Microsoft partners size up device-as-a-service

Microsoft's modern workplace vision is for organisations to subscribe to software and hardare, to create a virtuous cycle of innovation. But is the channel on board?

Simon Sharwood found out from resellers and disties at CRN's Modern Workplace roundtable.  

GUESTS
Harry Kassianou, sales director, AC3
Nathan Lowe, managing director, ASI Solutions
Lyncoln De Mello, head of cloud and telco, Brennan IT
Jayden Zullo, technical director, CDM Australia
Matt Wynn-Jones, managing director, Counterparts Technology
Jared Staniland, portfolio manager, managed devices, CSA
Paula Fountain, national practice manager, Data#3
Pete Murray, regional director NSW ACT, Dimension Data
Nick Stranks, account director, Ethan Group
James Mercer, portfolio director, Fujitsu
Stephen Kerr, general manager, financial solutions, Ingram Micro
Eloisa Cortez, product manager, Synnex
Angus Mansfield, sales & marketing Director, XCentral

FACILITATOR
Simon Sharwood, editorial director, CRN

SPONSORS
Chris Bright, OEM director, Microsoft
Peter Garner, commercial sales lead ANZ, Windows OEM, Microsoft

Matt Wynn-Jones found a customer with “a bucket of money to spend”, a PC fleet that needed a refresh and other priority projects they couldn’t quite see how to finance.

So Wynn-Jones, managing director of Sydney-based managed service provider Counterparts Technology, sold them device-as-a-service (DaaS).

“Our conversation was really with the financial controller, and it was a different proposition,” Wynn-Jones said.

“They had a bucket of money to spend, but that money was better spent on other things apart from buying PCs. That’s really what drove the conversation. It was really freeing up their funds to use it more appropriately. The conversation wasn’t technical, it was a financial conversation with the chief financial officer.”

Pictured: Matt Wynn-Jones (Counterparts Technology)
 

The outcome of that conversation was a deal that saw Wynn-Jones’ customer refresh a third of its PCs per year over a three-year cycle, delivered in an as-a-service mode. Financing the PC buy in this manner “freed up some other capital to drive some other projects,” Wynn-Jones said. 

The result? A happy customer doing several important things at once, rather than worrying that their IT budget had to go on a single project. And for Counterparts, a happy client impressed with the technical outcome and the way their partner had made it possible – so much so that they’re now signing up to refresh the DaaS deal.

Jared Staniland, CSA’s portfolio manager for managed services, also has a customer queueing up for a DaaS deal.

The customer is a not-for-profit organisation that first bit on DaaS in 2014, when the biggest objection to overcome was the client’s IT department.

“It’s very much a service designed to take a lot of operational pain away from some customers who were growing very rapidly,” he told CRN’s Modern Workplace roundtable.

“We didn’t have objections from existing IT departments and things like that so much. But that was very much around the device and managed in the lifecycle.”

Pictured: Jared Staniland (CSA)

But like Wynn-Jones, Staniland found that IT-as-a-service isn’t just about delivering and managing devices. 

As CSA heads into a refresh cycle for the deal, Staniland has come to realise it’s best to “really enhance that DaaS offering by using some of the mobility and security aspects, tying that into the device offering. And basically starting to improve the processes that exist around managing the device.”

Distributors have responded to experiences like Counterparts’ and CSA’s by creating portals that make it possible to build a predictable DaaS deal with a few clicks.

“It all comes down to simplicity,” said Stephen Kerr, then Ingram Micro’s general manager for finance solutions.

“If we look at the original DaaS agreements that have been set up out in the market at the moment, they’ve been very bespoke. They have often involved vendors, service providers and large customers.”

Pictured: Stephen Kerr (formerly Ingram Micro)

Ingram and Synnex both aim to pre-arrange those relationships so that the channel can just deliver.

Synnex’s ITaaS portal product manager, Eloisa Cortez, said her company’s ITaas portal is designed to let resellers add almost anything to a deal.

“You can put the devices as well as cloud or managed services product and finance into the portal,” she said.

“Even the support that you’re going to provide.” Synnex has even added a facility that allows customers to buy devices for a dollar at the end of a three-year DaaS deal.

But while attendees appreciated the concept of ITaaS and the power of distributors’ portals to make it deliverable, they also said that customers don’t want DaaS in isolation.

Pictured: Eloisa Cortez (Synnex)

Paula Fountain, Data#3’s national practice manager for HP Inc and Hewlett Packard Enterprise, said DaaS starts conversations about what else a client needs.

“Once you get to DaaS, the customer is looking to add more. They tell us we have solved one problem, but ask for assistance with others." 

“All of a sudden, your as-a-service model is lagging,” she added, describing that lag as “not a bad problem to have”. 

Pictured: Paula Fountain (Data#3)

But it is a problem, because once more products and services are involved, each with their own lifecycles to manage, it complicates the delivery of DaaS. 

Fountain, therefore, said that most DaaS deals tend to be bespoke, despite the click-to-run offerings in the market. 

“You can create something as a conversation starter. But really what you need to do is tailor that to what your customer is really looking for," she said. 

"Because every customer is at a different part of that journey. Some are a little bit further down the track. Others are a little bit lagging, so, therefore, your contract or the way that you shape the service for them may be a little different.”

