IT and Business Insights for SMB Solution Providers

Tech Data Unveils Subscription-Based Purchasing Program

Available in the U.S. now and in Canada next quarter, the new procurement plan lets businesses pay for customized selections of hardware, software, and services via monthly payments that scale up or down as their needs change. By Rich Freeman

Tech Data Corp. has introduced a purchasing plan that allows end users to pay for hardware, software, and services via flexible monthly subscription payments.

Called Tech-as-a-Service (TaaS) and available immediately in the U.S., with availability in Canada to come in the first quarter of 2018, the new program lets resellers offer customized combinations of the latest technologies from multiple vendors—along with optional lifecycle management services, including deployment, from Tech Data professionals—without forcing large upfront capital outlays on their customers.

“We want to make this something that’s easy for partners to sell,” says Linda Rendleman, vice president of product marketing for endpoint solutions at Tech Data, which is headquartered in Clearwater, Fla. “They understand what their end customers’ needs are and are now able to offer them the option of a subscription offer.”

Customers can adjust the size of a subscription as their requirements change as well. Businesses that need more capacity can add it on a quarterly basis, while organizations with more capacity than they’re using can reduce their spending by up to 15 percent of a subscription’s total cost between quarters.

Significantly, Tech Data pays VARs that take advantage of TaaS the full value of new deals immediately, and pockets the monthly subscription payments itself.

“They’re getting the benefit of having their customer in a recurring revenue model, but they don’t really have the capital risk,” Rendleman says, adding that resellers who sell two to three-year IT subscriptions can also discuss hardware and software upgrades with their clients more frequently.

“When corporations buy hardware today, they may try to have a lifespan of five years on it,” Rendleman says. “We think this type of subscription offer will bring an accelerated refresh cycle.”

The TaaS program contains two core components. The first, called CapacityNow and originally created by Avnet Technology Solutions (ATS), lets business buy on-premises private cloud solutions through usage-based payments. Tech Data bought ATS from Phoenix-based distributor Avnet Inc. earlier this year for $2.6 billion.

The other component provides subscription purchasing options for hand-picked selections of desktop, laptops, tablets, wall-mounted conferencing displays, projectors, and other endpoints.

All a reseller has to do to take advantage of either component is contact their Tech Data account manager, who will quote them an as-a-service price on the specific set of technologies their customer wants to deploy. Deals must be at least $10,000 in size and last for a minimum 24-month term.

The ability to include lifecycle services in subscription purchases allows partners to outsource those functions if they wish to, or tap into Tech Data resources when selling to businesses with out-of-town offices.

“They could utilize Tech Data services to complement what they have to offer, and potentially get a bigger piece of the opportunity with that customer,” notes Rendleman, who adds that the ATS acquisition significantly expanded Tech Data’s ability to satisfy reseller demand for services assistance.

Demand for subscription-based purchasing options is relatively modest among end users at present, according to Rendleman, but Tech Data expects it to experience the same swift ascent that cloud computing went through earlier.

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