Information technology consumption services are a hot category these days, and for a good reason. The ability for enterprises and service providers to treat infrastructure as an operational expense provides certain balance sheet advantages. Especially given recent inflationary pressures, the outright purchase of networking gear might not be in the cards many businesses.
The good news is that nearly all tier-one networking infrastructure providers offer Networking as a Service (NaaS). However, as with any new category, there is some market confusion around NaaS. What defines a complete NaaS offering? What should stakeholders and decision-makers consider in the evaluation of a comprehensive offering? At Cisco’s behest, I recently conducted a research study on NaaS, focusing specifically on SD-WAN and SASE offerings. I want to provide my insights and key takeaways from the study and subsequent conversations I had with Cisco executives.
What does a NaaS offering encompass?
NaaS is a flexible consumption model for connectivity hardware, software, and support services. From my perspective, a complete NaaS offering includes several key elements. For one, it requires a highly scalable cloud-native architecture. Additionally, it should incorporate a high degree of automation, artificial intelligence (AI) and machine learning (ML) capabilities to facilitate self-healing, observability and assurance. NaaS promises to harden security through a continuous integration, delivery and deployment pipeline. This architectural approach also allows businesses to tailor performance optimization to specific workloads. Additional potential benefits include a guaranteed quality of service, improved IT agility and resource management for line-of-business support. Last, but not least, of course, is the ability to treat infrastructure as an operational expense on the balance sheet. I believe this is particularly important in the current moment, given the recent spike in inflation.
Cisco announced its intention to enter the category, under the branding Cisco+, in the spring of 2021, at its signature Live! event. The initial offering focuses on Secure Access Service Edge (SASE), which marries SD-WAN functionality and security with the Cisco+ Hybrid Cloud. The service also includes data center compute and storage capabilities. I expect Cisco’s NaaS portfolio to expand over the next year to include more options.
Research summary findings
Cisco recently published its take on the NaaS opportunity in its 2022 Global Networking Trends Report, and many of its findings aligned well with my definition of what constitutes a complete NaaS offering. NaaS should deliver improved IT staff resilience, agility, line of business support, faster access to the latest technologies and quality of service. In my opinion, Cisco’s research is worth a read for enterprises considering the leap to a networking subscription service.
I also conducted NaaS research in late 2021 and came to several conclusions. First and foremost, security integration is paramount. Simply bolting on a third-party security point solution comes at the risk of implementation errors and higher integration costs. A NaaS platform takes the guesswork away. Second, automation, as well as AIOps, is a critical element of any NaaS offering. Automation facilitates maximum connectivity uptime. Finally, I believe one of the most significant opportunities for NaaS is its role in private 5G network deployments. Amazon Web Services validated this conclusion with its 5G as a Service announcement at its re:Invent event last December. I expect Cisco to launch a similar service this year.
I believe that NaaS is poised for robust adoption this year and beyond. The benefits are compelling from a deployment, ongoing management and procurement perspective. Cisco will be competing for share among the traditional incumbents, a host of start-ups and others. However, given its deep networking roadmap, strategic acquisitions and focus on customer experience, I bet that the company will emerge in a handful of front runners.
Disclosure: My firm, Moor Insights & Strategy, like all research and analyst firms, provides or has provided research, analysis, advising, and/or consulting to many high-tech companies in the industry including Cisco Systems, cited or related to this article. I do not hold any equity positions with any companies cited in this column.