Network-as-a-service market set for huge profits from SMEs

From 2019–25, extensive demand from telecom companies for NaaS will drive the market's landscape, providing greater flexibility to businesses and improving the performance of businesses' network infrastructure

14May

The global network-as-a-service (NaaS) market has been gaining a commendable impetus in recent years, as NaaS provides companies with greater flexibility and helps to improve the performance of their network infrastructure.

The worldwide NaaS market is also making major headway as enterprises of all sizes are striving to run IT infrastructure more efficiently, while methodically operating and managing their networks.

Business models such as NaaS promise the much-needed efficiency through an on-demand provisioning model. Companies can act more cost-consciously with on-demand purchasing as they only need to pay for the networking services they require.

NaaS helps businesses that demand provisioning flexibility without requiring to rearchitect networks from the ground up. NaaS also offers palpable return on investment by helping customers to trade capex for opex and refocusing person hours on other, more demanding priorities. Such benefits are majorly driving the NaaS market size, which is expected to surpass $50bn by 2025.

One of the instances that can demonstrate the growth of the NaaS market can be provided through the WAN-as-a-service segment which has been is slated to garner nearly 30% of NaaS market share by 2025. In traditional networking architectures, the hub of the network was built around a company's headquarters or a data center which housed most of the equipment for computing, storage, communications and security. This location traditionally hosted enterprise applications and traffic is typically backhauled to this location in case of people in branch and other remote locations.

This formula has recently started to fail the needs of many enterprises today, especially due to major migration to the cloud. The demand for cloud network services has also began to increase due to its networking cost-reduction capabilities.

Enterprises are also coming to prefer WAN infrastructure to connect remote employees and devices. The NaaS market has been capitalizing on such a shift, as enterprises show increased preference for NaaS offerings that help in minimizing costs associated with WAN networks management. NaaS models also eliminate the need of network rearchitecting and enable a subscription-based pricing model for enterprises.

Network function virtualization will act as yet another driving force for the NaaS market as telecommunication companies strive to meet the rising demand for bandwidth, cut down costs and speed up delivery of new services.

Companies are launching major initiatives that underline the acceleration of network function virtualization which in turn will help propel the NaaS market. For example, Canadian telecoms firm Bell Canada used an open network automation platform for the implementation of its first automation use case in early 2018, while US telecoms giant AT&T has announced that 75% of its network would be virtualized by 2020.

Market forces that have inspired the idea of network function virtualization have continued to raise pressure on telecommunication companies to make significant changes. While the revenue per megabyte of data has continued to become minimal, over-the-top businesses such as Uber and Netflix have contributed to the explosion of mobile data usage.

Estimates show that over the next few years, mobile video usage will grow by 870% and telecom companies are turning to transform their networks to survive such a tectonic shift in mobile data usage. Gradually, telecom companies are coming to add a considerable impetus to the growth and expansion of the NaaS market.

The NaaS market has garnered some of its most loyal customers among small-and-medium enterprises (SMEs) as NaaS allows companies to buy into infrastructure services and solutions that they could struggle to afford to purchase outright, instead paying a subscription to avail as needed.

The NaaS market through SMEs is expected to record a significant CAGR of 35% between 2019–25. This is because NaaS not only provides the bandwidth, flexibility and technology, as well as 24/7 support and on-call expertise that SMEs desperately need, but also saves such SMEs from the crippling one-off capex cost, swapping it with the predictable monthly opex bill.

With digital transformation, each and every aspect of all businesses have become highly competitive. This, however, is not an easy feat in an environment where technology seems to be changing daily.

More often than not, all businesses cannot afford to jump on to the bandwagon mostly due to cost challenges. With NaaS however, businesses of all sizes can afford become more flexible and scalable, remaining competitive by taking a risk of upgrading as the service can be easily cancelled if the business decides against its requirement.

Endowed with such a unique offering as making technology accessible, affordable and flexible, the NaaS market is poised to witness explosive expansion between 2019–25.

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