The “anything-as-a-service” (XaaS) business model is increasingly becoming prominent, with Software as a Service (SaaS) serving as a prime example. According to a survey by EY US, 54% of businesses are ready to accept XaaS models, with 66% believing that transitioning to XaaS would boost their valuation by 50%.
But what if there was a solution to help SaaS founders cut down on the capital expense of purchasing computers, printers, servers, and other IT infrastructure? Or a model that could help you procure cutting-edge technology for your business without breaking your budget?
This is where HaaS comes in.
This article explores what Hardware as a Service (HaaS) is, how it works, and why it’s relevant for SaaS companies, focusing on hardware asset management.
TL;DR
- Hardware as a Service (HaaS) allows businesses to lease hardware on a subscription basis, reducing upfront costs and shifting expenses to operational budgets.
- HaaS offers scalability and flexibility, enabling SaaS companies to adjust hardware resources as needed while focusing on core business functions like software development.
- Integrating HaaS with hardware asset management helps streamline hardware tracking, maintenance, and upgrades, ensuring your business stays competitive with the latest technology.
What is Hardware as a Service (HaaS)?
Hardware as a Service (HaaS) is a business procurement model where a manufacturer or managed service provider (MSP) installs hardware to a customer’s site and the customer pays for usage of the hardware, not the hardware itself.
The MSP and the customer sign a service level agreement (SLA) defining the responsibilities of all the parties involved. It’s the MSP’s responsibility to retire or replace the hardware if it breaks down or becomes outdated.
HaaS is also referred to as Equipment as a Service (EaaS), Device as a Service (DaaS), Machine as a Service (MaaS), or Infrastructure as a Service (IaaS).
It’s an evolution from the traditional model of a one-time purchase of hardware to a pay-as-you-go or subscription model. Think of it as leasing hardware you need.
As a SaaS company, there are many reasons why you might want to consider the HaaS model. The most prominent one is its cost-effectiveness. If you’re a small or mid-sized business, you don’t have to break your budget to acquire sophisticated technology.
You also don’t have to worry about operational expenditure or surprise costs when hardware breaks down. The unpredictability and security of aging hardware becomes a thing of the past.
How Does HaaS Work?
There are a few variables that determine how the HaaS operational model works. However, the overall process is pretty straightforward and often looks like this:
- Evaluation – The MSP assesses the age and capabilities of your current hardware setup to determine the hardware technology that would meet your equipment needs.
- Selection – The MSP matches your needs and requirements with their hardware technology products. They’ll provide you with a plan on how their technology will meet your business needs and financial goals.
- Installation – The hardware is then configured according to your needs, shipped, delivered, and installed at your location. The MSP facilitates the return or disposal of your old hardware.
- Maintenance – The MSP now provides regular maintenance, support, repairs, and updates. They also train your team on using the technology efficiently.
- Billing – You and the MSP will agree on a suitable pricing model to make the billing predictable. You’ll then pay the fees on a predetermined schedule.
- Upgrades/Disposal – When the service term is over or the technology is outdated, you can choose to retire the technology or retain the solutions from your MSP but with upgrades.
With HaaS, the MSP shoulders the responsibility of managing the hardware’s entire lifecycle, including deployment, monitoring, and end-of-life recycling or upgrading.
The hardware usage fees can be based on various pricing models. The HaaS client can pay a monthly fee, a usage fee based on duration (minutes or hours operated), telemetry-based fees, or a feature-based fee. Sometimes, the MSP might incorporate the fees into the installation, monitoring, and maintenance charges.
Either way, the pricing depends on the chosen business model and the capabilities of the technology behind the HaaS solution.
Note that HaaS goes beyond just physical hardware. Many HaaS providers also offer hardware asset management, remote monitoring, backup solutions, and anti-malware solutions.
Benefits of HaaS for SaaS Companies
Haas provides numerous benefits for SaaS companies. They include:
Cost efficiency
Upfront costs associated with procuring hardware infrastructure can be significant for SaaS companies. According to Product HQ, the average SaaS startup costs for equipment purchases range from $25,000 to $50,000.
