does the costs for lost time as employees encounter issues due to older devices.
With a lease agreement, the customer either owns or has the option to own the equipment at the end of term.
A DaaS agreement includes the ability for businesses to scale down if a change occurs within the business. There are usually set acceptable percentages within the agreement, but it affords organizations the ability to reduce their subscription if the need arises. Of course, scaling up is also included part of the agreement.
A lease agreement does not provide the option to scale down. If your have devices that are not being used, you still have to pay the monthly cost.
3. Ability to include support and services
Part or the benefit of the DaaS model is that the subscription includes services and support and therefore the agreement allows for the inclusion of those costs within the monthly subscription fee.
Lease agreements will allow a limited dollar amount of services to be included normally within 15% of the total lease value. The services that are normally included in a lease agreement would include things such as implementation and professional services. They do not normally include proactive services such as patching, updating, monitoring, maintenance, and helpdesk.
4. Consolidated Billing
DaaS agreements allow for the consolidation of the monthly costs of the device, services and software.
Lease agreements normally do not have this option available.
As you can see Device-as-a-Service programs is different from lease agreements. The right option for depends on the business outcomes an organization is looking for. Understanding the end results that are being sought is a critical step in determining the best option for the business.
MicroAge can help analyse your needs to provide the right option for you. Contact us today.