Weighing the Pros & Cons of Hardware as a Service Financing (HaaS)

Date Published
Jan 14, 2015 5:58:00 AM
Reading Time
Reading Time: 2 min

hardware as a service

As technology demands in our districts continues to grow and our technology budgets do not seem to be following suit, we need to find a way to stay up with changes and demands with technology and access in our schools, while staying within our tech budgets.  A growing trend to accomplish this goal is to finance or purse a Hardware as a Service (Haas) program.  Below we have broken down the pros and çons to HaaS so you can make an educated decision if it is the right path for your district.

Hardware as a Service Financing Benefits: 

(1) Financing keeps your equipment up-to-date. Computers and other equipment eventually become obsolete. With financing, you pass the financial burden to the equipment financing company. For example, let’s say you have a two-year lease on a copy machine. After that lease expires, you’re free to finance whatever equipment is newer, faster and cheaper.  In fact, 65% of respondents to a 2005 Equipment Leasing Association survey said the ability to have the latest equipment was leasing’s number-one perceived benefit.

(2) You’ll have predictable monthly expenses. With a lease, you have a pre-determined monthly line item, which can help you budget more effectively. 35% of respondents to the Equipment Leasing Association’s survey said this was leasing’s second-highest benefit.

(3) No Up-Front Capital Expense. No full cost payment up front and lower total cost of ownership over the life of the solution. When investing in 3-5 year technology expenditures, why would you accrue those costs in one year, or worse, one payment. 

(4) End of Term Flexibility. At the end of the term, leasing gives your clients the option of simply returning the equipment, purchasing it outright or extending the contract, making it easier to cascade, upgrade or dispose of their equipment.

(5) More flexible payment options. Different payment structures can be tailored to fit your specific needs. For example, periodic payments can be structured to increase, decrease or stay constant over time.  Delayed pay dates also help to fit into fiscal cycles within your district.

(6) Faster implementation. Due to eliminating upfront capital requirements, you have the ability to implement hardware initiatives when you need the equipment/solution, instead of when your funding becomes available. 

(7) Reduced risk.  Financing an entire hardware solution allows us mitigate risk of technology budget surprises.  

Hardware as a Service Financing Downsides:

(1) Long Term Agreements:  Although you have the ability to buy out of a term at any point, you are committed to the payment for the life of the term.

(2) Paying Interest: Although you are able to keep this money in house, longer, you are going to pay some type of interest which will make the Total Cost higher. 

(3) Committed to Financing Terms: With financing, you will always be at the mercy of your financing company and agreement. Schools must follow their guidelines and are susceptible to reposition upon request.

Buying: The Downsides

(1) The initial outlay for needed equipment may be too much.

(2) Eventually, you’re stuck with outdated equipment. That means you’re eventually stuck with outdated equipment that you must donate, sell or recycle.

(3) Buying capital equipment often involves a lengthy budget approval process. Choosing leasing can help shorten the process, accelerating the implementation of the solution.

Learn about HaaS: financing equipment instead of buying here.

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