Partner Blog: Why I switched to HaaS, and why HaaR is a better alternative.

posted by Paul Sponcia on Monday, September 28, 2015 in Unified Communications and IT Blog

The MSP world isn’t cut-throat, but many IT Solution Providers are getting creative to differentiate themselves from competitors. That is part of the appeal of Hardware as a Service (HaaS).

My business partner and I knew we could be better and more profitable. After considering several business models, we determined it was critical to bundle everything the customer needed into a single price. HaaS was the linchpin to rounding out our sales and service delivery models.

The top three reasons we switched to HaaS:

Gross Margin

Straight product resale has a relatively low gross margin — 16% in our case — and we could do better by offering HaaS.

Customer Stickiness

HaaS creates greater client stickiness, compared to annual or month-to-month service contracts with cash sales.

Standardization

We could get clients to immediately transition to our technology standards as a part of onboarding without the capital expense of buying new equipment. Instead, customers would have a lower monthly operating expense, paid over time.

After the transition to HaaS, we had gross margins over 40%, customers were signing 36 month agreements, and we were a more effective services organization. HaaS was also helping us gain more deals…and bigger deals, but we were burning cash to keep up with the demand. The model was working from a sales and service perspective, but it had the potential to crash the system if we didn’t come up with a viable alternative.

Since the HaaS go-to-market strategy had made us so successful, the solution was to change the aspects that had us cash-strapped. Instead of using our own cash, we used GreatAmerica’s Hardware as a Rental (HaaR) services. We immediately saw improvements when we made the transition. Here are the biggest the results:

Sales Focus

We are now able to focus on selling, implementing and delivering our solution platform instead of trying to figure out how to pay for the deals we were selling.

Standardization

HaaR helps us baseline all of our customers on a common stack, increase the operational effectiveness of our team and improved financial results.

Administrative Costs

One unexpected upside of HaaR is many of our administrative cost are covered. We were no longer chasing down deposit checks, calling on delinquent accounts or even sending invoices to customers. GreatAmerica is doing that all for my clients.

Today we spend less time worrying about the finances of the deal and more time executing our vision and living our mission of Happy Customers

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About The Author

Paul Sponcia is a serial commercial and social entrepreneur, focused primarily on the Knoxville, TN market. Currently Paul’s commercial businesses include The IT Company (www.theitco.net), where he is a Principal and serves as the CEO. Paul’s background includes over 20 years of start-up, entrepreneurial, business leadership, not-for-profit, information technology, consulting and executive experience. Contact Paul Sponcia via email: psponcia@theitco.net.

  1. as-a-service
  2. managed services
  3. monthly payment
  4. recurring revenue
  5. sales
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