Terms like “software-as-a-service”, “infrastructure-as-a-service”, and “hardware-as-a-service” have been big buzzwords in the IT industry for a while now. The rise of as-a-service and subscription-based models now even applies to hardware. This can be confusing! Typically “anything-as-a-service” (XaaS) applies to products, tools, and technologies that are delivered remotely and digitally, via the internet or a network. Exactly how does hardware-as-a-service work then? How is it similar or different to leased or financed hardware purchases? And are there different benefits?
What are you actually paying for?
The point of as-a-service models, even when applied to hardware and infrastructure, is that you are paying for the value of a service, rather than the underlying hardware. Hardware-as-a-service (HaaS) is a “procurement model that is similar to leasing … in which hardware that belongs to a [provider] is installed at a customer’s site and a service level agreement (SLA) defines the responsibilities of both parties” (Source: SearchITChannel). To unpack this a little, it means that if you procure equipment through a HaaS contract, you benefit from the equipment but usually the contract specifies that your IT provider is responsible for the maintenance, management, and eventual replacement of that hardware.
However, HaaS is not the same as hardware leasing or hardware financing, despite the frequent comparisons. With HaaS, you are paying for the use of the hardware, and the hardware remains the responsibility of your provider. You’re relieved of the burden of maintenance and replacement. But with hardware leasing or financing, you are paying for the hardware over installments. At the end of the leasing period, you (typically) own the hardware and then become responsible for arranging upgrades and replacements. (Note: We say typically because there are different types and terms of leases, with different accounting and income tax treatments.)
In a way, HaaS is like paying for a utility. The provider is incentivized to keep the hardware up to date and swap it out for the latest models so that the service remains high quality. HaaS is often a small portion of a much larger offering, which itself is an end-to-end solution for your IT environment. But a leased or financed hardware agreement can be on its own, simply depending on what leasing options your IT provider may arrange via a financing or leasing company. And in this case, the leasing company may have its say over the financing terms, rather than the IT provider being in control.
Benefits of HaaS and Hardware Leasing
Now, what are the benefits of either of these options?
First of all, HaaS or leased hardware is a flexible, affordable way for small and medium-sized businesses to have an up-to-date IT infrastructure.
- Financing or leasing means there is no large capital expenditure to get started.
- The costs can be operational. (Note: A good accountant can explain to you why this is a benefit. But once again, whether it’s an operational cost depends on the type and terms of the lease.)
- Your technology bill is often simplified, as HaaS or leasing may be rolled into a larger agreement to provide a single invoice for you.
- They both give you a predictable monthly expense that’s easy to budget for.
- With HaaS, the hardware is maintained by the service provider, always up to date, and replaced when necessary.
- Both can reduce legacy equipment – saving you hassle and unpredictable costs down the road. Your equipment now has a predictable or managed replacement cycle.
- Both can help reduce large upgrade purchases.
So ultimately the difference between HaaS and leased hardware agreements can boil down to a single point: At the end of the HaaS term, hardware belongs to the IT support provider, who upgrades or replaces it. At the end of a leased term, the product can belong to you, the client.
Looking for a managed IT services bundle that provides HaaS or hardware leasing? Check out OXEN Technology’s Business Bundle.