Nathan Lowe (ASI Solutions)

Lincoln De Mello (Brennan IT)

Leasing-as-a-service?

Another issue several attendees brought up is that DaaS isn’t radically different to leasing PCs, an arrangement the channel and buyers alike have used for decades.

Pictured: Simon Sharwood (CRN)

However, enterprises have come to assume that an as-a-service experience – especially software-as-a-service – allows them to scale down to zero users.
That’s not doable with DaaS. 

Fujitsu portfolio director James Mercer explained why. Someone has to pay for PCs that are sold under DaaS deals.

While investors can be found that are willing to front the capital, those investors expect a return on their capital. Letting a user scale down to zero devices increases risk.

Throw in the tepid market for secondhand devices and he felt DaaS contracts that scale down will be hard to devise. 

Pictured: James Mercer (Fujitsu)

Another recurring theme from the event was that while the concept of DaaS is well-understood, implementations vary widely, by necessity and by design.

“You can’t have a cookie-cutter approach to DaaS,” said Harry Kassianou, sales director of Sydney-based government-centric service provider AC3. 

Pictured: Harry Kassianou (AC3)

For CDM Australia, a Perth-headquartered group with offices in Sydney and Melbourne, DaaS means a hardware upgrade and then services.

Technical director Jayden Zullo explained that the company’s clients typically “don’t want to buy new hardware, so we sell them normally an extra 4GB of RAM and a 128GB or 256GB solid state disk”.

The new hardware provides enough of a speed boost to make older PCs easily capable of upgrading from Windows 7 to Windows 10.

CDM then sets up Office 365 and SharePoint, then delivers education and support so that end-users are comfortable with the upgrade.

Pictured: Jayden Zullo (CDM)

Another variation on ITaaS sees Ethan Group deliver an IT policy that customers can implement and which takes into account recent legislative changes, plus HR, privacy and other legislation.

Ethan Group Account Director Nick Stranks said customers tell him “I probably should comply with this, but I don’t know what to do.” Delivering a policy is therefore appreciated as a value-add and a service in and of itself.

Pictured: Nick Stranks (Ethan Group)

Chris Bright (Microsoft)

The kids these days

Attendees agreed that one benefit of DaaS was its ability to help organisations attract and retain young staff by putting more modern devices into their hands.

Without modern devices, young employees miss out on a cool factor. They also miss out on the kind of communications tools they use in their personal lives.

As the consumerisation of IT continues and social networks and messaging tools increasingly influence and inform the design of business communication tools, asking young workers to use older tools risks making an employer less attractive.

DaaS also means that younger staff can receive new devices at a similar rate to their personal mobile devices.

By matching that refresh cadence, organisations meet cultural and personal expectations that young people work with new, and often premium-branded devices that they’re proud to use and feel displays their taste and accomplishments.

Attendees, therefore, felt that DaaS allied with bring-your-own-device has the potential to deliver an experience that young workers will enjoy.

That’s because it offers the chance to choose a device, take physical ownership of it, use it for personal and work chores and have a tool that suits both uses — all while also putting a status symbol on their desks and/or in their hands.

But delegates were less certain that the combination of subscription software and hardware subscriptions translates into a more innovative culture.

Pete Murray, Dimension Data’s regional director for the ACT and NSW, said users are accustomed to software updates but don’t necessarily expect or explore new features.

That’s good news because it gives the channel something to talk about.

Murray said his own company uses a SaaS package for managing MSPs and regularly notices downtime for an update but then finds himself asking, “What actually changed? Everything looks the same.” He added: “So it all comes down to communication.”

Pictured: Pete Murray (Dimension Data)

All agreed that security was another DaaS benefit. Windows 10 is demonstrably more secure than its predecessors and newer devices offer biometrics and other security. 

Explaining how this combination improves a baseline is a chance to engage customers in an important conversation. 

The fact that DaaS equates to a new device every three years means that conversation is easy to stage, said then-Ingram GM of financial solution Stephen Kerr.

“The way we’re structured is that six months out [from a device refresh point in a DaaS deal], you’ll get a phone call saying, ‘Hey, these devices are ending, start selling the next one.’ Because our business is about selling the next one.”

For Ingram-aligned resellers, that means selling more than just the new device but also what they can help their owners to achieve, be it better security or other benefits. 

Of course, savvy resellers stage such conversations whenever possible, but the group felt that DaaS created more moments for those conversations. 

It was also felt that DaaS may be more of a money-spinner than SaaS alone. Several participants mentioned that Office 365 sees them bill $7 per user per month, a sum that adds up on bigger deals. 

Peter Garner (Microsoft)

Missing transformation link

While the roundtable heard plenty of opinion that DaaS isn’t necessarily new, delegates also felt it is an important milestone.

For XCentral sales and marketing director Angus Mansfield, the fact that DaaS has arrived after many organisations signed up for and began to enjoy SaaS means the channel has a new opportunity.

“If you think about enabling people to be effective, organisations transforming their workplace technology already had software-as-a-service and managed services," he said.

"And then there was this gigantic capital cost of devices that put the brakes on the whole thing. I think DaaS is the piece of the puzzle that was missing, which is why customers are going, ‘Yes, talk to me about this. I’ve been waiting for this for years and I think it’s got a really important role’.”

Pictured: Angus Mansfield