AV-as-a-service (AVaaS) has gained a lot of notoriety in recent years - and it’s only gaining traction in today’s continuously evolving subscription economy. For a variety of reasons, organizations are opting for the use of and access to the technology and additional equipment they need to operate versus making cash purchases and outright owning it. These solutions offer more flexibility and protection in a constantly changing business climate.
Additionally, AVaaS just makes more sense from a financial, business, and technical perspective. However, when first introduced to as-a-service solutions many customers falsely believe these AVaaS solutions are just leasing but rebranded with a new name. This is simply not true and it’s an important fallacy that needs to be clarified. Let’s unpack one of the most common questions we get asked when we present and propose AV-as-a-service solutions, “Is AV-as-a-service the same thing as a lease?”
First, let’s provide a short answer. No! AVaaS is not the same thing as a lease. However, there are imposters on the market. That is why it’s important to understand the following two key components that differentiate AVaaS and a lease and proves that they are in fact, not the same. The first has to do with the manner in which the agreement concludes at the end of the term. While the second resides in the details of how the solution operates within the term. Let’s dive into the details of each of these two components so you can clearly understand what makes an AV-as-a-service different from a traditional lease.
1. End of Term
Traditionally, AV technology leases have been designed to conclude in ownership at the end of the term. When you hear the word lease, you associate ownership. Lease to own. You make your agreed payment amount over the selected term and once you have completed that term you are then the owner of that technology. However, with AVaaS it is just as it states in its name, a service. It is not possible to own services. Therefore, like a majority of services you consent to receive there are two options at the end, you can continue/renew the service or you can cancel the service.
In today’s climate ownership is just not the value that it once was. Especially when it comes to technology equipment. In fact, it can potentially do more harm than good in terms of operational efficiency. More importantly, audio-visual solutions and related technology themselves are not revenue-generated assets. So, if the equipment doesn’t generate revenue what is the benefit of owning it? Owning this type of hardware can leave you handcuffed to obsolete hardware due to today’s pace at which technology advances. Industry data shows that office and facility technologies are already moving at a pace for obsolescence to occur within a two to four-year time frame. Therefore, ownership is not a conducive business, technical, or financial strategy.
One last mention on the topic of ownership. When you peel back the components of what makes up these solutions the AV hardware itself represents on average less than 30 percent of the sale price. The other 70 percent comes from a necessary combination of licensing, warranty, installation labor, software, and profit. These are known as non-recoverable costs. Most CFOs or financial professionals that understand basic financial principles would advise that if there are greater non-recoverable costs than recoverable costs and ownership can be avoided, highly consider that option.
2. Flexibility Within The Term
As mentioned prior, the second key component that differentiates AV-as-a-service from a lease can be found in the terms of the offering. Leasing is very black and white in how it performs. You do not have much flexibility without incurring large financial consequences. A true AVaaS solution allows you to migrate or scale to new technology if you grow or the technology no longer meets your needs without a financial penalty. Unlike a lease, AVaaS does not make you roll over any existing balances from the old technology’s agreement. However, with a lease, you are only allowed to take the remaining stream of payments and add that to the new solution. While this does provide an avenue to obtain new technology, you are now paying for a new solution with a new lease, but still paying for the old technology. True and pure AV-as-a-service solutions provide organizations with the flexibility to migrate and scale up to new technology at any time during the term, releasing you from the original agreement. There are no rollover balances, penalty fees, or financial repercussions. Just freedom to grow your business without a drain on your resources.
3. Honorable Mention: Support Services
Finally, it’s important to mention the ease, ability, and relevance of layering multi-year maintenance and support services on a monthly basis. Leases do have the ability to offer support services, but these services traditionally get offered as an afterthought and are choppy at best. Opposed to AVaaS which puts an emphasis on an all-inclusive full-service bundled solution from day one. These services include things like proactive checkups, and concierge services, and are supported with traditional service level provisions for multiple years into the future.
As we begin to see more and more as-a-service solutions hit the market, learning and clearly understanding what makes AV-as-a-service different than a lease will be important. Therefore, if you’re considering AV-as-a-service remember to identify the aforementioned components. One, the solution’s end-of-term goal is not ownership, but the focus is on access to and use of the needed hardware and available support services. Second, understand the agreement’s terms for migrating to new technology in the event that the solution no longer meets your needs or becomes obsolete. If the new agreement includes a rollover balance or the remaining cost of your old solution gets dispersed into your new stream of payments, it is not as-a-service, but just a lease.
A well-packaged AV-as-a-service solution includes everything you need to be efficient, grow, and adapt or pivot as a company. It creates a true service offering that aligns with today’s subscription consumption model. Explore Smarter Systems AV-as-a-service solution offering and discover more about how you can have flexibility, protection, and peace of mind with your AV technology.