Research from Analysys Mason suggests that communication service providers (CSPs) can achieve cost savings of around 25 percent over five years by adopting SaaS.
The research – commissioned by Nokia – makes the projection based on comparing the cost of CSPs buying, managing, and maintaining their own hardware and software infrastructure.
Justin van der Lande, Research Director at Analysys Mason, said:
“As this research shows, there are many factors that CSPs need to weigh when looking at the increasingly attractive option of adopting new capabilities through a SaaS model.
In many scenarios, the long-term software costs associated with SaaS can be outweighed when CSPs consider the significant savings that are possible in other areas, as well as reduced time to value for the creation of new services.
Long-standing CSP pain points are also avoided: no more having to plan how data centre resources, testing of changes and right scaling of hardware to best meet capacity needs; these all fall to the SaaS vendor.”
Analysys Mason notes how the perception of SaaS costing more over the long-term due to recurring subscription costs often doesn’t take into account benefits including:
- Lower initial investment cost
- Always having the latest technology
- Reliability
- Fewer internal staff for installing, maintaining, and upgrading infrastructure
- Less training
“Care, therefore, should be taken to compare not just the licensing costs for various deployments, but also the costs associated with end-of-life upgrades, staffing, and maintenance in order to understand the full range of cost savings that can be achieved by using a SaaS-based deployment,” explained Analysys Mason.
“CSPs may gain more benefit by outsourcing the responsibility of a deployment’s maintenance to a vendor, thereby enabling internal staff to focus on improving revenue generation. This also means that resources that would have otherwise been spent on hardware can be spent elsewhere.”
The leading analysts estimate that CSPs spent around five percent of their operational expenditure on SaaS in 2019. By 2023, that’s expected to grow to 11 percent.
“With monetisation of 5G assets at the top of their agenda, CSPs need cost-effective tools that not only support delivering on the promise of 5G but strengthen their ability to get more value for their expenditure,” commented Mark Bunn, Senior Vice President of Cloud and Network Services at Nokia.
“There is a strong operational and financial case for moving to SaaS services today and away from the dated practice of buying customised software for analytics, security, and other functions that run on costly, complex, on-premise infrastructure.”
(Photo by Markus Winkler on Unsplash)
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