HaaS allows businesses to free up their cash flow and shift their capital expenditure (Capex) budget to operational expenditure (Opex) budget.
Capex expenditure provides long-term tax benefits for the company as the hardware’s value depreciates and the depreciation rate is deducted from your taxable revenue.
On the other hand, Opex expenditure is accounted for annually. The amount deducted from the revenue (the amount spent on HaaS in one year) is accounted for in that year. For this reason, company managements are more likely to approve Opex expenditure and Capex budgets are likely to require several layers of management approval.
Scalability
As your company grows over time, your hardware infrastructure needs change. HaaS enables companies to scale their hardware infrastructure to match their changing needs without having the delays associated with buying and installing new hardware.
This kind of flexibility means that your business will always have the needed infrastructure to handle new customer demands or increased workloads while maintaining performance and reliability.
Focus on core competencies
Managing hardware in-house can be an uphill and time-consuming task. By choosing the HaaS business model, businesses outsource hardware management to MSP specialists. The internal team can then focus on product development, sales and marketing, customer support, deliveries, and other core business functions.
Up-to-date technology
MSPs make it easy for their customers to access the latest advanced cutting-edge technology in the market without the need for a huge capital investment or frequent upgrades and replacements. This helps your business stay competitive in your industry.
Enhanced security
HaaS providers often have advanced security features that counter cyber threats. This is essential especially if your business handles sensitive information. Most importantly, it helps you stay compliant with industry regulations and standards for data protection, reducing the need for you to maintain security and compliance in-house.
Integrating HaaS with Hardware Asset Management
Hardware asset management (HAM) refers to the process of deploying, tracking, managing, and maintaining physical IT assets, such as laptops, servers, routers, and drives, throughout their life cycles.
It involves having systems and processes like procuring the hardware, delivering or installing the infrastructure, scheduling maintenance, handling repair requests, tracking the usage and location of the hardware, and retiring or updating when outdated.
The entire HAM process gives IT teams crucial details about their hardware asset inventory, how those assets are being used, and where they are in the hardware life cycle.
In the SaaS environment, the availability and effectiveness of the software product depend on the underlying hardware infrastructure. Poorly managed hardware assets can lead to loss of data, compromised cybersecurity, downtimes, and bad customer experience.
HAM helps SaaS companies optimize their hardware infrastructure and avoid underutilization, asset duplication, and high maintenance costs. It also allows SaaS companies to stay on top of compliance with industry and security standards.
Integrating HaaS with HAM helps simplify many of the challenges associated with managing hardware assets.
By integrating HaaS with HAM, SaaS companies benefit from lifecycle management, streamlined tracking, simplified maintenance, automated updates and upgrades, and reduced overhead.
Case Study 1 – Salesforce
Salesforce, a leading CRM software provider, has been leveraging HaaS for its data centers. With a growing customer base, their hardware needs have also been increasing. Instead of frequently buying and managing their servers, Salesforce partners with MSPs to help them scale their infrastructure seamlessly.
This strategy allows Salesforce to focus on its core business of providing applications focused on sales, marketing automation, customer service, eCommerce, and business analytics. On the other hand, the HaaS provider shoulders the responsibility of hardware lifecycle management and upgrades.
Salesforce can then maintain minimal downtimes and high performance without the overhead of managing physical assets.
Integrating HaaS into their asset management strategy allows Salesforce to enjoy predictive maintenance, real-time tracking of server health, and timely upgrades. Their IT teams can shift priorities from infrastructure concerns to software innovation and development.
Case Study 2 – Zoom
Zoom, a video conferencing platform, reached its peak in the 2020 pandemic era. With a massive surge in usage, the company needed to scale its infrastructure. Zoom integrated HaaS with their HAM to handle the surge in demand.
HaaS allowed Zoom to quickly deploy additional servers and networking equipment to help them accommodate the millions of new users without having to procure, purchase, and configure physical assets directly.
