Why 75% of partners say they’ll be selling DaaS in 2020

What’s up with DaaS? The idea of selling devices as a service has been around since 2015, but it’s fair to say that the idea hasn’t yet taken off with customers. IDC estimates that in 2016 only 1% of PC sales were shipped through a DaaS agreement and recently cut its 2020 forecast from 20% to 15%.

That’s why OneAffiniti surveyed nearly 800 IT channel partners in Australia, New Zealand and North America about Device as a Service (DaaS). We hypothesized that customers, partners and vendors alike were missing out on the benefits of DaaS.

We found that the market has a long way to go in terms of customer acceptance. This is despite good uptake from partners and a strong desire from customers to simplify their IT management.

These are encouraging results – but what lies behind them and, just as important, how can they be actioned? Delving deeper into the data, speaking with vendors and comparing other analyst’s findings delivers some answers.

Key findings

The survey arrived at three top-line conclusions:

  • Partners are embracing DaaS
    Nearly half (43%) of all partners are selling DaaS. Of the remainder, nearly one-third (32%) are considering it within the next 12 months; only one-quarter (25%) aren’t.
  • Customers want to manage IT better
    Nearly one-quarter (24%) of customers want stability and visibility on their IT costs; nearly one-fifth (17%) want to spend less on managing hardware, and around one-sixth (16%) want to streamline their IT.
  • The market has a long way to go
    A strong majority (81%) of vendors said the chief reason for not selling DaaS was insufficient customer demand.

Following is a closer analysis of the questions we asked, the responses and their implications.

Are channel partners offering DaaS?

A critical consideration is that selling DaaS can require partners to significantly reconfigure their operations, from what they sell to how they sell it.

It’s a critical point; as IDC’s Linn Huang notes, “DaaS will affect different channel players in very different ways depending upon the position they currently occupy … If the IT provider has mostly implemented hardware and wants to participate in this space, that company will have to build service capabilities.

“On the other hand, managed service providers that historically lacked interest in managing inventory or carrying inventory risk must learn how to manage inventory if they want to implement DaaS”.

Partners are well aware of the need to change and while, as our figures show, they’re moving towards DaaS, they – just as much as their customers – need to adapt.

Has your business considered selling hardware via a Device as a Service (DaaS) model?

Source: 2019 DaaS Survey, OneAffiniti

“We’re starting to talk about it,” said Dave Allum, Director at IT solutions partner Acronym. “Clients have no concerns about DaaS, but so far it only sparks interest in those who need to upgrade.” Moreover, while he welcomes the transition (“We’re into selling a subscription”), it’s a process that needs careful management:

“We’ve seen partners go all-in with DaaS and 24 months later, they’ve gone away. The monthly revenue takes time to kick in … we’ve tried not to cannibalize the rest of our business.”

The key to helping partners make the transition, Allum says, is to improve customer awareness and generate stronger demand. “Campaigns and public awareness are a big help,” he notes, “we’re very keen for DaaS content, it helps punters understand and puts it front-of-mind.”

“Clients have no concerns about DaaS, but so far it only sparks interest in those who need to upgrade.” —Dave Allum

Why are customers using DaaS?

The desire for certainty and simplicity in IT is telling and plays to one of DaaS’s key benefits: service and support. DaaS means businesses benefit from “simpler lifecycle management, more updated devices, the ability to offload some services to the vendor and potential hardware discounts”.

However, the benefits don’t stop there; DaaS “could also help organizations embrace and support more types of devices … Windows PCs remain the dominant end-user device in the enterprise, but programs that include Apple and other devices may appeal to IT departments that don’t have a lot of expertise in non-Windows management.”

What would be the main reason for your customers implementing DaaS?

Source: 2019 DaaS Survey, OneAffiniti

Such flexibility can be persuasive. Iby Boztepe, Director of Professional Services at biotech, pharma and health IT solutions provider Exigence, takes a similar but more strategic view: “By creating a new process, system or supply chain, we provide information to help clients with their pain points … we’re no longer just talking about devices.”

The key, he believes, is to look beyond the customer’s immediate need and provide a service that helps them at a fundamental level – addressing the ‘why?’ rather than the ‘how?’ or ‘what?’. This can be particularly effective when “so many buyers gravitate towards product descriptions and costs when ultimately, we’re selling the benefit to the end customer”.

DaaS can help organizations embrace and support more types of devices, even for IT departments without experience in non-Windows management.

It can be a critical differentiator, but one key question remains: with vendors entering the market, and with customers hungry for the benefits DaaS provides, what is holding DaaS back?

Why aren’t channel partners selling DaaS?

The desire for certainty and simplicity in IT is telling and plays to one of DaaS’s key benefits: service and support. DaaS means businesses benefit from “simpler lifecycle management, more updated devices, the ability to offload some services to the vendor and potential hardware discounts”.

However, the benefits don’t stop there; DaaS “could also help organizations embrace and support more types of devices … Windows PCs remain the dominant end-user device in the enterprise, but programs that include Apple and other devices may appeal to IT departments that don’t have a lot of expertise in non-Windows management.”

What’s preventing your business from selling DaaS?

Source: 2019 DaaS Survey, OneAffiniti

This is the conundrum: despite the clear benefits and growing partner support, DaaS hasn’t taken off in the marketplace. IDC analyst Linn Huang notes that “The lack of enthusiasm for this opex purchase model, at a time when opex is gaining favor over capex for a growing number of IT purchases, is a bit of a head scratcher”. He suspects it’s a matter of products (individual DaaS offerings) versus brands (the overall concept of DaaS as a purchase model).

“People just haven’t accepted the concept of DaaS, but when they do, there will be a fast switch to brand recognition; then we’ll see a rapid adoption,” he claims.

Allum takes a similar view, noting that customers will always need to “refresh their fleet, get services and have it maintained properly”, so identifying the most suitable value adds, such as analytics, high-quality support services and vendor finance (which provides customers with regular opex-based payments and partners with revenue up-front), is crucial.

Bringing DaaS to market: Creating relationships, understanding needs and providing value

As the market moves, DaaS is likely to find broader acceptance. Boztepe reckons the key is to change the conversation: “Ultimately we’re selling ourselves. We have to keep track of what our clients need, add value, and make sure we’re helping them along. It’s not just about making numbers; it’s about relationships.”

That’s the key: creating relationships, understanding needs and providing value. These will prime a market that, through the end of 2019 and into 2020, will be ready to refresh as Windows 7 and Windows Server 2008 reach End of Service.

It’s a brilliant opportunity to help customers experience the benefits of DaaS first-hand as it saves them time and money, simplifies their IT management and preserves their cash flow. For customers, partners and vendors, it’s a win-win-win scenario. DaaS good. 😉

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