A frequently asked question on the subject is, “Isn’t this just a lease?”
The simple answer is, “No, it is not.”
Financially, this model has more in common with a rental agreement with services attached, because you never actually hold the title to the hardware. Rather, at the end of the agreement, you discontinue the service or renew, generating an automatic refresh. Simply put, PCaaS is one more financial “vehicle” at your disposal, in addition to leasing and buying.
Companies are attracted to this model because they have heard or seen data that highlights a predictable cost per seat model, which saves money and provides an automatic refresh without the hassle of the CapEx process. Of course, that is an ideal scenario, and we deal with less-than-ideal scenarios every day in IT.
So, what is the right approach when trying to achieve goals such as cost reduction and predictability?
Across all industries, annual metrics show that per user, the cost per seat has not decreased as expected, but remained flat. “How can this be?” you may ask. ”Our organization aggressively bids out hardware and software purchases!”
While it may be true that many organizations have been successful with these bidding initiatives, the cost per seat has not dropped due to the labor costs associated with supporting and managing software hardware assets with a low maturity.
Labor is the single largest cost factor in a model such as PCaaS. Unemployment in IT is at an all-time low, increasing the cost of labor as a result. In addition, more devices, software and complexity exist in end-user computing. When combined with low maturity in the ITIL process and ITSM platforms, the time associated with support isn’t reduced.
The result? Some companies are not seeing cost savings when it comes to providing services to end users, while others are actually seeing costs increase. To solve this problem, we must go beyond the hardware and the financial model designed to perpetually refresh that hardware to create lock-in.
Innovation in managed services, process and technology is the linchpin to reducing labor costs associated with end-user support services. Whether considering PCaaS, leasing or buying models, the most important factor is the cost of the managed services delivered around the devices and the innovation the provider brings to your organization.
The PCaaS models on the market currently offer service components such as imaging, deployment, migration, repair and disposal. These components are regarded as the easier, more predictable cost structures to quantify.
For example, migration is one of the most expensive events associated with a managed service model. Migration projects represent one of the largest areas that negatively impact end-user satisfaction. Customers report their current processes to perform a migration, which can take between two to four hours.
This step in the lifecycle is an example of where organizations can see a huge swing in cost, since migration increases service desk costs and represents a large portion of “hidden costs” in PCaaS agreements. Additional work that was not accounted for in the pre-onboarding phase is qualified as “out of scope” or falls under the category of additional billable services. So innovation to reduce complexity and a thorough process to identify your company’s requirements for success are important factors when selecting a delivery partner
For that and other reasons, it is important to select a delivery partner that is mature in managed services and can help reduce labor costs through its own fully-matured processes and ITSM platforms. The right partner can help innovate and reengineer your client management systems.
It is also important to move beyond basic service elements and consider Move Add Change (MAC), service desk, self-service, automation, daily projects, return-to-service and software and hardware asset management. These elements must be addressed to reduce a company’s cost per seat and create predictable cost structures while improving the end-user experience.
Maturing the areas that ultimately affect cost and the end-user experience will not happen all at once. Many organizations that have signed contracts with outsourced providers reported at the end of those agreements that very few advancements were made to mature service delivery and their cost structures were still the same. Over time, their provider’s turnover was high because as labor increased, the provider was not willing to keep pace with the market due to the negative impact on the contract margin. As a result, companies had underqualified personnel supporting IT processes, which drove lower end-user satisfaction.
If this sounds familiar, you are not alone, as this is a common industry problem. How will PCaaS change this? It will not.
It is vitally important that companies select the right managed-service providers and view them as an extension of their IT team, working together to deliver a hybrid managed-service model that matures over time. Hybrid delivery works when projects are identified at the beginning and throughout the contract that will achieve those desired outcomes and both parties are committed to execution.
Several different parties are offering PCaaS or DaaS models, including some major hardware manufacturers. Their approach to the market is to offer very aggressive pricing to grab consumers’ attention, but with a scope of service that is not clear or is very limited. While reading the fine print, you may see “work shop required before pricing is finalized.” Without detailed analysis, signing a generic agreement will leave you with out-of-scope billing and project work.
Be sure to ask basic questions of potential partners, such as:
There’s an old saying, “You can always tell a leopard by its spots.” Care is needed when talking with potential partners. Ask who is this organization? What has been the core of their business? What is their identity? Is it product manufacturing, staff augmentation, lifecycle services, managed services or integration, or are they just another product and software reseller?
The right partner will show experience across all domains and have a proven record of accomplishment for managed services.
Insight has been providing end user support services for 30 years, is recognized for global managed services by MSP Mentor and is an innovator in managed device services.
Our evaluation process provides an accurate cost per seat for managed device services regardless of your company’s preferred financial vehicle. Our engineering and delivery teams work with you to develop innovative migration, client management, service desk and ITSM platforms, all while maturing processes.
We believe in empowering customers, not entangling them. Our open approach to process, systems and working with all technology manufacturers in your environment ensure we deliver the best options and models for your company. As a hybrid delivery partner, we will work with you project-by-project to mature and advance service delivery and improve your customer experience.