SMEs, Startups Secure Future for DaaS

Digital transformation and the work-from-home movement may not be the only big technology trends gaining strength due to the Covid-19 pandemic. Device-as-a-Service (DaaS) model of acquiring hardware without having to buy, configure, and manage it, is also picking up traction in the business IT marketplace in the last two years

Till 6-7 years back, no major PC manufacturers offered a DaaS option to acquire hardware. But in 2020 that changed dramatically with a majority of large PC makers offering DaaS options to their customers.

The pandemic brought remote and hybrid working to the forefront and businesses looked at maintaining business continuity while allowing flexibility, security, and reducing overheads.

When the pandemic hit and the workforce went remote, desktop adoption declined drastically. In fact, a big chunk of that demand drifted to notebooks. In this scenario, Device-as-a-Service started gaining some traction over the last two years when enterprises were struggling to procure devices on time, says Bharath Shenoy, Senior Market Analyst, PC Devices, IDC India.

Gartner forecasts that the number of users for DaaS will grow by over 150 percent between 2020 and 2023.

Why DaaS?

In a typical work scenario with employees on remote work, the organization has to procure computing devices like laptops and desktops for its workers. Post procurement the devices have to be configured according to the internal IT structure by the IT teams. Most importantly, post-deployment the devices need to be maintained and security has to be taken care of.

With Device-as-a-Service, companies can offer workspaces to employees without having to worry about procuring hardware, individual configurations, and maintenance. Using DaaS means businesses can allow employees to work from anywhere without any added hardware and software hassles. The devices aren’t purchased outright by companies like in the past but are paid for on a consumption model.

That may seem like a lease, but it’s not a lease; DaaS is less about the device and more about the services associated with the devices. The service provider takes care of the pre-configured hardware needs, software solutions for security, offers scalability, and manages the device replacement cycle while freeing internal IT resources.

In fact, organizations quickly realized that it was easier to procure machines fully loaded and configured and ready for workers to do their jobs from home. “We have seen teams getting distributed over PAN India level. It becomes very difficult for the IT team to manage their IT assets. I think this kind of service will help, especially in the kind of a distributed environment, reducing the burden of device management,” shares Amit Srivastava, Co-founder & CTO, GetVantage.

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.

Productivity, cost benefits

IT support amounts to a significant portion of an organization’s annual expenses, whether it is procurement, deployment, or refreshment of the devices. DaaS reduces the burden on the internal teams and on the organization’s profitability.

While industry experts agree that a three-year refresh cycle is the optimal length of time for computing hardware, businesses stuck with outdated technology end up spending 30 percent more to repair devices that are four years or older compared to new devices. In many cases, as technology changes come in faster, repair costs for older devices can exceed the purchase prices of newer devices. With DaaS, the organizations always have access to the latest technology leading to increased productivity and reducing the costs of repairs and refreshment cycles.

“DaaS combines hardware, services, and software into a single, configurable solution for a predictable, periodic fee. This service also enables customers to move away from onsite IT infrastructure and aid them with smarter but affordable technology for competitive advantage, higher productivity, and workforce empowerment,” highlights Ajay Sehgal, Executive Director, Commercial Business, Lenovo India.

Along with the device, Lenovo offers a variety of services designed to protect and support the asset during its lifecycle. When the device reaches the end of its service life, Lenovo collects the device, wipes it clean of the customer’s data, and recycles or repurposes it. This means the device can either be refurbished or reintroduced into a new working environment, or the device’s parts can be used to repair other devices under warranty. Customers only pay for what they use, avoiding the heavy capital outlays of the ownership model, as well as escaping the burden and cost of disposal.

“The implementation of DaaS solutions provides many unique computing solutions to enterprises to simplify IT requirements. Customers can adapt the DaaS model to achieve a variety of objectives, including lowering costs, automating IT management, and enhancing security and employee productivity while simultaneously increasing organizational competitiveness,” states Kavit Gupta, Director, Enterprise Sales, Services & Solutions, HP India.

