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A look at the direct and indirect financial drivers of NaaS

By Nick Harders, APJ Solutions Director
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The mainstream adoption of cloud has created an environment where CFOs are increasingly comfortable with consumption of IT in a flexible, as-a-service model. However, when it comes to Network as a Service (NaaS), there is rising interest but also significantly more hesitation.

NaaS, of course, is a new model of as-a-Service lifecycle solutions for the network combining hardware, software, services and support. Traditionally the network – which, until recently, has been largely hardware components - has fallen within the CapEx model, but NaaS flips it over to OpEx. You no longer purchase and maintain the network, you instead consume the network as a service.

NaaS has been brought to CFOs attention given that financial efficiency has emerged as one of the anticipated benefits. The main reason for hesitating lies with proving NaaS is a better model than currently used. Deciding whether to transition from traditional consumption models requires CFOs to weigh up the costs between old and new approaches, gauging both direct and indirect costs over the lifecycle of the technology. But the NaaS model incurs costs differently and uses different metrics, making financial comparisons difficult - but not impossible.

The financial benefits of NaaS impact many corners of IT operations, and today we want to speak to those areas, providing a pathway for CFOs to participate in the evaluation phase.

But first, in the below points, we do touch on the HPE GreenLake for Aruba solution, a market leader and pioneer in the NaaS space. Because we are focusing on the financials rather than a more general overview, you can learn more about HPE GreenLake for Aruba here.

Budgetary Control

Spikes in capital budget spending for network infrastructure put pressure on businesses, causing organisations to slow down acquisition of new network infrastructure. This makes the most obvious benefit the fact that you can shift from a CapEx procurement model to an OpEx one - NaaS provides financial flexibility and predictable monthly subscription charges rather than large upfront networking costs.

If you have leased networking infrastructure, you are already receiving the benefits of switching from CapEx to OpEx. However, a lease is typically aligned to the depreciation lifecycle of the infrastructure – we see this quite frequently in the range of 7-10 years. A lot can change in this amount of time.  To put this in context, the last 8 years has seen us jump from Wi-Fi 5 through Wi-Fi 6 and now into Wi-Fi 6E.  Technology iterates quickly, as do business requirements.

NaaS allows for more frequent technology refreshes (every 3-5 years) which better aligns to the speed at which technology evolves at the edge.  NaaS avoids lengthy lease terms and long depreciation lifecycles. Like HPE GreenLake for Aruba, many NaaS agreements offer expansion and renewal options included to ensure you stay on top of the latest networking technology.

Avoid Overprovisioning

 Optimising technology utilisation is another challenge confronting CFOs on the path to digital transformation. A challenge within the CapEx model is that it usually requires upfront prediction and planning of long-term capacity for the purpose of making infrastructure investments.  NaaS, on the other hand, can grow with your business to meet future capacity demands.

The network should be architected to address current network requirements today but designed in such a way that it enables scale out in future, which builds on existing capability and does not require wholesale replacement of existing network service components when business requirements change over time.  This right-sizes your networking environment from the start whilst optimising network utilisation and allowing you to scale out as your business grows.

Get it right and you can avoid overprovisioning on infrastructure and eliminate expenses for technology refreshes, which Forrester found could directly reduce HPE GreenLake customers historic TCO by up to 40%*.

Transition from Reactive to Proactive

Most organisations tend towards a reactive approach to network management. Anticipated benefits are realised immediately after deployment, but ongoing changes that occur frequently in these complex environments start to undermine your ability to understand and tune the network effectively.  Gartner reported that 70% of IT’s time is spent trying to troubleshoot the network* – and responding to false positives – creating noise as the ecosystem continues to evolve and grow.

On the flipside, industry reports suggest that Aruba’s NaaS solution delivers faster value with simplified IT operations and proper control.  Automated onboarding and upgrade processes ensure the customer can rapidly extract value from their network deployment.  For example, a Forrester Consulting survey revealed that GreenLake customers were able to accelerate deployments, reducing global IT project deployment time by 75%**.

Most enterprises find themselves caught in a reactive environment where fighting fires is the norm. NaaS can help create a preemptive environment where issues are identified before users are impacted and closed-loop remediation automates resolution.  This type of transition takes you from reactive to proactive, leveraging Aruba’s best practices for network design and ensuring your business needs and governance policies are met.

NaaS can also further progress towards a predictive environment where network telemetry drive ML-backed insights.  These typically identify trends and correlations that could lead to network interruptions or performance issues. In this type of predictive environment, AIOps delivers predictive change suggestions and operational automation to ensure early identification and prevention of issues.

By reducing the support load on IT and freeing them up to take on a more strategic role of supporting business initiatives, organisations can expect to see a 40% improvement in resource productivity*.

Network engineers can then align with other parts of the business and IT teams to ensure that the network becomes an asset to support business success. For example, they could work with app development teams to integrate network telemetry and deliver a rich user experience through mobile engagement and location analytics.  NaaS delivers the base network service, upon which network engineers can build additional business-centric value.

Conclusion

The traditional network deployment model has long been ripe for a makeover – by reframing the network as a service we can deliver increased agility to address changing network and business requirements. And NaaS really can be that enabler, fulfilling both your transformation and financial imperatives by achieving maximum ROI and faster time-to-value.

If you are considering NaaS for your organisation, Aruba’s expert teams are here to guide you every step of the way with a solution that best fits your needs and optimises the use of your resources.

* Gartner (2019), Gartner Identifies Five Cost Optimization Tactics for Marketing Leaders [ONLINE]. Available here.

** Forrester Consulting (2020), The Total Economic Impact™ of HPE GreenLake [ONLINE]. Available here.