I’ll admit I find the Device as a Service (DaaS) situation a little frustrating.
I believe that DaaS should be much further along the adoption curve because it makes significant business sense: Customers get the hardware they need, expenses move from large Capex purchases to monthly Opex budget items, and they get support to manage and scale devices to meet demand. And from a supplier viewpoint, it drives a higher mix of sales and faster refresh!
It took a pandemic for remote work to be embraced. What will it take to get to critical mass on DaaS?
Part of me thinks that this is a “chicken-and-egg” situation — Is it the demand that enables the creation of DaaS engines to capture that demand, or do you need to create the DaaS offering first to stimulate demand?
We seem to still be in the heavy lifting phase and haven’t gotten to the automatic and scaling phase that is the hallmark of success in our industry. So what’s going on?
What the forecasters are saying
- Gartner forecasts the number of DaaS users will grow by over 150% between 2020 and 2023. It projects 72% of businesses have invested or will invest in DaaS in the next 24 months.
- Market Research Future predicts a 55.8% CAGR growth over the forecast period (2020-2026) for DaaS reaching US$190B by 2026.
- Reportlinker.com is expecting DaaS to grow from US$50B in 2021 to US$303B by 2026. Small and medium-sized enterprises are expected to hold the largest market share during the forecast period.
Why has DaaS uptake been so slow?
I’ve done a little digging and found there are multiple factors impacting uptake:
- Definition — There’s no real industry standard for what DaaS solutions include. Many businesses think they have embraced DaaS, but they’re really just paying a monthly fee for their equipment. That’s not DaaS — that’s a lease.
- Budget Fear — As with any change to a new model, there is an element of fear among certain customers who don’t want to give up their Capex budgets because that’s the way they’ve always budgeted for their IT.
- Control — Some MSPs are hesitant to include their services in a DaaS offering for fear of losing control over their customers, services and business model.
- Bloat — Sometimes, partners add too much in the way of add-on hardware, software & services to the DaaS offerings, which, in some cases, has driven the price too high for the value received.
What demand drivers could accelerate DaaS adoption?
Emerging market factors that I believe will have to potential to push the critical mass for DaaS and finally crack this nugget of opportunity include:
- Windows 11 will drive businesses to focus on refresh since this operating system requires specific hardware to operate that older PCs can’t support. Jason Kimrey digs into Windows 11 in his blog.
- Work from Home requires enhanced security and support solutions. A hybrid workplace isn’t going away so IT will need to find ways to support employees and ensure security when employees are in the office and at home.
- Subscription World: We are very familiar with subscription-based solutions that are becoming the norm so there is, arguably, less resistance to this model.
- Budget Management: Businesses are looking for ways to shift IT spend from Capex to Opex – particularly among SMBs.
What needs to happen?
I see the following actions as crucial to driving up acceptance and increased adoption of DaaS in the North American marketplace:
- Make it Clear. The industry needs to align on a definition and eliminate confusion. DaaS is outsourced IT — software, hardware and services in a complete package billed monthly (or on a regular cycle). It’s analogous to our cell phone packages where our providers give us the devices, network access, data, storage and software in exchange for a monthly fee.
- Make it Easy. Implement on-line portals that make it easy for customers to identify the technology and services they need. Furthermore, services such as Windows Autopilot make it easy to migrate and move people to new PCs. Distributors have made a livelihood out of masking complexity — this is a business that is screaming for the industry to offer simple point-and-click implementation models.
- Make it Compelling. DaaS is not for everyone. The channel needs to understand where it does make sense, and then craft a clear value proposition that incorporates the demand drivers and reduces/eliminates the obstacles listed above.
Perhaps our expectations are too high. Cloud adoption took 10 years and went through many of these same growing pains in the beginning. And, as I mentioned before, it took a pandemic for remote work to gain widespread traction. DaaS is facing similar adoption challenges.
However, when the IT industry comes together and focuses the sheer might of its overall ecosystem — technology, financing, solutions focus, relationships — we’ve shown we can move mountains. (Just look at what we accomplished with Intel® Centrino®, Ultrabook™, vPro®, etc.)
I believe that everything is in place for DaaS to take off. We just need a critical mass of channel players to commit to this model, understand where it works/doesn’t work, get out there and step up the offerings, communicate it clearly, and make it easy to purchase. That will pave the way for DaaS and will enable the overall channel to accelerate down this highway for the rest of the decade!