What is Device-as-a-Service (DaaS) ?
Device-as-a-Service (DaaS) is a subscription service where a company rents its laptops, smartphones and computers instead of buying them. A DaaS subscription also includes the software needed to manage the devices, plus actual device management such as replacing, removing or upgrading devices at will.
How a DaaS subscription works in real life
A business needs 5 laptops and smartphones for its employees. The upfront cost of buying these can range from 10,000 euros to 20,000 euros, depending on the price of the chosen hardware.
For each of these devices, the company then must:
- Buy basic productivity software such as Microsoft Office 365.
- Buy and set up device management software, so the company can monitor, lock or unlock an employee’s device.
- Setup data protection to prevent leaks and maintain legal compliance.
- Setup security policies for each device that govern what an employee can, or cannot do, with the device.
- Replace lost or stolen devices (basically buy new devices).
- Handle warranty claims and find a replacement device while the broken one is repaired.
- Repair out of warranty devices with the company’s own money.
- Buy new devices if the company adds new employees or store the devices somewhere if it loses employees.
- Manage complex accounting rules for amortizing the cost of the hardware over the course of the next few years.
Thus, the actual cost of owning the device (called total cost of ownership, or TCO), can be significantly higher than just the initial investment required to buy the hardware.
Instead of going down this path, the business can instead choose to work with a DaaS provider, which offers the same number of devices for a monthly subscription of 500 to 1000 euros.
However, a DaaS subscription also solves all the hardware ownership problems mentioned above because:
- The DaaS subscription includes a software layer the customer can use to manage the devices. This can even include basic productivity software.
- The DaaS provider handles all hardware problems such as: repairs or replacements (even for stolen or lost devices).
- The DaaS subscription is flexible, so the customer can return or add a new device at will.
- A Daas Subscription keeps accounting simple, since the costs are classified as OpEx (vs CapEx), which are much more easily deductible.
Thus, a DaaS subscription can significantly reduce all the costs associated with owning a product, whether they are expressed as money, time, effort or lost productivity.
7 Advantages of Device-as-a-Service Subscriptions
1. Lower initial starting costs
Buying all the necessary hardware for a company’s employees can require a significant amount of capital.
Sometimes a business may simply not have this amount of money. But even if the business does have the capital, it might prefer to spend it on more profitable things such as ads or customer acquisition.
2. Built-in admin dashboard & tools for managing company devices
Companies that provide devices to their employees generally want to know how the employees are using them, either for productivity or legal reasons.
Companies that buy their own devices must implement this feature themselves, but DaaS providers generally include it in their monthly subscription.
Thus, with a DaaS provider (such as INKI), the business gains access to a secure cloud platform where they can see in real time the status of all company devices.
From there, the company can lock, unlock a device, monitor its location, or simply see how the employee is using the device.
3. Moving capital expenditures (CapEx) to operational expenditures (OpEx) to decrease tax costs
The ability to move a business’s capital expenditures to operational expenditures is one of the greatest advantages of DaaS.
Operational expenditures can be directly expensed against a company’s revenue during a given period.
For example, if a company has 100 000 euros in revenue in a year, but has 80 000 euros marked as OpEx, then it must pay taxes only on the remaining 20 000 euros.
If the tax rate is 10%, then the company must pay just 2 000 euros in taxes during that year.
By contrast, capital expenditures are classified as an asset and cannot be fully expensed in the period when they were bought.
Instead, the value of these assets is amortized/depreciated over a longer period of time.
For example, a company has 100 000 euros in revenue in a year and spends 80 000 euros as CapEx.
In our imaginary example, the company can only amortize/depreciate just 50% of the total 80 000 euros in the first single year.
Thus, out of 80 000 euros, the company can only classify 40 000 euros as a deductible expense. This means the company must then pay taxes on the remaining 60 000 euros.
In this case, a 10% tax rate means the company must pay 6 000 euros in taxes for that year.
The remaining 50% of the 80 000 euros in CapEx will then be amortized/depreciated over the course of a number of years, depending on the accounting rules involved for the specific purchase.
In both cases, the companies spend 80 000 euros, but the CapEx spending leads to increased tax costs in the short term.
However, DaaS subscriptions are always classified as an operational expenditure!
Because of this, a DaaS subscription is very attractive from a tax perspective, since it can greatly reduce the total tax costs of a company in the short term.
Overall, companies that operate with very short business plans (1 to 3 years) are very well positioned to use DaaS. This is because their business plans are shorter than the amortization/depreciation period of their CapEx, so they will end up paying fewer taxes with DaaS.
4. Device security and compliance with security standards
DaaS providers ill preconfigure devices so they are data secure.
