How to avoid the Network-as-a-Service shell game
I cannot tell you how many times one of my clients or contacts has complained about the difficulties in obtaining approval for the network budget. If I had never met a CFO in person, the description these people would have given me would have led me to expect something like a troll or a zombie, determined to eat up projects and maybe people too. Do we wear garlic when we visit the CFO, or maybe we sing before the meeting, or could there be a more hands-on approach?
CFOs aren’t just trying to mess up a good tech project (at least most of the time), they’re trying to validate two basic financial rules that govern tech purchases. The first rule is that any project must advance the financial situation of a company and not harm it. It seems logical, but it is often difficult to assess what is the return on investment (ROI) of a project. The second rule is that you don’t want to buy equipment that you will have to replace before it is completely depreciated. The useful life of something should be at least as long as the financial life set by tax laws.
An obvious way to approach rule two is to avoid buying something that needs to be amortized, which means that if you can spend something as a service rather than installing capital goods, you are avoiding rule two bullets. Spending also makes it easier to calculate ROI, as there aren’t any complex financial calculations involving things like cost of money when you’re not making capital purchases. One of the things businesses love about the cloud is that you don’t buy data centers, you buy data center service.
This spending substitute for investments is an old networking concept. Today, rather than building a private network with leased connections and routers, most businesses use virtual private networks. VPNs are now augmented or replaced by managed SD-WAN services, which is also a virtual network technology. You probably won’t be surprised to learn that we have a name for what comes next in networking. The cloud gave us “as a service”, so we’re starting to hear about network as a service or NaaS. It’s also not surprising that NaaS already means different things to different people.
The only element common to all definitions of NaaS is the substitution of expenditures for capital purchases. Service providers see NaaS as a VPN / SD-WAN with a lot of customization and agility. The cloud allows you to scale up and scale down and replace something that breaks down, and service providers see NaaS moving in those directions, even to the point where individual applications or users might have their own virtual networks adding to it. or subtract endpoints and capacity as needed. You then pay for your consumption.
Suppliers are in a more difficult position here because it is their equipment that the NaaS service provider’s vision is transforming into service. Large network operators have economies of scale that businesses cannot match, so less equipment would be sold to create a NaaS service than to support the private network. In addition, it is difficult for equipment vendors to differentiate their offerings when they are hidden in a NaaS cloud.
Cisco, the equipment supplier best known for its marketing skills, has a solution. They start from the idea that NaaS means you spend something rather than capitalizing on it, and this is how Cisco’s website opens its discussion on NaaS. Cisco goes further, however, with an emerging concept they call Cisco Plus. This slogan will cover not only NaaS but also cloud computing, edge computing, virtual office, etc. Everything as a service – from Cisco, of course.
It’s hard to say exactly how it all works at this point, but it looks like what Cisco is planning to do is combine both IT and networking in a common Cisco cloud model, accessible through an edge. secure access service (SASE). You would likely pay a flat access fee to your network provider to connect and then pay for the features, connectivity, and capacity you use.
Before you get too excited to face the CFO shouting “Cisco-Plus-NaaS”, to force a retreat into one of those dark caverns, consider that NaaS isn’t fully responding to both of us. project justification rules, it just falls through a different set of cracks.
Our rule 1 states that your project must achieve financial goals, that is, a target return on investment. NaaS makes it easier to determine whether a project meets CFO goals, but remember that anything sold as a service should include a profit margin for the seller. The cloud hasn’t replaced all data centers, not because of the intransigence of the CIO, but because the cloud isn’t always cheaper. NaaS wouldn’t always be cheaper either, so a NaaS-based project would have to prove that it’s a better strategy than buying capital. Your trip to the CFO’s office just got more complicated.
Another problem with NaaS is cost control. With traditional networking, you pay a fixed amount for a fixed capacity. Your cost is predictable. Any kind of consumption-based pricing is likely to generate some truly mind-blowing bills if usage is greater than expected, and most of these systems really fail to guarantee that excess usage will not occur. Serverless cloud computing customers are already complaining about cost overruns of several hundred percent. It seems like you can either face your CFO when approving the project, or face your CFO when you’re blowing your budget. The latter is probably not a good career choice for you.
Perhaps the biggest networking problem we have isn’t the CFO, it’s the bandwagon. We seem to expect any new technology to be the best because it is the latest and will sweep away old technology. We jump on every moving train. The cloud has not swept the data centers. VPNs haven’t eliminated the sale of routers to businesses, and serverless hasn’t replaced all other forms of cloud computing. Network as a service is not always a good idea.
Where is this a good idea? NaaS is good where usage is highly variable, as fixed price solutions in this situation would mean paying for peak usage all the time. It is also a good idea when support for the purchased network technology is difficult for a user to provide. Operating costs are often overlooked in justifications for NaaS projects, yet CFOs tell me that operating costs are often what tip the balance from rejection to approval. So, yes, you also have to estimate them.
The point here is that there is no easy way to justify network projects, and new offerings like NaaS are likely to make the justification harder, not easier, because you will need to know a parcel more about the applications, traffic and users of a network than ever before. You will need statistics and charts, and you will need to be able to calculate the cost of all NaaS options compared to traditional VPNs and SD-WAN.
Oh, what should I do? Get your sales people to help you. Ask them to do a specific business case for what they want to sell you, not just hand you a packed business case that the seller or service provider likely paid someone to write. . Take some of your past experiences with your own CFO and translate it into your own vendor conference game face, then let vendors / vendors worry about garlic, chants, and NaaS, while you consider moving to a local office.
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