Digital transformation and the work-from-home movement may not be the only big technology trends gaining strength due to the COVID-19 pandemic of 2020. Also picking up traction in the business IT marketplace in the last six months is the Device-as-a-Service (DaaS) model of acquiring hardware without having to buy, configure, and manage it.
In 2015, no major PC manufacturers offered a DaaS option to acquire hardware, according to a recent report from Accenture. But by 2019, that changed dramatically, with 65% of major PC makers offering DaaS options to their customers.
To Kevin Dobbs, the leader of Accenture’s Everything-as-a-Service practice, it’s where PC makers and other hardware suppliers need to go if they want to keep up with business and consumer expectations and demands.
With DaaS, vendors take laptops, desktop PCs, and other devices and preconfigure and customize them with productivity and security applications as well as value-added services to ready them for business or consumer customers. The devices aren’t purchased outright by companies like in the past, but are paid for on a consumption model.
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That may seem like a lease, but it’s not a lease, Dobbs said. “They may look similar, but DaaS is less about the device and more about the services associated with the devices.”
The work-from-home movement due to the pandemic could be a big boost for DaaS adoption in the future, he said. Companies that scrambled to send workers home to do their jobs as the pandemic spawned shutdowns across the nation were often forced into a laptop-buying frenzy.
That quickly revealed that it was easier to buy the machines fully loaded and configured and ready for workers to do their jobs from home, Dobbs said. For companies, it essentially streamlined the process of quickly enabling a large number of at-home workers that companies didn’t have in the past. DaaS arrangements also include product support from vendors or partners as needed.
“It gives an easy way to get help,” Dobbs said. “They would rather buy things preconfigured with software and security. I think a lot of the customer buying pattern is moving in that direction.”
Benefits and challenges for vendors
And while this can all be beneficial for users, the DaaS model also provides a mix of big benefits and real challenges for hardware vendors, Dobbs explained.
First, because customers use the devices until they are done with them, the vendors get them back and can collect, refurbish, and resell them to new users up to four more times over the useful life of the devices, which maximizes returns on investments, according to Dobbs.
“For vendors, it’s a great option because rather than only selling a product one time, they can sell them up to five times,” Dobbs said. “The benefit is that by keeping control of the devices and surrounding them with different kinds of services and capabilities each time you can give more to customers. In the hardware business, margins are thin, but here you sell it over and over. That’s why we think this is an exciting trend.”
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It’s also something that can boost revenue for hardware vendors at a time when sales may be lower due to the growing popularity of business customers moving workloads to the cloud. When customers move to the cloud, hardware sales typically get lost in the transaction.
“DaaS becomes a more interesting way for manufacturers and channel partners to head as they are moving into the next phase of their growth,” he said.
But the challenges are there as well. To enable DaaS, vendors require complicated supply chains to collect, refurbish, and redistribute all that gear. “That means that vendors need to take a very different approach to how they sell their goods,” Dobbs said. “We’re seeing more and more companies looking at that option.”
Creating and maintaining the needed supply chains to create a seamless experience for customers isn’t easy, though. “At scale, it is difficult to do these things, when we’re talking about millions of devices and being able to orchestrate them to make money for vendors,” Dobbs said. On the flip side, companies that already have such supply chains will be able to drive more value from them.
DaaS is all about the customer
Ultimately, DaaS is gaining traction because business customers and consumers want to make things easier for themselves, Dobbs said. “In the end, the customers don’t care about the device itself. They just want an outcome. If it breaks, they just want it replaced. They want service. All those things are valuable to customers.”
And that’s where the flexibility and value of DaaS can solve problems for users, Dobbs said. “This is the way customers now want to get their devices. The business buyers are expecting the same level of service and experience in their work as they are in their consumer lives. Customers want to try before buying, pay as they go, and have more of a consumption-based model, where they get charged as they go for what they use.”
By using DaaS, customers potentially pay less up-front, but could spend more over time for the overall package of devices and integrated services and support. Cost-savings aren’t usually why customers are attracted to DaaS in the first place, Dobbs said.
For hardware vendors that aren’t filling these demands in the future, it will be a challenging environment in the future, he said.
“The opportunity today is to do this proactively,” Dobbs said. “Customers want to buy it this way, so you are going to have to move this way, like it or not. COVID-19 is also highlighting the fact that more and more customers will be embracing this approach.”