What is Technology as a Service?
Technology as a Service (TaaS) is a method of acquisition for any of your technology solutions; AV, security, voice, video, data, IoT, etc. It is a way for you to make one monthly payment for all of your needed equipment and services. TaaS creates a solution that you can use or have access to, much like a subscription. Unlike the traditional methods of acquisition, Technology as a Service doesn’t end in ownership. It allows you to have use of or access to the technology while it is useful and provides added flexibility and scalability when you grow or organization’s needs change.
Due to the rapid advancement in technology and the need to upgrade obsolete technology more frequently, Technology as a Service is becoming a more preferred way for organizations to pay for their solutions to stay competitive and agile in the marketplace.
The Drivers Behind “Why” Technology as a Service
There are four important factors to help you understand how as-a-service became popular and why it makes the most sense in today’s environment
01. Economics of OwnershipRegardless of the technology industry; AV, security, data, unified communications, etc. technology solutions are non-revenue generating assets because they rapidly depreciate the day after they are installed. In fact, paying cash with after-tax dollars on these non-revenue generating assets defies basic economics. Technology is no doubt essential use in today’s marketplace, it is of utmost importance. However, there is a big difference between the importance and the economics of it.
**So why do technology solutions depreciate the day after install?**
In every bill of materials, you have a high level of non-recoverable costs (i.e. manufacturers margin, distributor margin, licensing, installation, and sometimes comprehensive with extensive labor, programming, software, design, warranty, training, etc.) This can make up 30-50% of a solution. These costs are non-recoverable because after the install none of it can be returned.
02. Rapid Advancement of TechnologyTechnology continues to change rapidly, for the better, with no sign of it slowing down. Look at these major manufacturer’s R&D budgets within the AV & Security sectors:
- Bosch - R&D Budgets = 8% of Revenue
- Barco - R&D Budgets = 11% of Revenue
- Hikvision - R&D Budgets = 9.7% of Revenue
- FLIR - R&D Budgets = 10.75% of Revenue
- Axis Communication - R&D Budgets = 18.02% of Revenue
Customers are recognizing the challenges of staying at the forefront of technology and having to continuously request higher CAPEX budgets. This is why they are embracing and giving more value to the use/access procurement method versus ownership.
03. Insuring Essential Use TechnologyAV technology has replaced the phone system for internal and external communication and collaboration. Security technology protects our essential use assets; companies, employees, schools, children, intellectual property, confidential information, etc. Today’s technologies are no doubt essential and necessary. How can you NOT insure these types of technologies with a complete service and maintenance plan beyond the warranty period? It’s negligent not to. It is too much of a risk to not protect mission-critical technology.
We can’t NOT mention COVID-19. The economic downturn has placed a lot of pressure on budgets. In fact, in a recent survey with top national retail chains, 89 percent stated that their 2020 and 2021 budgets have been greatly impacted. Continued economic uncertainty places pressure on organizations to preserve cash flow.
How Technology as a Service Addresses The Drivers
TAMCO’s Technology as a Service payment program addresses the four above drivers behind why as-a-service is becoming more desired. They include creating favorable economics, embracing technology change, operating with peace of mind, and how not having a budget doesn’t have to prevent you from your technology implementation strategy. Let’s unpack these components:
01. Creates Favorable Economics
TAMCO’s expertise and understanding of the components that make up a total technology solution provides an avenue where system integrators can package and offer you, the customer, a relevant and real Technology as a Service. This specific as-a-service payment program provides you with a way to absorb the myriad of non-recoverable costs and keep your working capital, working. Everything is included and packaged into the offering as one monthly payment for you over a subscription service term of 36 or 60 months.
02. Embrace Technology Change
When considering the large amount of money manufacturers are pouring into R&D how are you as the consumer supposed to manage the rapid advancement of technology and risk of obsolescence? A component of TAMCO’s Technology as a Service is a feature called the Solution Replacement Guarantee (SRG). This is an exclusive feature that allows you to migrate or scale-up into new technology at any time during the subscription service term, without financial penalty. This puts you in control to move in and out of technology on your terms.
03. Operate With Peace of Mind
With essential-use equipment, customers need ongoing service and support. TAMCO’s Technology as a Service has a way to include your system integrator’s ongoing service agreements as part of the monthly subscription. These services are inclusive of most failure situations that remove any additional service expenses throughout the subscription term. The one area that is most challenging for integrators to cover under any Service Level Agreement is Act of God coverage. TAMCO has addressed this and protects customers from the unforeseen expense should an Act of God situation occur.
04. Don’t Let “No Budget” Prevent You From Your Strategy
With Technology as a Service, you can address any budget pressures or lack of budget from COVID-19 or any other economic uncertainty.
Not All As-A-Service Offerings Are Equal
Like the title of this section states, not all as-a-service offerings are created equal. When considering Technology as a Service it’s important to do your research and be aware of what you are receiving. Make sure you know what is and is not included. A true as-a-service should be one low monthly payment with everything bundled in. There should be no need for large upfront à la carte costs. Be fully aware of what you are responsible for and what your solution provider will manage for you. Understand the protocol if something malfunctions at any time throughout the term. True as-a-service solutions will include support services for the entire term and the ability to scale if your needs change or the technology becomes obsolete, without major financial implications. And lastly, know what the financial implications and ownership outcomes are. As-a-service is an operating expense, not a capital expense. Be clear on all of the expenses. Small fees are not uncommon, but you should not have to pay large upfront costs. If your as-a-service solution results in owning the technology you do not have an as-a-service, but a traditional lease in disguise. If the as-a-service subscription model is what you are after make sure you understand this detail in the agreement.
Learn More: Discover a true as-a-service payment program that protects you from obsolete technology. With over 25 years helping organizations stay at the forefront of technology we have fine tuned our as-a-service offering to meet the technical, financial, and business needs of your technology solutions.