This means enrolling the devices in Apple Business Manager, Android Zero Touch or, in INKI’s case, applying the necessary security measures to ensure the device can be ISO 27001 certified.
5. Completely (or partially) replace an IT department
One of the advantages (that also brings cost savings) of a DaaS service is that companies don’t need to create their own IT department to manage their devices.
Once companies reach a certain size or complexity, they need to hire a dedicated IT person (or more) to correctly setup and manage company laptops, smartphones and computers.
A DaaS service completely solves this problem for small and medium businesses, since the DaaS provider will now do the work of an IT department:
- Setting up new company devices for employees.
- Monitoring devices, locking or unlocking them remotely.
- Automatic updates and security patches.
- Preinstalling and configuring required software licenses.
- Analytics for the device fleet.
- Handling device warranties and repairs.
- Replacing broken, stolen or lost devices.
- Handling hardware upgrades, downgrades.
- Returning unused hardware.
This device management service is of great help to companies, since:
- Employees who did IT management tasks can now do their more productive ones.
- Prevents (or at least delays) the need to hire a dedicated IT person.
6. Predictable budgets and costs
Companies that buy their hardware often suffer from unpredictable expenses associated with those devices.
This includes buying more devices for new employees, replacing or repairing out of warranty devices, upgrading to the newer hardware versions etc.
These costs can be very unpredictable. Some months nothing happens, while in other months the business needs to pay for a bunch of devices, either as replacements or new purchases.
By comparison, a DaaS subscription is much more predictable for a company, since they know any hardware problems will either be fixed for free, or for a very small cost.
This predictable cost structure frees up valuable budgets so they can be used elsewhere.
7. Risk minimization and flexible costs
A DaaS subscription is especially valuable in volatile periods or industries where a company cannot accurately predict what revenues or costs it will have 6 months to 1 year in the future.
In unfortunate situations where revenue is decreasing and employee count must be reduced, a client company can simply cancel some of their extra subscriptions and return the devices, thus reducing its hardware costs.
However, if the company had bought those devices, they would be laying around with no employees to use them and would essentially be unproductive capital, that isn’t producing a return on investment.
Companies best positioned to use a Device-as-a-Service
Device-as-a-Service has many advantages, but some companies might not find it a perfect fit.
Most notably, companies that want to completely own both their hardware and software might not find the advantages of DaaS sufficiently appealing to switch over.
Likewise, companies that need access to a wide range of devices might find the device selection of a DaaS provider to be restrictive.
Others might want a highly customized software layer to manage their devices, which the DaaS provider might not offer.
Taking all this into consideration, below you’ll find the ideal profile of companies that prefer device-as-a-service instead of buying and owning their hardware.
Companies that work extensively with contractors or remote workers
These companies benefit greatly from Device-as-a-Service (DaaS) due to the flexibility it offers.
Contractors and remote employees can receive pre-configured devices with necessary software and security settings, ensuring consistency and security with the rest of company.
When contracts end or employees leave, devices can be easily returned or repurposed, minimizing device management costs and reducing the risk of data breaches.
Companies that work in volatile industries
Companies that work in risky and volatile industries, such as tech startups, media agencies, energy or commodities are excellent candidates to use DaaS.
This subscription-based model allows them to scale their device fleet up or down as needed, without the costs of owning depreciating assets.
They can easily access the latest technology without significant upfront investments, ensuring they remain competitive.
If the business scales down, they can return devices, avoiding financial losses. This agility is crucial for navigating unpredictable market conditions and maintaining a competitive edge.
Companies that work in project-based industries
Organizations in construction, consulting, or event management, where projects have defined start and end dates, are also well served by a DaaS subscription.
DaaS allows them to obtain devices only for the duration of a project and return them afterward, without having to buy the devices.
This approach reduces capital expenditure and storage costs, while ensuring project teams have access to up-to-date technology.
Furthermore, it simplifies asset tracking and management, which is particularly complex in project-based environments where equipment is frequently moved or reallocated.
Companies who want to avoid large capital expenditures
DaaS offers a predictable operating expense (OpEx) model, replacing the large upfront capital expenditure (CapEx) associated with purchasing devices.
This is particularly attractive for small to medium-sized businesses (SMBs) and startups with limited budgets.
By shifting device costs to a monthly subscription, companies can free up capital for core business activities, such as research and development or marketing.
This model also simplifies budgeting and forecasting, as IT expenses become more predictable and manageable.
Conclusion
Device-as-a-Service has many advantages for companies compared to the traditional device ownership model. If you think your company is best served by doing a switch to DaaS, then don’t hesitate to contact us at https://inki.tech/contact .