With this strategy, Zoom could benefit from the HaaS provider’s hardware maintenance and lifecycle management. The provider ensures Zoom regularly receives necessary upgrades and ensures its security remains robust, which is important for seamless video streaming and user data privacy.
Challenges and Considerations
While HaaS provides numerous benefits for businesses like yours, there are several potential downsides and considerations to have in mind. They include:
Vendor dependence
Outsourcing your hardware infrastructure needs may allow you to focus on your core business, but it comes at a risk. Partnering with an MSP means you rely on them for timely updates, maintenance, and support.
But that also means that if third-party HaaS provider experiences challenges in their supply chain, your company’s operations are affected. Besides, if the provider has poor customer support, response times, and security updates, your service delivery is also affected.
This is why it’s important to thoroughly evaluate potential HaaS providers before entering into a contract with one. Prioritize providers with a demonstrated track record of robust support systems and reliability.
Also, check whether the provider has a service level agreement (SLA) in the contract. An SLA demonstrates the provider’s commitment to service delivery.
Contract management
HaaS contracts often involve long-term commitments, which may be a hindrance to your business in the future. If your company experiences growth or acquisitions, your hardware needs are certain to change.
However, you might find yourself bound to an unfavorable contract with early termination fees or flexibility restrictions.
It’s important to carefully review the contract and ensure it guarantees flexibility for scaling, renegotiation, and termination without hidden costs or penalties. Also, consider having clear exit strategies to avoid staying in a contract that’s no longer suitable.
Data security and compliance
Outsourcing your hardware needs to a third party could raise data security and compliance concerns. If the infrastructure is compromised or lacks robust security measures, it could expose the company to data breaches and compliance violations.
Carefully review the HaaS provider’s security protocols, audit practices, and compliance certifications. You can also consider implementing other data security measures on your end, such as data encryption.
Also, ensure the HaaS provider complies with industry standards and regulations, such as the General Data Protection Regulation (GDPR) and Payment Card Industry Data Security Standard (PCI DSS). If you’re in the healthcare industry, check for compliance with the Health Insurance Portability and Accountability Act (HIPAA).
We also recommend backing up your crucial information in different locations. For example, you could have a cloud backup of your data archive and an external hard drive backup in your business to support the server storage.
Future Trends in HaaS for SaaS Companies
HaaS is proving to be transformative in the world of technology and business. Even then, HaaS is yet to reach its full potential. In the near future, you acn expect to see HaaS become more influential in the IT infrastructure landscape.
Some of the technologies poised to become mainstream in HaaS include Artificial Intelligence (AI), the Internet of Things (IoT), and Machine Learning (ML). Future HaaS solutions will integrate these technologies to analyze data in real-time and predict potential hardware failures before they occur.
You can also expect edge computing to take over from cloud computing due to low latency, increased data security, and faster data processing.
HaaS providers are likely to add more customization and flexibility options to their offerings due to the growing demand for customizable hardware solutions in the SaaS industry.
In addition, since sustainability is becoming a vital concern for many businesses, the HaaS model can play a huge role in helping businesses reduce e-waste. HaaS providers will incorporate environment-friendly and sustainable solutions, such as recycling, repurposing, or refurbishing end-of-life hardware.
In the future, HaaS hardware solutions are likely to be geared towards energy efficiency through low energy consumption.
Conclusion
HaaS is an IT service model where businesses obtain hardware infrastructure from third-party providers on a subscription basis, instead of purchasing and owning the hardware outright. This model allows businesses to lease the latest technology that would have otherwise cost them a lot in capital expenditure.
On top of saving on costs, businesses can also focus on their core competencies and outsource their hardware management to MSP specialists.
But don’t just get into any contract with the first HaaS provider you contact. There are a few considerations to make. Thoroughly go through the contract to ensure you’re not getting unfavorable terms. Also, check whether the HaaS provider has robust data security measures in place and is compliant with industry standards.
At the end of the day, the benefits of integrating HaaS outweigh the potential downsides. Plus the future of the HaaS landscape looks promising. You can consider HaaS as a strategy option to help your SaaS business manage its hardware needs efficiently and sustainably.
