Hardware-as-a-Service (HaaS) is a term you may not be familiar with. However, as a small business, it offers a flexible, affordable way to ensure your IT infrastructure is kept up-to-date.
In a previous blog we asked the question ‘Is It Time To Replace Your IT Equipment’? Even when the answer is ‘yes’ cost is often a huge barrier. This is where Hardware-As-A-Service comes in.
If you’re using Office 365 then you’ll be broadly used to the concept. Office is Software-As-A-Service (SaaS). This is cloud based software that is paid for on a monthly basis. Compared to the old methods of purchasing licences the advantages are clear. There is the obvious reduction in up-front costs, and installation is quick and easy. Software is constantly updated, meaning you are always on the latest version without having to spend more money. Compatibility issues between software versions becomes a thing of the past.
Whatever else IT is, it is not a good investment. It is out-of-date quickly and loses value at a phenomenal rate.
HaaS allows businesses to spread the cost of the equipment over the course of it’s useful life. This means the company has no large capital outlay, nor ownership of fast deprecating equipment. For the business it’s up-to-date, quality equipment for a simple monthly payment.
How is Hardware-As-A-Service different to leasing?
Whilst very similar to leasing, the HaaS solution includes some added advantages.
Hardware-As-A-Service from Your IT Department would normally be part of a fully managed support contract. This means that the solution will be fully installed by our engineers and any installation costs can be included in the monthly cost. The hardware is also fully supported by Your IT. Under a lease arrangement you might be covered under a warranty, however any issue means shipping a unit back to the manufacturer. This is inconvenient in the case of a desktop PC, practically impossible with a server!
At the end of a standard leasing agreement you’ll be faced with various options including keeping the equipment for a final payment, continuing to lease the same equipment or sending it back to the lease company. With Your IT’s Hardware-As-A-Service solution we’ll work with you to decide the best option. In most cases this will mean that we come in, upgrade everything to new, up-to-date equipment and you simply continue to pay the same fee. No more worries about ageing equipment or finding capital for new machines.
You can also add to your HaaS agreement, meaning as you grow your infrastructure can grow with you and still with no large capital outlay.
How Hardware-As-A-Service works
Let’s give an example to explain the HaaS model:
Jack Of All Trades LTD is a growing company with 15 employees. They have been running for 5 years and bought all of their IT equipment new at start-up. They have noticed that their network is running slowly. Two of the PC’s have constant ‘niggles’ and need rebooting several times a day, whilst one of the laptops has stopped working completely. Their software provider is trying to upgrade them to the latest version but it is incompatible with the server software.
The equipment obviously needs replacing but the business cannot afford a large capital outlay. Impressive growth means they’ve taken on new staff and more office space – so whilst the business is profitable cash is currently tight.
We’ll work on rough figures of ยฃ750 per PC, ยฃ1,000 per laptop and ยฃ6,000 for a server. Replacing the two problematic desktops and the failed laptop will cost in the region of ยฃ2,500. However this still leaves the software compatibility issue, a creaking server, and several machines hurtling towards end-of-life. To replace everything will cost ยฃ18,500. You’ve then got to factor in installation and configuration – say another ยฃ1,500 for a total of ยฃ20,000. Money that Jack Of All Trades LTD just hasn’t got in the bank.
The solution is simple – Hardware-As-A-Service.
Using HaaS, the ยฃ20,000 cost is spread over the life of the equipment. For example;
Cost of Solution ยฃ20,000
3 Years @ ยฃ652 per month
Total Payable is ยฃ652.00 x 36 = ยฃ23,472
The interest payable is ยฃ3,472 which is under ยฃ100 per month but next comes the clever bit – the solution is 100% tax deductible!
Therefore, if we assume that tax is 20%;
ยฃ23,472 x 20% is ยฃ4,694
The reduction in tax (ยฃ4,694) is more than the interest charged (ยฃ3,472)
Brilliant eh?
As if that wasn’t enough….
Hardware-As-A-Service preserves you cash reserves and has some great tax advantages, but it doesn’t stop there.
On the finance side of things you’ll also protect any other lines of credit, for example bank overdrafts, whilst it makes budgeting easier and more reliable. It may even improve the businesses credit rating.
You’ll also have access to the latest technology now, without having to wait. This can give you a competitive advantage over your rivals. You may even be able replace your leased items with newer technology within the term of the contract – without necessarily increasing your payments.
Each HaaS solution is bespoke – length of terms will be agreed based on the useful life of equipment, whilst rates take into account the business credit rating etc.
All types of IT Infrastructure hardware can be purchased in this way. Desktop PC’s, laptops, servers, monitors, printers even firewalls can be purchased using HaaS.
If you’d like to find out more about how a Hardware-As-A-Service solution might suit you’re business please complete a Contact Us form or call us 0115 822 0200.