• Telcos are finally becoming 'cloud first' with their strategies
• Nokia is tapping into this with a SaaS model for multiple applications
• Analyst Caroline Chappell says Nokia is helping to break down telco resistance to SaaS

Nokia is launching a number of software-as-a-service (SaaS) offerings for telecoms operators just as the telcos are starting to accept that the way they operate and run their business processes in a 5G world needs to change.

So, great timing! And it's not often we can say that about a mainstream telecoms equipment maker.

The Finnish vendor announced its entry into the SaaS for telcos space, revealing that it will launch multiple SaaS offerings during the coming few months, starting with its Nokia Data Marketplace (NDM), the as-a-service data trading and AI offer it launched earlier this year, which is now commercially available through a SaaS framework. The new SaaS version of the NDM provides better automation, efficiency and scalability to telco and enterprise customers across verticals like energy, public sector, transportation, and smart cities, Nokia said.

Early next year it plans to add the SaaS-based NetGuard Cybersecurity Dome and Nokia Anomaly Detection offerings. The former adds automation to cybersecurity and shortens response times, as well as, in its own words, enabling telcos "to assure 5G networks and monetize security tied with services like 5G slicing" – this also appears to be a case of good timing, if Appledore Research is on the money – while the latter is a machine learning service aimed at finding and fixing network anomalies before they affect customers. It has also committed to unveiling other SaaS for CSP services in early 2022.

Further, Nokia aims to create three SaaS suites to house its various services: Digital Engagement; Marketplaces; and Networking. It's clear it has a plan.

And that's a good thing, given the size – and growth potential – of its addressable market. Nokia itself values the SaaS market it is targeting for both telcos and enterprises at US$3.1 billion and predicts an annual growth rate in the 25%-30% range between now and 2025. 

But that’s not the limit of the SaaS opportunities in the telecom sector. Analysys Mason puts the value of the global SaaS market for OSS and BSS at $10.7 billion in 2023, on the back of a 29.5% CAGR since 2018, driven by CSPs looking to reduce costs and improve agility as they roll out 5G-enabled services. SaaS will account for 16% of the overall BSS spending in 2023, and 12% of the total OSS spending, the firm predicts.

Meanwhile, Analysys Mason Research Director Caroline Chappell highlights a report produced by her company last year that puts the value of the global SaaS market for OSS and BSS at $10.7 billion in 2023, on the back of a 29.5% CAGR since 2018, driven by CSPs looking to reduce costs and improve agility as they roll out 5G-enabled services. SaaS will account for 16% of the overall BSS spending in 2023, and 12% of the total OSS spending, the firm predicts.

"We’ve seen an acceleration in the market adoption of BSS as SaaS – Salesforce and ServiceNow in particular – but there has been resistance to SaaS in other areas and few vendors, including the public cloud providers...have talked about SaaS," Analysys Mason Research Director Caroline Chappell explained to TelecomTV on Wednesday, though she notes that Microsoft Azure at least has the capabilities to offer 5G cloud-native functions as a service as a result of its Affirmed Networks and Metaswitch acquisitions and the development of Azure for Operators. 

That resistance “is partly because operators themselves have not so far been interested in this model," continued Chappell. "However, we agree with Nokia that there will be a sea change in the coming years as operators become more 'cloud-native' and 'cloud-first' in their thinking. We're seeing early signs of change in operator procurement strategies and growing interest in more agile procurement approaches, although the shift from capex to opex is still a concern for most."

Telcos have never been the most nimble or open to change, so 'early signs' is probably as much as we can hope for at this stage. And it does mean that Nokia is effectively getting in on the ground floor.

Indeed, Chappell's view is that Nokia is "leading the market in its vision for OSS/VNFs/CNFs in a SaaS model," which is something of a result for the vendor.

Nokia itself explains that it sees offering SaaS for CSPs as a natural evolution of its everything-as-a-service strategy and represents the culmination of its efforts in recent years to shift to cloud native software applications.

"To seize the 5G opportunity, CSPs need to shift away from the legacy practice of deploying customized software for analytics, security, network management, and other functions, that run on costly, complex, on-premise infrastructure," it said. That sounds more like a comment from a public cloud provider than an old school kit maker, doesn't it?

Indications are that telco customers – still of the old school variety, to an extent – are getting that message. Nokia says it is "in discussions with several CSPs around the world about using its SaaS services, including security." Whether non-disclosure clauses and the like allow for a customer announcement at some point remains to be seen. Either way, a tier one vendor and the telco community seem to be pulling in the same direction, and that's worth highlighting.

"This announcement is in line with Nokia wanting to present itself as the most cloud-friendly and cloud-capable of the big NEPs and the most able to lead operators into a cloud-first future," says Chappell. "From that perspective, they are pushing at an open door, as operators recognise (at last) that they need to come to grips with the cloud, not least if they're deploying/planning to deploy a 5G network, but also to accelerate their entire businesses."

- Mary Lennighan, reporting for TelecomTV