Uncertainty persists, but enterprises rush to adopt network as a service

With a background of almost constant change, businesses across all industries are finding certainties scarce, but the need to be more flexible and agile could be among these rare creatures, leading to the adoption of consumption models like network as a service (NaaS) to ensure they can adapt as their demands change. As a result, ABI Research forecasts that over 90% of enterprises will consume at least 25% of their network services in this new usage-based consumption model by 2030.

The analyst’s Enterprise opportunities in network as a service adoption application analysis report notes that fundamentally the NaaS paradigm is a more flexible way for enterprises to consume critical and non-critical network services. It enables enterprises to consume cloud-delivered services on-demand and in real time without owning, building, maintaining and, in some cases, deploying their infrastructure on-premise.

“Deploying networks ‘as a service’ will become a cornerstone of any successful enterprise digital transformation. It provides greater time-to-value for new sites or use cases, optimises cloud strategies, and increases networking control by abstracting hardware and providing centralised management,” noted Reece Hayden, distributed and edge compute analyst at ABI Research. “This brings massive financial and operational efficiency opportunities and moving forward will have a value proposition that resonates strongly across nearly every major enterprise vertical.”

ABI predicts that over the next seven years, NaaS will play a prominent role within most enterprise digital transformation strategies across multiple verticals and sizes. But it cautions that not all enterprises will adopt the consumption model in the short term. “Cloud-native enterprises and startups will be the earliest adopters, with SMEs and multinational companies lagging,” explained Hayden. “These adoption discrepancies result from different internal structures and value drivers. For example, a startup will prize quick time-to-value and low barriers to entry (which NaaS offers).”

At the same time, multinationals may focus more on security and on-premise physical infrastructure. Long-term expectations for NaaS adoption seem reasonable, but currently, the market remains stagnant, with enterprise adoption highly constrained to certain software-defined networking (SD-WAN) services. The report suggested this market nascency was a result of enterprise scepticism, confusion and risk aversion.

“Although enterprises can see the operational value NaaS could bring, they worry about the potentially higher total cost of ownership (TCO), day-to-day management challenges and risk of significant fluctuations in monthly bills,” Hayden added. “This leaves a massive challenge for communications service providers (CSPs).”

The report acknowledged that CSPs have made large strides over the past few years as they look to leverage their underlying infrastructure to climb the digital value chain by delivering cloud-enabled integrated network services. It emphasises that accelerating NaaS adoption should be a top priority for CSPs as it offers a clear avenue towards network monetisation through over-the-top (OTT) service delivery.

“CSPs must first invest heavily in their NaaS solution looking to integrate automation and drive platform openness,” Hayden recommended. “On top of this, they must look to develop a partnership ecosystem comprised of systems integrators and network service partners.”

These initial steps will lower the barrier to deployment, said the analyst, especially for MNCs weighed down by legacy contracts and large brownfield deployments, and introduce a trusted channel partner that can help ease the path to deployment. But it stressed more needs to be done beyond platform investment.

The report urged CSPs to work with enterprises to ease nerves through education and what it called “innovative” pricing support strategies that help mitigate some of the financial risk involved in this new consumption model. The report highlighted how many of the leaders in the NaaS market are already focusing heavily on FinOps and looking to deploy pricing controls that will play a pivotal step in accelerating enterprise NaaS adoption.

Concluding, ABI Research noted that enterprises of all shapes and sizes, from hospital groups to sports stadiums, can derive enormous financial and operational value from NaaS deployment as a cornerstone of their digital transformation strategy. But taking the plunge into this new and very different consumption model can be scary, especially given current global macroeconomic conditions and a long list of brownfield network service contracts.