MSPs: Avoid These Pitfalls When Building Your As-A-Service Offering

2019 is the year of as-a-service for Managed Service Providers (MSP). If your sell, service, or support technology you have undoubtedly heard about the need to adopt an as-a-service approach. This shift enables MSPs to sell packages that include the hardware elements that were traditionally difficult to sell to clients. Unfortunately, some MSPs are missing the opportunity to incorporate Hardware-as-a-Service and so lose a potentially valuable revenue stream.

What is Hardware-as-a-Service

Hardware-as-a-Service (HaaS) is a procurement model in terms of which hardware that belongs to an MSP is installed at a customer’s site and managed through a service level agreement (SLA) detailing both parties’ responsibilities. The client, for example, pays a monthly fee for using the hardware or it can be incorporated into the MSPs fee structure for managing and maintaining hardware. The benefit of this approach lies in the fact that if the hardware breaks down or becomes outdated the responsibility falls to the MSP to either decommission or replace it.

Why expand your service offering?

Ultimately, moving your clients to the cloud with software-as-a-service (SaaS) and hardware-as-a-service (HaaS) will see you create a stream of predictable revenue and increase your business’s competitiveness and profitability. Increasing your practice areas means you can increase recurring revenue month over month and eventually year over year.

Employing the as-a-service model makes you essential to your clients’ business. Unlike the rip and replace approach of selling technology which encourages clients to shop around, the as-a-service model positions you as an indispensable technology partner that will be too valuable to replace.

There are nevertheless a few pitfalls to avoid.

What are the pitfalls to avoid?

  1. MSP clients who have free reign over what hardware and software they run will, eventually, increase your service calls with the accompanying cost to you. Standardizing your offering with HaaS will see you avoid this scenario.
  1. Read the fine print and consider cash flow. Ensure you have a clear understanding of the SLA you will have to offer to your clients and what you will, in turn, need from the cloud provider. Many HaaS providers realise too late that this model requires a substantial amount of capital.
  1. If the first two pitfalls made you reconsider offering HaaS, remember you are leaving the door wide open to your competitors. If you cannot provide your clients with the hardware and equipment required to run their business, they will likely consider a competitor that can.

Conclusion

As-a-service is perhaps the most important change to the MSP business model in decades. It’s critical that you get it right as the HaaS model can be a cost-effective way for SMBs to offer state-of-the-art hardware to employees. Continuously managing clients’ chaotic IT environments can result in you losing your best technicians and perhaps even your business. It’s just logical that implementing a HaaS sales strategy will result in a higher business valuation.