With the introduction of our new Sustainable Hardware as a Service offering, we thought we’d breakdown the different types of IT ownership models that are available. Our quick overview should give you a basic understanding of each of the models, but for more information, please get in touch with a member of the team.
The one that most IT teams are familiar with. You buy your kit directly from a vendor such as Cisco or through a partner and take ownership for the maintenance, upgrades and decommissioning yourself.
From a finance perspective, owning the asset means that it is classed as a capital expenditure. Overtime the value of hardware will depreciate and will become more expensive to maintain.
This model is great for businesses that want complete control of their hardware and have teams in place to run updates and maintenance. However, the upfront costs associated with purchasing hardware, as well as those associated with ongoing maintenance can lead to businesses looking at alternative models of ownership.
In this instance there is a financial agreement in place with another company to supply you with the hardware. Think of it as renting your routers and switches, as opposed to owning them outright. At the end of the agreement, the equipment typically goes back to the leasing company, although some lenders will offer you the option of purchasing the equipment via a balloon payment.
Leasing often comes with options to wrap support and maintenance into the contract, if this isn’t the case then you will need the resource in place to do this yourself.
This model allows businesses to access hardware without the need for a large upfront cost as payments are spread. However, as a there is a financial transaction taking place on a physical asset, this can still have capital expenditure implications.
The Hardware as a Service (HaaS) model differs from leasing in that you are consuming the hardware as part of a service. In a similar model to how businesses consume software (SaaS) or cloud (IaaS), you are paying for access to the hardware, meaning the ownership of the product remains with the business you are taking it from.
Like leasing, obtaining the networking hardware you need for your business becomes easier as there are no upfront costs. At the end of the services, the hardware then goes back to the supplier.
As this is a service, the supplier is responsible for the upgrading, maintenance and support of the hardware. If something breaks, they will be on the hook to replace it for you. Because they are taking hardware back out of other businesses, this could mean that the kit you receive isn’t always brand new and has been through a remanufacturing process instead.
From a finance perspective, this is now an operational cost as you don’t own the hardware and no financial transaction takes place for the asset directly. This makes this model of ownership great for customers who offer consumable services to their customers and are looking to mirror this operational model themselves, or who are looking to reduce the number of fixed assets that they own.
Building on the HaaS model, we developed our Sustainable Hardware as a Service. We own the asset and provide fully managed shipping and “white glove” product recovery services. This is backed with Cisco’s full manufacturer warranty and Smartnet support, covered throughout the period of the service. However, we’ve designed the solution in a way that embeds both sustainability and customer value at its core.
We take a customer’s Cisco requirements and analyse the solution to identify opportunities to blend in Cisco Refresh, Cisco’s fully certified remanufactured equipment. This approach gives you access to the latest and great new equipment with the traditional value achieved from remanufacturing. This means you are reducing your Carbon impact via a cost-efficient solution that doesn’t come with any technical trade off.
We then provide a financial wrapper using Cisco Capital’s Green Pay solution. Cisco Green Pay is an award winning financial solution that ensures Cisco products are sent back to Cisco as part of the service lifecycle and supporting Cisco’s world leading sustainability objectives for 100% product takeback.
Finally, through our detailed product research, you gain access to comprehensive ESG and carbon impact metrics throughout the product lifecycle. From day one you have visibility on the role that remanufactured IT is having in helping your business achieve it’s ESG commitments.