Analyst firm Dell'Oro Group is set to release an advanced research report focused on the enterprise campus network-as-a-service (NaaS) and public cloud-managed LAN markets next month. Lead analyst Siân Morgan gave SDxCentral a preview of the report's highlights and how these two markets relate to each other.

If enterprises looking for a NaaS solution take away anything from the report, it should be that "the word NaaS can mean all sorts of very different things," and there's a significant lack of industry-wide accepted NaaS terminology. "It's a nascent market," Morgan said.

While the firm's analysis of the market's total value is still under wraps, Morgan shared that the report evaluates NaaS as a subset of the public cloud–managed LAN market. "Most of these [NaaS] services only make sense" if they're delivered in a way that allows equipment to be managed from a central point in the cloud, which is a key functionality of true NaaS offerings.

Dell'Oro defines a campus NaaS offering as layer-two and layer-three connectivity within the campus delivered in a cloud-consumption model, typically through a subscription. Enterprises pay monthly to rent network equipment, "along with the monthly charge [they'd] normally be paying for cloud management services," Morgan said.

From a customer's perspective, these offerings usually include network management services and may enable network elasticity: a simple scaling up and down based on traffic needs.

"But confusingly," Morgan said, the cloud delivery model isn't always present in offerings that vendors market as NaaS, and neither is the hardware financing. "Some services actually offer the option to buy the equipment up front, even though it's labeled NaaS," she noted.

One of today's major drivers of NaaS market growth is the lack of skilled IT talent. "Companies are finding it harder and harder to find skilled resources to run their networks," Morgan said. "[NaaS] offers that automate a lot of the operations of IT networks are quite attractive because of that."

Predictable pricing is another element supporting the NaaS market's growth. In the current macroeconomic environment, if organizations don't need to "shell out huge amounts of money" to purchase network equipment, that's "very attractive" — especially for universities or non-governmental organizations funded by donations or foundations.

On the flip side, Morgan noted rising interest rates might be an inhibitor to the market's growth. Since NaaS changes large upfront costs into a regular monthly fee, "that recurring price often involves financing behind the scenes," she said.

Cultural differences based on certain industry verticals or country cultures could also inhibit NaaS growth if those organizations are "not as open to outsourcing their network," Morgan said. In some circumstances, however, cultural differences "could be a catalyst," she pointed out.

According to Dell'Oro, the public cloud-managed LAN market "involves managing LAN connectivity equipment — whether it's wireless LAN or switching — from a public cloud," Morgan said. Equipment providers either use their own cloud for central management, or they have a presence in one of the hyperscale cloud providers like Amazon Web Services (AWS), Microsoft Azure or Google Cloud, and that's where "the management application is located."

But while public cloud management is a technology architecture for LAN, campus NaaS is "actually both a technology architecture and a commercial positioning," Morgan said.

To that point, incumbent NaaS vendors are "watching new entrants carefully," she noted. "Startups with cutting-edge technology and innovative commercial strategies are seeing an opportunity to make a dent in the market."

Some of the newer vendors may be targets for acquisition by the bigger players in the next few years, but those startups might also try to forge their own new and innovative paths. Whichever way it goes, "that's going to be an interesting thing to watch," Morgan noted.