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How is Network as a Service (NaaS) different from a lease?

NaaS can help organisations increase their flexibility and lower their risk compared to traditional equipment financing methods, writes Mandy Duncan, Aruba Country Manager, South Africa

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NaaS can help organisations increase their flexibility
Mandy Duncan, Aruba Country Manager, South Africa

Many people think of Network as a Service (NaaS) without the managed services component as simply a lease of the hardware and software.

However, there are some key differences. Each implementation and experience working with various vendors will differ, but some highlights include the following:

1. Contracts

The lease of hardware and software involves the same ordering process as making a purchase. Multiple purchase orders and separate support agreements are involved.

With NaaS agreements, typically a single statement of work (SOW) provides a customised solution built for optimised performance and business outcomes that are inclusive of hardware, software, support, and services.

2. Overprovisioning 

Leasing hardware and software requires the same rigorous planning when an organisation makes a large capital investment, often procured as a one-time event.

This leads to the added cost and inherent risks of overprovisioning or under provisioning. NaaS delivers the flexibility to overcome those challenges.

3. Liability and risk 

The pace of change in technology and added devices can often expose networks to security vulnerabilities. NaaS often reduces these risks by ensuring the latest features and functions are implemented at all times.

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Ideal NaaS services include additional insights and analytics, provided through a dashboard, on the operational conditions of the network environment.

Leasing is focused only on the financing of the network hardware and software, typically in a static environment without active services and analytic tools to drive optimal performance.

4. Balance sheet flexibility 

All accounting practices differ within each organisation. NaaS is often supported as an operating expenses (OPEX) model, with some organisations preferring to categorise NaaS as capital expenditures (CAPEX).

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From the CIO perspective, NaaS is aligned to an operational IT budget point of view. From the CFO perspective, it is typically a question related to financial statements. The benefit of NaaS is that it is a usage-based agreement delivering services for the OPEX point of view.

For example, a simple NaaS stock keeping unit (SKU) associated as a service-based delivered service could be more easily consumed from an OPEX perspective.

5. Asset management 

NaaS often includes intelligent deployments for achieving the best business outcomes. This includes asset management of all hardware, software, support, and service components. Leasing typically adds more decision layers, such as purchasing, renewing, or renegotiating multiple lease schedules.

The holistic approach to a NaaSSOW alleviates organisations from the burden and resources of asset management.

Consequently, while there can be vast differences between a lease and a NaaS implementation, careful consideration needs to occur with each individual organisation to assess the best method to meet its business needs.

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NaaS offers more flexibility in the financial treatment of network deployments for organisations. Careful consideration should be done with advice and consultation from accounting and finance professionals.

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