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Tech Data Touts Tech-As-A-Service, Plans To Expand Enterprise Hardware Offerings In 2H'18
Joseph F. Kovar
Now that Tech Data's Tech-as-a-Service program for end-point laptops, printers, and peripherals has come to market, the distributor is looking to add networking, servers and storage, and managed print services over the next year or two.
Tech Data wants solution providers to start offering endpoint technology as a service as soon as possible as a way to build their future business, and promises partners will soon be able to provide enterprise technology as a service.
Tech Data's Tech-as-a-Service program, which was officially launched in December, is now available for solution providers looking to offer endpoint products, including laptops, printers and peripherals, to customers as a service, said Jennifer Shaeff, manager of financial solutions for the Clearwater, Fla.-based distributor.
The program had been earlier referred to as a Device-as-a-Service program.
Shaeff, speaking before an audience of solution providers and managed service providers at this week's Tech Data TechSelect conference, also offered a peek at the roadmap of the Tech-as-a-Service program.
The program is now in what Shaeff called phase 1, which refers to the endpoint products business users typically use on or near the desktop, including PCs, printers and peripherals.
Phase 1.5, to be unveiled shortly, will add networking products. Phase 2, which will be unveiled soon, will add enterprise storage and server products to the mix. And phase 3, which will add managed print services, is also being planned, she said.
Tech Data is in the process of building the enterprise server and storage Tech-as-a-Service, and expects it to be ready in the third or fourth quarter of this year after the monitoring software and other parts are ready, Shaeff said. "This will be a really robust program," she said.
The coming enterprise server and storage Tech-as-a-Service offering has at its root the Avnet Enterprise Now program that came with Tech Data's acquisition last fall of Avnet's Technology Solutions business, Shaeff said. She added, however, that program was "old and clunky."
Tech Data will likely keep excess capacity on-site and let customers pay for capacity as it is consumed, although details, including the risks of such a program, are being finalized, Shaeff said.
Tech Data's Tech-as-a-Service program is differentiated from how vendors and other distributors are approaching this market, Shaeff said.
First, the program scales to let partners change the order size as needed. For instance, she said, if a customer ordered 100 laptops, and later wanted to add 10 more, it could be done either at the original term of the contract or via a new contract, depending on details.
Customers can also scale down the contract, sending back up to 10 percent of the devices in the contract after 12 months. They would not have to be sent back at the same time, as long as the returns stayed within the 10-percent limit.
Actually, she later said, the return time could start in as little as six months, and up to 15 percent of the products returned, depending on the circumstances.
The second difference in Tech Data's program is expedited cash flows coming from the distributor's paying partners up-front for the service contract, Shaeff said. "And as additional services are added, we pay you as they are added," she said.
The third difference is the ability of partners to add their own services or Tech Data services to the monthly recurring revenue, Shaeff said. "You can add it to a single monthly bill," she said.
Tech Data offers a broad platform of products which can be mixed and matched as part of a Tech-as-a-Service offering, Shaeff said. It also encompasses all of the distributor's end-point products, including laptops, desktops, printers, unlocked phones, and the latest peripherals.
"Don't think just about the latest laptop or desktop models," she said.
Tech Data handles details related to the contract's end-of-life, including sending all necessary packaging to the customer to take care of the returns or actually going to the customer sites to retrieve the products if needed, Shaeff said.
The distributor handles everything including data wipes, she said. "You guys never have to touch them," she told solution providers.
Some of the requirements for the Tech-as-a-Service program include a minimum end-user cost of the hardware, software, and services of $10,000, Shaeff said.
The contracts also typically require a minimum 24-month duration before the next refresh period begins, but it might be possible to sign a 12-month contract, she said. "If you have someone who absolutely needs 12 months, come see us," she said. "I don't know why anyone would want a laptop for only 12 months. But 12 months is the absolute minimum."
There is no buy-out provision to the Tech-as-a-Service contracts, and the program would not work if customers hope to buy the products after their contract expires, Shaeff said. "This is for customers looking for a subscription," she said.
Warranties for products included in the program are handled by the vendors just as if the products were purchased, Shaeff said. However, Tech Data can also keep a few units from larger contracts available in its warehouse for quick swap-outs in case customers have a problem.
"When you have a large enterprise customer, that can be a real plus for them," she said.
Arraya Solutions is already in the process of signing its first opportunity under Tech Data's Tech-as-a-Solution offering, said Ryan Benner, vice president of solutions and services for the Plymouth Meeting, Pa.-based managed service provider.
"This allows us to have value across the entire end-point product business," Benner told CRN. "End-point computing has become so commoditized."
Benner said his company is looking forward to the follow-on enterprise Product-as-a-Service offering. "Enterprise is a big part of our business," he said. "Even if we make only 5 points on the hardware, we can roll in our managed services."
Craig Hissong, director of sales at Arraya Solutions, told CRN that companies like his are continuously being challenged when it comes to growing the IT business as customer budgets shrink even as demands are growing.
"The cloud is changing everything," Hissong said. "Customers are having the conversation about how to move from a capex model to an opex model, even as vendors like Dell EMC and Cisco are moving from hardware sales to software subscriptions. This is a big shift in how resellers sell."