What’s the Difference Between HaaS and Leasing?

HaaS is not only more beneficial than leasing from your clients' perspective but also yours.

HaaS vs Leasing

One of the questions your prospect may ask about Hardware as a Service (HaaS) is how it’s different from leasing. Be forewarned: It’s a loaded question. IT hardware leasing has developed somewhat of a bad reputation. Businesses that needed technology — and were looking for ways around large, upfront capital expenses — signed lease agreements to discover, in some cases, high interest rates, hidden fees, and inflexible agreements that included high penalties for ending a contract before it expired. Entering into an iron-clad lease agreement can also lead to losses for an end user in other ways. For example, by locking into specific IT hardware for a given period, a business may find itself behind its competitors as new technologies emerge.

A Better Solution

Once the word was out on IT leasing, it became necessary for value-added resellers and managed services providers to find a new approach: The answer is HaaS. Hardware as a Service is more than a leasing rebrand, however. Although the financial arrangement behind HaaS is similar to a lease, but there’s one major difference: the VAR or MSP that provides HaaS solutions.

With HaaS, you don’t just lease IT hardware; you provide it as a managed service. The end user pays for, for example, data collection, mobile fleet, or point of sale (POS) functionality, rather than just devices and infrastructure. You make it happen by delivering an end-to-end solution including implementation, training, and ongoing maintenance and support, as well as software, peripherals and ancillary services the customer may need. Hardware actually represents only a fraction of the total cost to the end user.

In return for paying monthly HaaS costs, your client has an optimized system as well as the peace of mind that you have their backs if something goes wrong — they don’t need in-house resources to manage or maintain the solution.

Furthermore, your business, not the leasing company, holds all the cards. You can optimize solutions that are best for your clients. You also set the terms, which may include options to upgrade or expand the system to keep up with industry disruption and customer demands.

How HaaS Builds Revenue

HaaS is not only more beneficial than leasing from your clients’ perspective but also yours. You can shorten the refresh cycle, allowing you to increase your income within the typical timeframe of a lease. HaaS also builds your recurring revenue stream with value-added products and services that can build margin far beyond what you could expect from a lease.

Of course, purchasing IT hardware upfront for a HaaS solution can be a burden for some VARs and MSPs. Fortunately, you can work with your distributors or companies that specialize in funding HaaS providers. Some of these companies will even pay you upfront and assume the risk of the deal. 

Are You in the IT Hardware Leasing Business?

Businesses that need IT hardware immediately but need to find a way to finance it more affordably will always exist. To meet this demand, you have two choices: Lease IT hardware in a partnership with a leasing company or on your own or create HaaS offerings. The latter option is more likely to help you build stronger relationships with your clients and grow your business.

One pitfall to avoid is attempting to offer leasing and calling it HaaS. Your customers will see through it and, perhaps, assume your offering will lock them into a rigid contract or have hidden fees like the cautionary leasing tales they’ve heard.

Build a true service offering that equips your clients with the hardware they need and provides them with all the products and services to get the greatest value from it.