Research from Analysys Mason indicates that communication service providers (CSPs) can reduce costs by roughly 25 percent over five years by adopting Software-as-a-Service (SaaS) solutions.
Commissioned by Nokia, the study compares the full cost of ownership for CSPs running their own hardware and software infrastructure versus using SaaS-based offerings.
Justin van der Lande, Research Director at Analysys Mason, commented:
“This research highlights many considerations CSPs must weigh when evaluating the increasingly attractive option of acquiring new capabilities via a SaaS model. In many cases, although SaaS appears more expensive on a simple license basis, the broader picture—significant savings in other areas and faster time to value for new services—often overcomes that perception.
Long-standing operational challenges are also avoided: CSPs no longer need to plan data center capacity, test every change internally, or scale hardware precisely to forecasted demand—those responsibilities shift to the SaaS provider.”
Analysys Mason notes that the common belief that SaaS is more costly over the long term because of recurring subscriptions often overlooks additional benefits, such as:
- Lower upfront capital expenditure
- Access to the latest technology and continuous improvements
- Greater reliability and resilience
- Reduced internal headcount for installation, maintenance, and upgrades
- Less training and faster onboarding for new capabilities
“Care should be taken to compare not only licensing fees for different deployment models but also costs associated with end-of-life upgrades, staffing, and maintenance,” Analysys Mason explains. “Only a full total-cost-of-ownership analysis will reveal the complete range of cost savings possible with a SaaS deployment.”
Outsourcing maintenance and operational responsibilities to a vendor can free internal teams to focus on revenue-generating activities. Resources that would otherwise be tied up in hardware and on-premises support can be redirected to strategic initiatives.
The analysts estimate that CSPs allocated about 5 percent of their operational expenditure to SaaS in 2019, a share expected to climb to approximately 11 percent by 2023.
“With monetisation of 5G assets high on their agenda, CSPs need cost-efficient tools that not only enable 5G delivery but also improve the return on their technology investments,” said Mark Bunn, Senior Vice President of Cloud and Network Services at Nokia.
“There is a compelling operational and financial case for shifting to SaaS today instead of continuing to buy customised software for analytics, security, and other functions that run on expensive, complex on-premises infrastructure.”
(Photo by Markus Winkler on Unsplash)
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