BY Jean-Michel Boyer, CEO, BNP PARIBAS LEASING SOLUTIONS UK
Leasing in the IT sector is on the rise. The 2017 Global Leasing Report revealed that the UK leasing industry captured $87.13bn in new business volume in 2015 – a 14 percent increase compared with the previous year. The largest rate of growth came from the IT equipment market, which grew by 38 percent.
The latest development taking the channel by storm is ‘hardware as a service’ (HaaS). The ‘as a service’ model is not new, but it usually refers to cloud-based offerings such as Software-as-a-Service (SaaS) – the most well-known form.
Big brands are responding to this shift in market demand by offering HaaS solutions. Microsoft for example, launched Surface-as-a-Service in 2016 to supply customers with a managed offering of Surface hardware and associated cloud software on a hybrid lease and subscription model. Dell’s finance arm has also made noises about including formal HaaS solutions in their product offering.
Amongst consumers, the notion of ‘pay per use’ has been around for some time, most commonly in the form of mobile phone contracts. Leasing is also a common way to acquire essential assets like cars. And it seems the popularity of payment models is making its way in to the business world also. According to the Economist Intelligence Unit, 80 percent of business buyers also want flexible payment solutions that can scale to suit their changing needs.
IT resellers and suppliers in the channel need to pay attention, or risk falling behind the competition. Rather than leave the question “How do you intend to pay for the solution?” unanswered, resellers should consider taking a leaf from the typical car dealer’s selling process that promotes every sale on cost per month basis. This helps to reinforce affordability and usage, rather than capital expenditure and ownership.
Benefits of HaaS for the channel
Technology is constantly changing and the latest models are invariably the most expensive. A HaaS approach gives businesses access to the technology they need, without costing them a fortune. Customers don’t need to purchase computers, servers or printers outright that will inevitably become obsolete in a few years – they can lease them for a defined period of time at an affordable fee. At the end of the contract, these assets are returned to the finance company allowing the reseller to instigate a new sales opportunity helping to aid long term customer retention in the process.
When a reseller has a long term relationship with a customer, they’re better placed to understand their needs and act as consultants to suggest other suitable services. These leasing agreements ensure regular income for the reseller and predictable payments for the customer.
Given ‘as-a-service’ is here to stay and only set to increase in popularity, resellers looking to take advantage of this market should partner with a leasing company that can offer flexible payment options that include hardware leasing as well as bundling of service elements such as soft costs, typically installation, configuration, security, training as well as maintenance into one contract. In fact, this approach is increasingly becoming part of an overall solution that also includes software and hosted solutions.
The UK’s IT leasing market is lucrative: The Finance and Leasing Association valued it at £2.3 billion in 2015. A climate of economic uncertainty is also fuelling the appeal of leasing. Businesses that may have delayed investing in new hardware due to limited cashflow, no longer need to hold back.
Leasing and payment models such as HaaS are still not commonplace though; resellers need to discuss finance solutions with their customers and prospects early in the sales cycle. Offering hardware on this basis provides resellers with valuable opportunities to improve their market position and grow their businesses – while helping their customers grow theirs.