SaaS services can cut costs by 25 per cent

Research by Analysys Mason, commissioned by Nokia, has revealed the potential benefits of CSPs moving to SaaS offerings. Benefits could include lower initial investment, always having the latest software, and being able to launch new services faster.

The researchers also found that CSPs that move to SaaS offerings can realise IT cost savings of approximately 25 per cent over a five-year period. The projected reduction compares to the cost of the traditional on-premise model of software delivery and consumption, which entails CSPs having to buy, manage, and maintain their own hardware and software infrastructure.

While market perceptions exist of telecom SaaS services having higher longer-term costs due to recurring monthly subscriptions, Analysys Mason said those perceptions did not typically take into account the full extent of potential benefits using SaaS services.

CSP spending on SaaS has increased in recent years, accounting for 5 per cent of CSPs’ operational expenditure in 2019. That is expected to rise to 11 per cent by 2023, as CSPs continue to execute on digital transformation projects.

Justin van der Lande, research director at Analysys Mason, said, “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 center resources, testing of changes and right scaling of hardware to best meet capacity needs; these all fall to the SaaS vendor.”

Mark Bunn, senior vice president, cloud and network services at Nokia, added, “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.”