The Ugly Side of Hardware-as-a-Service

The Ugly Side of Hardware-as-a-Service

By now, you are likely familiar with the term SaaS or “Software-as-a-Service.” This is where you pay a subscription fee to use software like Microsoft Office 365 or Dropbox. These kinds of services are billed as ones that continuously keep your software as up-to-date in a world where technology – and threats –change at a rapid pace.

Around three years ago, managed service providers noted the success of SaaS and added a similar offering, Hardware-as-a-Service (HaaS). TechTarget defines Hardware-as-a-Service as “a procurement model that is similar to leasing or licensing. In the hardware-as-a-service model, hardware that belongs to a managed service provider (MSP) is installed at a customer's site. Sometimes the client pays a monthly fee for using the hardware; sometimes its use is incorporated into the MSP's fee structure for installing, monitoring and maintaining the hardware.” The logic for HaaS remains the same as the logic for adopting SaaS; hardware is ancient after a few years, so why bother buying your own? 

While the idea of not being responsible for, and stuck with, expensive hardware investments might sound appealing, we’ve run into more than one case that shows a darker side to HaaS.

Where HaaS Can Turn Bad

An MSP might include a firewall, Wi-Fi access points, servers and more as part of your service offering. This is great at the start of the contract because you get all the services and features included with the new hardware. However, switching to another IT provider becomes difficult, disruptive and expensive because you don’t actually own the hardware. Often, HaaS contracts come with unfavorable exit or buyout clauses. To the small business owner or manager, these HaaS contracts can be confusing and difficult to understand. Most of the time clients do not know what they got themselves into. MSPs refer to HaaS as keeping them “sticky” with clients, but clients may end up feeling trapped.

What Can You Do?

If you have a HaaS contract and you're thinking about switching IT or MSP providers, it can still be accomplished. Some companies may allow you to keep leasing the equipment from them directly or will help move the contract to a different leasing company. If that doesn’t work and the contract allows, you might consider buying the equipment from the HaaS provider outright. This isn’t ideal, however, as you’ll likely be stuck paying higher prices for older, used equipment.

To prevent an unfavorable HaaS situation, we recommend organizations own all IT hardware either through purchase or direct lease. Hardware-as-a-Service contacts can appear attractive initially, but prove to be more of a hassle than they are worth. 

Due to all the negatives associated with the HaaS, Switchfast does not offer it.

Should you currently be under a HaaS Contract, we would be happy to review the terms and provide options. If your outsourced IT contract is expiring soon, we recommend you confirm that you own all of your IT equipment as soon as possible to avoid any surprises. Contact us to help you plan your exit to a more transparent partnership.

Written by Nik Vargas