Ecosystem Partnerships Will Help Soothe Some Enterprise Network-as-a-Service Concerns, But Financial Risk Still Looms Large

Enterprise Network-as-a-Service (NaaS) is a cloud-delivered, ‘pay-as-you-go’ consumption model that allows enterprises to ‘rent’ rather than buy network services. Traditional network consumption models rely on enterprises outright purchasing the hardware component and then licensing the software. With NaaS, CSPs will typically provide the network hardware for free (or at a fraction of its actual capital cost), then the enterprise pays for the services that it actually consumes on a month-to-month basis. This brings huge operational benefits in terms of the flexibility to scale up and down network services in real-time, while also enabling on-going technology refresh. But questions still remain over NaaS’ financial and operational value.

• Financial: Many enterprises remain skeptical over one, NaaS’ potentially higher life cycle Total Cost of Ownership (TCO) as compared to traditional network consumption models; two, the risk of unexpectedly high monthly bills due to excessive network usage; and three, managing monthly bills.
• Operation: Brownfield integration concerns and existing network service contracts make NaaS deployment challenging, especially given the potential operational issues created by asymmetric networking across a Multi-National Corporation (MNC).

These concerns have led to sluggish uptake, especially among ‘big ticket’ MNCs. To ease NaaS deployment concerns, CSPs are looking to build partnerships with System Integrators (Sis) to take advantage of their position as ‘trusted enterprise advisors’. Verizon Business and Wipro are one such example. Verizon has entered into a multi-year partnership with Wipro, through which the former provides its NaaS capabilities to the latter. Wipro will utilize these ‘on-demand’ networking services as part of its enterprise digital transformation solution. By partnering with Wipro, Verizon is hoping to leverage their status as a ‘trusted advisor and partner’ for enterprise digital transformation and gain access to ‘big ticket’ clients with large, global network footprints. Wipro’s enterprise relationships can provide a reliable channel to market, while their expertise will help soothe enterprise operational and financial worries, especially within challenging brownfield implementations.

With a value proposition that is not yet resonating strongly with enterprises, CSPs must look to augment their go-to-market and innovation strategy through partnerships. The importance of partnerships can be considered from two different perspectives.

• Channel-to-Market

NaaS should be viewed as a key link within the enterprise’s digital transformation story. This is because it provides the flexibility, agility, and cloud connectivity necessary to scale to meet digitalization demands. For this reason, partnering with digital transformation specialists like SIs present a perfect channel to market for enterprise NaaS. SIs provide the link between the CSP and the enterprise. They understand the specific use cases and pain points that different enterprise verticals will face. In addition, they can sell NaaS as part of their digital transformation solution and can position it as the key link to support key value creators such as a cloud application, Internet of Things (IoT), and edge. Purchasing NaaS from SIs, as compared to CSPs, is hugely valuable for enterprises as they can further abstract complexity from deployment and integration across the network footprint. This will contribute to a higher proportion of brownfield deployments within MNCs, as trusted SIs can soothe enterprise operational concerns.

• Integration onto NaaS Platforms

Existing network service contracts (especially Software-defined Wide Area Network (SD-WAN), given the recent growth in adoption across verticals) present major hurdles to NaaS adoption due to both operational (managerial) and financial (running multiple services) considerations. Overcoming these challenges relies upon NaaS vendors growing their platform ecosystem with service vendors. In the short run, CSPs must develop partnerships across SD-WAN, cybersecurity, Software-as-a-Service (SaaS), and cloud vendors. This will, not only, increase NaaSs’ value propositions, but it will also enable enterprises to deploy NaaS with limited or no disruption to their existing network service contracts. In the long run, platform openness should be the ambition, through which open Application Program Interfaces (APIs) enable the integration of any third-party network service within the platform.

Developing partnerships with SIs and IT vendors will begin to soothe enterprise operational concerns and help enhance the platforms value proposition. But given the geopolitical and economic challenges enterprises are facing, enterprises will increasingly become more risk averse with financial considerations front of mind. This is especially true as the looming global recession will lead to an environment of aggressive cost cutting. CSPs must do a lot more now to drive NaaS deployment by addressing enterprise financial concerns:

• Complete price visibility: CSPs must ensure that enterprises are aware of each cost associated with NaaS from hardware all the way through to egress fees and early cancellation fees.
• Innovative pricing strategies: For enterprises, especially MNCs with large network footprints, unexpectedly high bills are one of the key challenges they face with NaaS. Data surges with unlimited bandwidth could quickly add up and eliminate operational budgets. CSPs must mitigate this risk by putting in place safeguards and settings that can help enterprises control their NaaS costs.
• Enhanced FinOps tools: CSPs should heavily invest in cloud FinOps tools that offer enterprises granularity and control over their entire NaaS solution.
• Automation: As networks scale, the cost to manage services grows. Controlling these costs requires automation embedded across the entire network.
• Education: It’s not all doom and gloom. NaaS’ transition from Capital Expenditures (CapEx) to Operating Expenditures (OpEx) does have some financial benefits (‘time value of money’ and ‘OpEx tax incentives’), but often enterprises are unaware of them, instead focusing on headline Total Cost of Operations (TCO). CSPs must take the time to educate enterprises about how NaaS can provide financial benefits in the long run. Part of this is about including CFOs, as well as traditional CIO/CTOs, in the conversation. Enterprises need to change their mindset and begin to see networks as a revenue generator, not just about ‘keeping the lights on’.

NaaS has a long way to go. Enterprise financial and operational skepticism is rife and is only likely to grow as enterprises enter a global recession (which will make them more risk averse). CSPs will need to work hard to drive enterprise NaaS deployment and reap the lucrative benefits. Augmenting their channel to market strategy through SI partners with deep enterprise digital transformation expertise will be an important step as they can leverage their ‘trusted advisor’ status, as well as their understanding of where NaaS fits into each digitalization strategy. But alongside these partners, they must work harder to soothe financial concerns through innovative pricing tools/strategies and a compelling message that engages every c-suite decision maker from CTO through to the CFO.