Telecom SaaS | Turning hurdles into opportunities


With software-as-a-service (SaaS), communications service providers (CSPs) access the software needed to run their networks on demand as a subscription-based service – achieving faster time to value, improved financial performance and greater business agility. Yet, some still express concerns about the SaaS model.

Three common hurdles can make it challenging for CSPs to embrace SaaS. But by addressing them directly, CSPs can learn their initial perceptions might not align with what SaaS can offer.

Hurdle 1: Total cost of ownership

Perhaps the biggest concern for finance/procurement is the perceived total cost of ownership (TCO) of SaaS compared to the “perpetual licensing” model, which involves an upfront software license cost and indefinite usage rights.

Many understand the advantages of SaaS as a spread expense, with software costs distributed over time and the SaaS vendor responsible for the software’s infrastructure. Yet, perpetual licensing is still perceived as a better investment over the long run. However, this view may not account for hidden operational costs of non-SaaS deployments.

With non-SaaS deployments, CSPs must purchase or use their own physical or cloud infrastructure, driving costs related to power, cooling and physical storage space. Additionally, dedicated in-house expertise is needed to maintain the hardware or cloud infrastructure, leading to significant staff training or hiring costs.

Costs are also associated with backup, disaster recovery and security, and with ensuring compliance with regulatory requirements. Plus, the software itself needs to be manually patched, updated and upgraded regularly. And for services such as data analytics, machine learning algorithms need to be retrained at least twice a year to keep them accurate, which can require weeks of data scientists’ work.

In comparison, SaaS vendors own all those responsibilities for a single, all-inclusive subscription fee that’s highly predictable, making it easier to forecast future spending. This also spreads investment risk over time while sharing that risk between the CSP and the SaaS vendor.

In addition, SaaS can be a revenue generator. With the “pay as you grow” approach of SaaS, CSPs can quickly and easily scale services to experiment with new ideas and get new offerings to market faster. Should the offerings fail, they aren’t stuck with unused hardware.

Consider a CSP that plans to deploy a new security service. With a SaaS deployment, they can reduce the proof-of-concept time by weeks and cost by nearly half compared to a non-SaaS deployment, which would require hardware and infrastructure investments. For implementation and integration, non-SaaS deployments can take about one year to complete because of the many site installations required; with SaaS, the service is ready in a fraction of the time, meaning CSPs can start monetizing the service much earlier.

Overall, the return on investment far exceeds the long-term software costs associated with SaaS. In fact, research by Analysys Mason found moving to SaaS from an on-premises software model can reduce CSPs’ IT costs by 25% over five years.

Hurdle 2: Control

Technology leaders are used to controlling every aspect of operations, including what cloud provider they use and how services are run. For many, SaaS seems like a loss of control. Some also believe moving to SaaS will lead to a loss of in-house roles and could take away a competitive differentiator, if everybody uses the same SaaS platform.

In reality, SaaS can be managed quite granularly from an operational and accounting standpoint. Dashboards and application programming interfaces (APIs) give CSPs an exact view of usage, incidents, spending and more. This can’t always be said for self-managed, non-SaaS software.

Yes, SaaS may change organizational roles, but it also re-directs resources toward more strategic business priorities. Rather than focusing on time-consuming tasks such as managing their own technology components, staff can use that time to launch new value-added services and build application development ecosystems.

Ultimately, moving to SaaS can empower staff to focus on innovation. Through software development kits and APIs, application developers can embed network capabilities and SaaS components into their offerings to create new kinds of apps and experiences. In turn, CSPs can monetize the network beyond connectivity. In fact, Gartner projects the digital application ecosystem market will grow by 30% annually, while the connectivity market will remain flat.

 Hurdle 3: Security

Compliance and security officers are often reluctant to embrace SaaS due to fears that workloads and data are moving outside controlled environments. The public cloud seems especially risky, raising concerns in data security, data privacy, data residency and data sovereignty.

It’s understandable that CSPs have such concerns given what’s at stake. That said, SaaS deployments in the public cloud are secure.

Leading cloud computing companies are under intense pressure to ensure their infrastructures are exceptionally resilient, available and secure — their global brands depend on it. They invest more into security systems, technologies and capabilities than most CSPs could match.

They also enforce strict data isolation policies: engineers and all other personnel have zero access to customer data and only strictly controlled access to the hardware data runs on. Within multi-tenant environments, SaaS providers’ systems can guarantee data isolation by design.

What’s more, SaaS vendors offer additional security on top of what the cloud providers bring. By working with many CSPs and enterprises around the world, they have accumulated extensive knowledge in areas like regulatory compliance and data encryption.

Overlapping layers of defense-in-depth capabilities protect everything from the network perimeter to the data travelling across it. Traffic that isn’t routed over public internet, single-tenant architectures can be provided for workloads or CSPs that require them, and strict approval processes limit the SaaS vendor’s ability to move data from one cloud environment to another. In the end, CSPs have ultimate oversight and authority over their SaaS data.

It’s time to start the SaaS journey

SaaS represents a major mind shift in how CSPs do business. But accessing network operations and management via SaaS isn’t as big of a leap as they might think.

Many CSPs already have a large SaaS presence, accessing mission-critical platforms such as Microsoft 365 or Salesforce over the cloud. The future will only see more cloud-native solutions for telecom. For example, many 5G standalone core integrations happen on the public cloud, including DISH’s deployment of the first U.S. standalone 5G cloud network on AWS.

As they address their concerns, CSPs must understand these are hurdles, not roadblocks, in the path to SaaS and vaulting over them doesn’t require going “all in” today. It can be gradual starting with areas like analytics, security and monetization.

By starting their journeys now, they lay the foundation for better, more efficient and more agile operations.