Tech Data Corp. has added data center solutions and services to its Tech-as-a-Service procurement program.
The new purchasing option, which the Clearwater, Fla.-based distributor announced in conjunction with the fall meeting of its TechSelect partner community in San Antonio, lets businesses pay for server, storage, and networking equipment in monthly increments based on how much capacity they utilize.
“Anything you can put into the data center, we would monitor that and you would pay for consumption,” says Jennifer Schaeff, manager of financial solutions at Tech Data. The distributor shares consumption data with customers too, she continues, so they can see where their money is going, monitor usage patterns, and accurately levy chargebacks internally.
Officially called Tech-as-a-Service for Advanced Solutions, the new offering stems directly from conversations with resellers about what customers want with respect to financing, according to Jolea Kidd, vice president of financial solutions for the Americas at Tech Data.
“One of the things that came up repeatedly was that they wanted flexibility, and not just to increase but to decrease,” she says. “Some of them have seasonal workloads or other reasons why they may need the ability to decrease their consumptions at times, and that wasn’t really something that was being offered in these other traditional programs.”
According to Schaeff, partners also reported that businesses are increasingly interested in getting technology outlays out of their capital budget. “The other thing that we heard frequently was any possibility to treat IT as an operating expense was appealing,” she says.
Available immediately, Tech-as-a-Service for Advanced Solutions encompasses services as well as products and applies to any combination of data center offerings from Tech Data’s advanced solutions portfolio. There are no minimum or maximum contract terms, and buyers can add resources, upgrade selected devices, or replace an entire agreement with something better suited to increased requirements whenever needed.
“If they’re three years down the road and they’re at full capacity, they could make the decision that they want to refresh all of that hardware, in which case that hardware would come out of their facility and new hardware would go in,” Schaeff says.
Canceling a contract is always an option as well. “They can get out at any time,” Schaeff says, noting that Tech Data can help customers who change their mind about an as-a-service agreement either purchase or lease the products involved.
Consumption-based pricing can help partners sell more to organizations with limited cash or an aversion to borrowing, Schaeff continues. “This is another means for them to get business that they maybe could not have gotten before.”
Partners receive revenue on the hardware portion of as-a-service deals in advance. “We have a finance partner that actually takes title to the equipment, similar to what you would have in a lease transaction,” Kidd says.
Tech Data introduced its first Tech-as-a-Service offer, which lets businesses pay for endpoints via monthly subscription fees, last December. Unlike the advanced solutions version introduced today, though, that program bases charges on how many devices a customer buys and what that hardware lists for, versus capacity and consumption. According to Schaeff, Tech Data has been pleased with the results it’s seen so far.
“It was slow to start because it was a newer concept for people, but as we’ve gained momentum, it’s been really exciting,” she says. “We were hoping that by the end of the year we would have achieved a certain number of deals, and we’ve exceeded that now.”
Access to subscription pricing is helping resellers increase deal sizes too, Schaeff continues. “We’re seeing partners able to turn deals that normally would have been in the $25,000 range come in at well over a hundred thousand dollars,” she says.
The endpoint edition of Tech-as-a-Service has been most popular so far with managed service providers. “They’re already in that type of a business model, where they’re offering services combined with assets,” Schaeff observes, noting that MSPs like having the ability to charge customers one predictable monthly sum for both hardware and services.
Partner enablement, Tech Data has learned in the last ten months, is an important contributor to the success of as-a-service purchasing programs.
“It does take a bit more training with our partners and their sales teams, because it’s a different way to sell technology,” Schaeff says. “You’re not walking in and offering someone a purchase price. You’re now talking to them about services and about a full solution and managing that solution for them.”
Tech Data and Cisco introduced two networking, security, and collaboration bundles for small office environments yesterday. Those solutions are eligible for TaaS pricing.
Other leading distributors, including Ingram Micro Inc., SYNNEX Corp., and D&H Distributing Co., offer as-a-service pricing as well.
