What you should know about HaaS (Hardware as a Service) models
Recurring revenue, it’s what makes the world go around at this point right? Your IT MSP (Managed Services Provider) would concur with this sentiment and in fact, they try to incorporate subscription-based models into many of their different service lines. There are certain recurring revenue models they sell that are “stickier” than others and this is their preference as it makes it harder for a client to leave. Many providers have been introducing DaaS (Device as a Service) and HaaS (Hardware as a Service) models that they push to their client base in hopes of turning less profitable one-time hardware purchases into more profitable recurring revenue streams.
Let’s break down the hidden cost of convenience in this service model and how this is often a way to keep clients locked in. In these HaaS engagements you as the client typically do not own the equipment instead think of it as a leasing model, but there are certain instances where they do offer ownership of the equipment to the client. Most MSPs will position it as a way for you to get refreshed equipment every 3 or so years and while that is the case, if you decide to switch providers before that term is up this can be a difficult situation. There are certainly some benefits to the model especially if your business would rather turn a large capital expenditure into an operational (op-ex) expense and pay for the equipment monthly. As a client, you need to ask yourself are you willing to potentially lose leverage because your provider will control and own your hardware? If your MSP is pitching this model to you, ask about asset ownership as well as potential exit options just in case!
The worst scenario would be if you decide you are unhappy with this MSP in a year and you had signed a 3-year HaaS agreement for equipment, it becomes difficult to part ways smoothly and MSPs are certainly aware of this fact. Let’s say they talked you into a HaaS agreement for your servers, switches and firewalls, imagine how complex the process now becomes to switch providers. It is much easier to switch from one MSP to another when you own your equipment and infrastructure. Every HaaS agreement is different and often it comes down to reading the fine print, specifically about device ownership, buyout clauses and offboarding fees.
Let’s now talk about some due diligence questions you can ask your MSP before signing a HaaS agreement to ensure you are making the best decision for your business.
Ownership & Control
Who legally owns the hardware (servers, switches, firewalls, laptops etc. any devices included)?
Can another IT provider manage the hardware if we switch MSPs?
If we end the agreement, do we get to keep, buy out or return the equipment?
Financial Terms
Is this truly a lease, or are we financing the purchase over time?
What happens to monthly costs once the equipment is fully depreciated?
Are there early termination fees, restocking fees or buyout costs?
Lifecycle & Support
Does the MSP proactively refresh equipment, or will we be billed again for “upgrades and refreshes”?
Who’s responsible for updates and warranty coverage?
What happens when hardware becomes end-of-life or needs replacement?
Transparency & Reporting
What documentation do we receive showing device ownership and serial numbers?
If we terminate the relationship, how will data be securely wiped or transferred?
Who’s liable for hardware failures that cause downtime or data loss?
Before signing an agreement such as this, have a neutral third party like MSP Audit Partners - review your MSP’s HaaS contract. This will help to ensure that you as the client are empowered and understand fully what kind of engagement you are entering into.
We help you maintain flexibility and leverage
Ensure your business isn’t handcuffed by someone else’s hardware
Verify that your IT spend actually aligns with your business goals
We hope this article was helpful for you and offered some valuable insights into how you should approach a HaaS agreement being proposed by your MSP! If you have any questions at all on this process or how to proceed, we are more than happy to have a conversation and offer you our unbiased opinion.