Some of the most enjoyed and well-known business cartoons are the ones in which a salesman with a new, modern weapon (like a machine gun or rocket launcher) is rebuffed by the bull-headed King. The King doesn’t have time to bother with seeing the salesman because he is too busy directing his army in battle. There are many variations; here are a couple of favorites:
In today’s Oil and Gas environment, where capital budgets are being slashed dramatically, it is frustrating for all parties when a clearly beneficial GPS tracking program with a very fast, proven ROI gets shot down (pun intended) because of the upfront capital required. With so much pressure to “cut, cut, cut”, many great ideas never get implemented. Unfortunately, while everyone knows “you have to spend money to make money”, hardly anyone in Oil and Gas is in a spending mood these days.
Given this dire environment for capital spending – even for projects with clear benefits – Geoforce has joined a growing group of companies who deliver their complete solutions in an “as a service” model – in this case, adding “Hardware as a Service” to our current “Software as a Service” offering. Geoforce’s proprietary GT1 Global Asset Tracker and GT0 Compact Asset Tracker can now be paid for as an operating expense, along with our traditional software and service charges. This allows companies to revisit key GPS initiatives, because they can often show real costs savings in month one. In addition, because they are no longer asking for capital expenditures, they can get on the good side of financial stewards.
In simple terms, Hardware as a Service is a financial arrangement that turns procurement of Geoforce’s GPS tracking devices into an operational instead of capital expense, while providing benefits that include:
• Characterizing hardware as an operational (instead of capital) expense often leads to easier and faster budget approval.
• Lower upfront payments make it easier to get started with a new GPS tracking initiative.
• Inherent perpetual replacement provides “peace of mind” by alleviating any need to be concerned about device performance.
• Device replacements will almost always be an upgrade to the latest technology. This allows companies to transition to the latest and greatest hardware version with no further investment in purchasing hardware.
• Lower upfront payments allow companies to obtain broader asset coverage faster.
Geoforce is not unique in moving to a Hardware as a Service model. For instance, the HaaS trend has also captured the cell phone industry, where most carrier subsidized new phones are now a thing of the past. Instead of having to pay upfront for increasingly expensive smartphones, all the carriers – and even Apple itself – offer businesses payment plans for hardware. In fact, Sprint has carried the concept even further for its business users, eliminating almost all capital expenses for business, and packaging this as “Mobility-as-a-Service from Sprint”.
There have always been options to lease or finance capital equipment. But Hardware as a Service is different than leasing or financing hardware in two key areas:
1. There is no third party leasing or financing company involved. With a company like Geoforce, there is just one agreement to manage.
2. Regardless of payment terms and schedules, all expenses can generally be characterized as OpEx and not CapEx.
For customers who have been holding off on GPS tracking buying decisions because of the obstacle of capital expense approval, Hardware as a Service may be just the program to help get an initiative started. After all, no King wants to lose a battle simply because he couldn’t buy the latest technology available to him!
Contact our sales team to find out more about Geoforce’s HaaS program.