'You have to jump into DaaS with both feet'

As part of CRN's Rising Stars report highlighting the most disruptive, most profitable and fastest-growing firms in the channel, Xeretec customer solutions director David Smith talks about the firm's early successes in the DaaS market

Amid predictions that up to one in every six PCs will be purchased under a DaaS contract by 2020, managed print specialist Xeretec is among a handful of MSPs pioneering the model among its customers, and was highlighted as one of seven firms pushing the boundary in CRN's Rising Stars report. We quiz customer solutions director David Smith on whether it really is the future of the PC market.

Partner: Xeretec

VAR 300 ranking: 70th

Pushing the boundary in: Device-as-a-service

According to IDC, the percentage of PCs shipped under a DaaS contract will rise from one in every 100 to one in every six or seven PCs between 2016 and 2020. Do you go along with this prediction?

Yes. People have been surprised by what's gone down the as-a-service route - everything from shaving products to the explosion around Netflix and consumption of media by the next generation of millennials and generation Zs. All the indicators are there to suggest that DaaS will grow in this way, and I think the customer demand is there. The challenge will be whether the supply chain can push that model as well as it being pulled by the customers. It's a big opportunity for us, that's for sure.

What kind of uptake are you seeing for DaaS?

We have secured some really nice contracts and have had some lighthouse wins in some really big accounts, one of which is a 15,000-unit deployment which is the first wholescale rollout in the NHS in the UK. Our unit placement figure is forecast within a 12-month period to be in excess of 20,000 units.

The dialogue with customers has been very positive so far. Not only are they seeing the value of migrating to a per-month model (which actually works out more economically attractive in total cost of ownership) they also see the services they are doing today that are distracting them - like building a PC, rolling it out, having to manage break-fix and liaise with the manufacturer - can be wrapped into what we offer. It alleviates them to focus on more important things.

Are clients moving one device at a time, or doing it in one go?

We've identified three models. There are those that are brave. They are doing a Windows 10 rollout in one big project. They tend to be quite large.

Probably the bulk of them tend to be the ones that refresh devices as they age. Let's say they have an estate of 1,000 PCs and every year they're going to replace 200 - ‘we'll do 200 through a DaaS model'. Oddly enough, if, say, it's the NHS, they'll say they've only budgeted to do 200 units this year, but when they look at the economics of DaaS they see they could afford to replace 1,000 units in year one because their payments are being stretched over a three to five-year period. So in many cases it accelerates the adoption.

And there are those that do spot purchases. It's pretty much 33 per cent in each sector.

To what extent is Windows 10 a driver?

There's a mandate [in the public sector] to move to Windows 10, therefore they look at a way of economically deploying this in the timescale they've been given without burning all their capital budget. And that's one of the attractions of the DaaS model.

We've seen that the Microsoft move in terms of operating system has always been the stimulus to move the client PC forward to the next platform.

You say you think DaaS is more economical for your customers from a TCO viewpoint. But what does it mean for you as an MSP? Is it all upside?

I'd issue a word of caution for anyone considering DaaS. You have to jump in with both feet because when you're looking at the whole supply chain metrics - the life cycle management, the proactive intelligent management of devices in situ; that whole ecosystem - it's not a simple thing to do. Because of our DNA [as a managed print specialist] we've done most of these things. We have the billing platforms and we have salespeople who are skilled in being able to articulate a consultative contract discussion with the customer.

It gives us greater buying power, so when we talk to a manufacturer like HP, the dialogue is not just about print deployment but also PC deployment. It also gives us the ability to have another conversation with a customer. If we have a happy managed print customer on a five-year agreement, the refresh cycle is planned in whereas with this the PC refresh cycles are pretty much happening all the time.

A link to the full Rising Stars report can be found here.

All the data from the Rising Stars report was drawn from VAR 300, which is available exclusively to CRN Essential subscribers.