One of the key reasons why Network-as-a-Service (NaaS) is so powerful is because it offers greater agility. But what economic impact does agility have? The easiest aspect of agility to understand is speed to deploy. You don’t have to wait for weeks and months to get interconnection bandwidth at scale, so you can get to market faster, and meet business needs on time with much lower management overhead. But a less obvious economic impact of agility is that it can save a ton of money by reducing stranded Wide Area Network (WAN) capacity.
Why Assets and Capacity Get Stranded
To understand the economics of NaaS and stranded WAN capacity, it’s helpful to understand that assets and capacity get stranded due to changing conditions and inefficient usage.
In economics, stranded assets refer to assets that have “suffered from unanticipated or premature write-downs, devaluation or conversion to liabilities,” per Lloyds, primarily due to changing conditions that make assets less valuable. The impact of change is key. To use the proverbial example, all the capital related to the manufacture and inventorying of buggy whips became stranded due to a shift in transportation technology and consumer demand, from horses to cars. That’s an example of a gradual shift in a market. Of course, we’ve come a long way from that era, and in the digital business age, market shifts happen a lot faster.
Speaking of the digital age, in the data center world, the notion of stranded capacity is commonly related to the inefficient use of cooling equipment. According to research conducted by Upsite Technologies of 45 data centers worldwide, “the average data center uses 3.9 times more cooling capacity than IT load. This excessive use of cooling results from an inadequate airflow management strategy, as well as the misunderstanding and misdiagnoses of cooling problems.” As a result, data center operations can strand a significant portion of their cooling capacity.
So how does this all relate to WAN capacity? First, let’s look at the shape of the enterprise WAN today.
A Tale of Two WAN Domains
The modern enterprise is evolving to have two distinct domains in its WAN. The first is the “service edge access” domain. This is the portion of the WAN used to connect users to the service edge of the IT infrastructure, where they can access applications and services. The service edge access domain includes SD-WAN and last-mile telco links that connect offices, retail and other sites; SASE tunnels that connect home offices and remote users; and CDNs that connect Internet users such as consumers and partners to applications.
The other domain is the cloud core. This is the new backbone of the digital enterprise, interconnecting hybrid and multi-cloud infrastructure such as public cloud VPCs, colocation-based private cloud data centers, enterprise SaaS, and independent cloud provider instances.
How WAN Capacity Gets Stranded
Just like with buggy whips and data center cooling utilization, WAN capacity can get stranded due to demand changes and inefficient practices. As an example of demand change, let’s look at the mother of all WAN disruptions—the one forced by the pandemic.
Most of the attention on this sudden change understandably focused on end-users moving from branch offices to home offices and remote work, and how that affected the service edge access portion of the enterprise WAN. SD-WAN projects ground to a halt. Branch office WAN circuits suddenly turned into stranded capacity with nobody using them. And SASE providers like Zscaler and Palo Alto Networks and remote work monitoring companies had an absolute field day meeting the demand transition to home Internet connections. However, there’s a whole other side to this demand shift story that gets less attention but is just as important.
When the pandemic hit, the move to home work also caused an earthquake in the bandwidth profile of the cloud core for tons of organizations because the demand for digitally transformed business processes and services skyrocketed. Digital services are built and delivered on a highly distributed basis, so high-performance connectivity had to scale fast to ensure good user experience.
In addition, users had scattered to the four winds so they were accessing network edges from totally different places than they used to. As a result, bandwidth demand in the core digital delivery infrastructure not only rose quickly but also redistributed geographically. It’s relatively easy to imagine what happened to the backbones of large digital services providers like Zoom and Webex—tectonic shifts. But the same held true for thousands of other organizations.
What happened in the pandemic was exceptional in its scope, but absolutely representative of the unpredictable nature of digital business demands—they can change rapidly, so core IT infrastructure and interconnectivity must be able to change with them. And remember digital unpredictability isn’t just driven by consumer demand changes, but also by continuous transformation of business processes, automation, software integration, analytics, and rapid innovation. Think of merger and acquisition scenarios. M&A has always been disruptive, but now you have a huge amount of pressure to integrate systems, rationalize different hybrid cloud infrastructure and software stacks, and connect and utilize data sets.
Here’s where change and inefficiency create the big uh-oh for stranding WAN capacity. Traditional ways of procuring and consuming core connectivity are prone to gross inefficiencies and inflexibility from the get-go, and those inefficiencies are amplified by digital unpredictability.
Okay, so let’s pretend there’s no such thing as digital business. When you rely on traditional telecom interconnection services that come with multi-year contracts, you automatically strand a significant amount of your WAN capacity by the very nature of the procurement process. The reason is that when you procure interconnections on a multi-year contract, you have to purchase at the peak anticipated bandwidth required three years from now. If you assume that there’s 25% growth in bandwidth required in year 2 and 3, then from day one, you’re paying for 50% more capacity than you need. Cue the picture of cash burning.
But what happens when you have a demand shift that makes a linkless relevant? If you’re in a multi-year contract, the answer is: too bad, you may end up with mad amounts of stranded bandwidth. Ouch.
Oh yeah, and let’s not forget that it can take a devilishly long time to stand up new circuits with traditional circuits, so not only are you burning stranded capacity when things change, but you may not be able to deploy bandwidth where it’s required fast enough to fulfill the needs of the business. Double Ouch.
The answer is so simple: NaaS
Network-as-a-Service is meant to destroy the outmoded concept of forcing you to consume cloud connectivity in the timeframes it takes to contract and construct an office building. Rather, it turns connectivity into a cloud service. Rapid, on-demand deployment, flexible consumption terms. Like Infrastructure-as-a-Service (IaaS)? You’ll love NaaS.