What is Hardware-As-A-Service?

May 17, 2018

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 It is out-of-date quickly and loses value at a phenomenal rate.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.

Retro computer which needs upgrading
It might be time for an upgrade!

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 £750 per PC, £1,000 per laptop and £6,000 for a server. Replacing the two problematic desktops and the failed laptop will cost in the region of £2,500. However this still leaves the software compatibility issue, a creaking server, and several machines hurtling towards end-of-life. To replace everything will cost £18,500. You’ve then got to factor in installation and configuration – say another £1,500 for a total of £20,000. 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 £20,000 cost is spread over the life of the equipment. For example;

Cost of Solution £20,000
3 Years @ £652 per month
Total Payable is £652.00 x 36 = £23,472

The interest payable is £3,472 which is under £100 per month but next comes the clever bit – the solution is 100% tax deductible!

Therefore, if we assume that tax is 20%;

£23,472 x 20% is £4,694

The reduction in tax (£4,694) is more than the interest charged (£3,472)

Brilliant eh?

As if that wasn’t enough….

Plotter showing alternative hardware-as-a-service solution

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.

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