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Hardware as a service

Why adopting the subscription model is a smart strategy for MSPs—and their customers.

February 17, 2020

Hardware as a service

Everyone seems to be jumping on the as-a-service bandwagon these days. The conventional wisdom that customers want to own their equipment is now outdated, and the subscription-based model is poised to become the primary way of doing business as a managed services portfolio (MSP)—for everything from copy machines and computers to firewalls and servers.

Today’s consumers want cutting-edge technology, but they don’t want to be saddled with equipment that starts becoming obsolete right after signing a purchase agreement. So, with more and more MSPs now selling packages that include hardware elements in their contracts, those who are resistant to the model risk becoming irrelevant if they don’t change.

The advantages of the hardware-as-a-service model
Integrating hardware as a service (HaaS) into your business strategy offers significant benefits:

  • Higher MSP standardization and more profitable service delivery
    Chaotic customer IT environments lead to unnecessary service calls, increased downtime, and frustrated technicians and engineers. By embracing HaaS, MSPs can offer a consistent set of technology, which over time will drive down the cost of service and increase profitability.
  • Greater customer satisfaction
    The affordability and predictable structure of monthly payments make product acquisitions much more approachable to businesses. What’s more, when bundled together with their monthly MSP invoice, it becomes an all-in-one solution that customers don’t have to think about. They like the simplicity, reliability and efficiency that HaaS and standardization bring to the equation. And having technology that’s frequently updated results in less downtime (and less need for service calls)—which makes everyone happier.
  • Higher business valuation
    Product gross margins will increase because customers are able to budget a monthly payment rather than a large capital purchase. And because they tend to adopt technology standards more quickly, MSP efficiency increases as well as profits.
Service Leadership data in 2018 reported that improving product resale can increase overall revenue by 33%, increase EBITDA by 31% and provide 12.5% in higher business valuation.

Transitioning to a HaaS model
It’s not simply a matter of waking up one day and deciding to shift your practice to a HaaS model. The process should be gradual and include time to vet the various ways to go about implementing the subscription model, how to integrate it into the business plan and what hardware to choose to help standardize products across all customers. MSPs also need to consider how current customers may feel about making the switch. It’s important to do research and align with reputable third-party leasing companies like Ingram Micro Flexible Payment Solutions before making the transition.
Financing solutions from Ingram Micro can help grow an MSP
For MSPs ready to grow or actively in high-growth mode, Ingram Micro Flexible Payment Solutions (Ingram Micro FPS) offers a critical support role to making product sales, standardization and as-a-service possible through financing options.
Partnering with Ingram Micro FPS gives MSPs financial flexibility and leverage. They don’t have to worry about having cash on hand from cash reserves or a line of credit to help finance HaaS plans for their customers. With Ingram Micro doing the heavy lifting on the finance side, they’re free to focus on their specialties—product implementation and service.
So what about you?
Virtually every MSP that has embraced the as-a-service model now won’t do things any other way. HaaS not only has changed they way they do business, but it’s enabled them to grow significantly. And it can do the same for you.
To learn more about how Ingram Micro FPS can help you make the transition, contact financialsolutions@ingrammicro.com.