By subscribing to DaaS, the provider will allow the organization to upgrade and deploy portable devices as needed and update the new hardware more often and quickly without much stress on the organization itself. With the DaaS agreement, the customer simply pays to use the equipment during the contract and can be upgraded to the latest and greatest machine for a similar monthly payment, he adds.

“On top of that, we add analytics in our DaaS service offering, which takes care of the productivity of the employees. For instance, it can prompt the users about a preemptive hard disk, battery failure, or any software glitch. So, instead of waiting for the system or component to actually fail, we can proactively address the issue or dispatch the component to the user location and replace it before it actually fails. Besides increasing employee productivity, this service also takes customer experience to the next level,” underlines Shivendra Pratap Singh, Country Category Manager- PC Services, HP India Sales.

DaaS also reduces a company’s total cost of ownership (TCO) as well as protects them from concerns such as the depreciation of devices after a few years of use. It also offers more flexibility as the plans are completely customizable and can be scaled up/down according to the company’s requirements.

SME push

According to a 2020 study by IT research firm Techaisle, maintenance and support take up 77 percent of IT staff time in SMEs, leaving only 23 percent of the time for transformation or innovation-related activities.

For SMEs, DaaS leads to significant cost savings and an option to scale up as and when required. According to a February 2021 report by TeamLease Digital, the DaaS adoption in India had witnessed 65 percent growth, and this increase was specifically witnessed amongst the country’s small and medium businesses. Fast-moving consumer goods (FMCG), pharma, and banking, financial services, and insurance (BFSI) segments have led the growth.

Buying, configuring, and managing a computing device on one’s own can be costly, especially for SMEs, which typically have a lean IT team and small budget.

“DaaS reduces capital expenditure, as well as operating costs for SMEs. They also benefit through a reasonable per seat expense spread over a three-to-four-year horizon. In fact, DaaS is a great option for small organizations or startups with as low as 25-50 employees. These smaller organizations don’t have to worry about huge investments on devices, hiring engineers, and device management solutions,” says Shivendra Pratap Singh, Country Category Manager- PC Services, HP India Sales.

“Over the last two years, this model is getting some momentum, especially in the SME segment which has a small budget and limited IT resources. With the digitalization drive expected to grow in SMEs, PC demand will increase. That will eventually drive the DaaS market,” says Shenoy of IDC.

DaaS is offered in a variety of pricing tiers, one can opt for a monthly or yearly subscription model. In addition, we are also providing several easy finance models through HP’s finance partners, who have introduced attractive financing offers through which businesses can acquire business devices starting at just Rs 899 per month,” reveals Gupta of HP India.

More value for vendors

And while this can all be beneficial for users, the DaaS model also provides a mix of big benefits for hardware vendors and partners.

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.

“For vendors, it’s a great option because rather than only selling a product one time, they can sell them up to five times,” shares Kalpesh Shah, Director and Co-Founder, Neptune Infosolutions. “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.”

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.

But the challenges are there as well. To enable DaaS, vendors require complicated supply chains to collect, refurbish, and redistribute all that gear. Creating and maintaining the needed supply chains to create a seamless experience for customers isn’t easy, though. On the flip side, companies that already have such supply chains will be able to drive more value from them.

DaaS is the future

With SMEs and the start-up ecosystem expected to grow big, the next 2-3 years hold strong prospects for the DaaS model as per Shenoy of IDC.

“We expect the DaaS market to further expand in the next 2-3 years, with primary sectors such as consumer goods, financial services, and healthcare being at the forefront. The sustainability factor will be another area that will gain momentum. While customers and businesses become more aware of having energy-efficient devices, integrating sustainable materials, minimizing waste through innovations in product and packaging design, and responsible disposal, they will expect their service partners to be responsible and unified under a common purpose,” says Sehgal of Lenovo.

“I think DaaS is the future. I really think that the infrastructure which we have will fade away soon. There is a lot of advantage to having DaaS as we can update faster and don’t have to worry about maintenance. So, I think DaaS is the future and we all should be moving towards it,” asserts Harsh Rajat, Founder, Ethereum Push Notification Service.

For hardware vendors that aren’t filling these demands in the future, it will be a challenging environment in the future