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What Are the Trends and Drivers Impacting NaaS Firms Like Cisco?

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Jun. 23 2016, Updated 2:06 p.m. ET

NFV and SDN: Key drivers for NaaS

As seen in the previous part of this series, technology (XLK) companies such as Cisco (CSCO), IBM (IBM), VMware (VMW), and Juniper (JNPR) provide Network-as-a-Service (or NaaS). These companies are also known as managed service providers (or MSPs).

One of the key drivers for the implementation of NaaS is the transition toward a more programmable, flexible, and virtual network, also known as SDN (software-defined networking) and NFV (network function virtualization).

This transition is focused on moving from a hardware-centric approach for networking toward a virtualized network environment. According to Infonetics Research, the SDN and NFV markets are expected to grow to $11 billion by 2018 from $2 billion in 2014.

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Shift from capex model

Enterprises are now looking to move from a capex (capital expenditure) model. According to Technavio, “Organizations worldwide adopt cloud computing technologies to reduce costs associated with managing enterprise IT infrastructure. They are shifting from CAPEX to OPEX model to gain cost efficiencies.”

Data security and privacy

Since the start of the IT revolution, data privacy and data security have been the primary concerns of enterprises. Business data is critical and although companies are now trying to implement cutting-edge technologies to prevent fraud, they are not 100% safe from cybercrime.

According to a research report from Technavio, “Clients, such as banks, corporations, and insurance companies, are wary of sharing business-critical data with cloud solution providers. They often hesitate to adopt cloud-powered technologies in processing sensitive financial data and information involving strategic decisions. This acts as a barrier to the growth of the global NaaS market.”

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