The “tech-as-a-service” consumption-based payment model is a growth area for Tech Data Corp., which recently responded to customer demand by expanding the TaaS offerings it provides to resellers.
“This is the trend in the market, for businesses to start using consumption-based models,” says Jolea Kidd, vice president of financial solutions, Americas, for Tech Data Corp.
Tech Data, a multibillion-dollar distributor of computers and I.T. products and services to thousands of resellers, launched the first leg of its TaaS program in December 2017, providing products like laptops, mobile devices and related software systems to resellers for their own use or for re-sale to their own business customers.
Last month, Tech Data extended the program when it introduced TaaS-Advanced Solutions, which covers the use of data center hardware, software and services. “We’ve seen a critical shift in the way organizations want to pay for and use their data center technology,” Kidd says.
Many companies want the flexibility to pay for data center technology on an as-needed basis, which typically requires them to access public cloud-based technology. But she adds that many also don’t want to rely solely on public cloud strategy, and Tech Data’s new TaaS-Advanced Solutions was designed to let clients pay on a consumption-based model while using “dedicated hardware that resides in the location of their choice.” Sales through the program generally range from about $10,000 to $200,000.
Tech Data’s customers typically work with account reps to set up their TaaS contracts, but the company is developing ways for registered customers to access its e-commerce site, TechData.com, to modify the technology and services included in their TaaS contracts and “flip a switch” online to activate them, Kidd says.
Technology research and advisory firm IDC forecasts that, by 2020, consumption-based “as-a-service” procurement will surpass traditional procurement models in data centers and account for as much as 40% of I.T. enterprise spending by large companies.
Tech Data works with resellers to analyze how much technology capacity they’ll need, increasing it as necessary, Kidd says. She adds that the consumption-based model also provides companies more flexibility in accounting for technology costs as operating rather than capital expenses.
The TaaS model is opening new ways for Tech Data’s resellers to better understand and serve their customers, says Anthony J. D’Ambrosi, president of ATSG, a provider of I.T. services to businesses and a long-time reseller of Tech Data’s products.
“We were an early adopter of TaaS,” he says. ATSG, which caters mostly to health care organizations but also services real estate and financial services firms, specializes in providing “workplace-as-a-service” hardware and software that its clients use to run their business, D’Ambrosi says.
Although only about 10% of ATSG’s client base is using the TaaS option, the firm expects TaaS to grow quickly and among larger companies. “I see a strong pipeline of TaaS opportunities really starting to take off,” D’Ambrosi says, noting that one larger pending deal would alone have “hundreds of thousands of technology users.”
Just as many companies have become accustomed to using cloud-based software, TaaS is also becoming more mainstream, he says.
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