Network as a Service (NaaS) is one of the most popular new enterprise networking solutions. However, it’s challenging for managed service providers (MSPs) to sell because there are many technical components to consider, financial risk factors, and different methods for building your NaaS practice.
Before we became a software company, TechGrid used to be an MSP. From 2015-2021, we built our own Network as a Service practice that led to an 80% conversion rate when proposed to potential customers.
Taking the lessons that we learned, we’ve built a guide that will lay out the facts about building your own NaaS practice and how you can best get started.
What is NaaS?
What is NaaS?
Network as a Service (NaaS) is a utility-like subscription model that enables the flexible consumption of network infrastructure—including:
- Hardware
- Software
- Management tools
- Licenses
- Internet access
- Lifecycle services
Businesses can activate only the services that they need and orchestrate service delivery on an outcome basis — without having to own, build, or maintain their network infrastructure.
What is a Network as a Service Provider?
A Network as a Service Provider (NSP) is an IT services company who has the necessary industry and manufacturer certifications for the products and services they are providing, along with the capability to manage the entire services lifecycle.
Although there has been much debate as to who is best positioned to deliver Network as a Service (NaaS), it has to happen at the Service Provider level because that’s where the service happens. But, only Network as a Service providers are qualified to deliver NaaS.
An NSP must provide the following requirements:
- Manufacturer and Industry certifications for the products and services they offer
- Digital customer experience using a customer portal
- 24x7x365 network operations center (NOC)
- Lifecycle services including (design, installation, configuration, monitoring, troubleshooting, remediation, and recycling services)
Why You Should Embrace the VAR/MSP Hybrid Model for NaaS
A VAR/MSP hybrid refers to a business model that combines aspects of Value-Added Resellers (VARs) and Managed Service Providers (MSPs).
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VAR Aspect: VARs typically focus on selling hardware, software, and other technology products to their clients. They excel at understanding client needs, recommending appropriate solutions, and handling the initial sale of equipment.
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MSP Aspect: MSPs specialize in providing ongoing managed services such as network monitoring, security management, data backup, and IT support. They earn recurring revenue through service contracts and focus on maintaining and optimizing clients' IT infrastructure.
Becoming a VAR/MSP hybrid bridges the gap between traditional VARs and MSPs, offering a holistic solution that combines equipment sales with ongoing managed services.
This approach meets customer demands for comprehensive solutions and flexibility in service delivery. By integrating both sales and service capabilities, businesses can:
- Enhance Customer Centricity: Provide comprehensive solutions that meet both immediate network equipment needs and ongoing service requirements.
- Increase Total Contract Values: Capture both one-time sales revenue from equipment and recurring revenue from managed services.
- Adapt to Market Demands: Respond agilely to customer preferences and industry trends, similar to how cloud services like AWS transformed IT with "data center as a service."
Any service provider can become a NaaS provider using TechGrid.
What Are Your Options to Build a NaaS Practice?
When it comes to establishing a Network as a Service (NaaS) practice, the choices you make can greatly impact your business's success and the satisfaction of your customers.
Two primary options lie before you:
- Resell the NaaS practice of manufacturers or distributors.
- Build your own NaaS practice internally.
Each option has its own merits and challenges.
Option 1: Resell
The first option at your disposal is to resell NaaS solutions provided by the manufacturers or distributors.
Pros:
At first glance, reselling appears to be a simpler and more convenient route, it seems like every vendor is putting their products on subscription. Reselling allows you to offer NaaS solutions without investing in infrastructure or expertise. You can rely on the expertise and support of the manufacturer or distributor, ensuring that your customers receive top-notch service.
Cons:
However, relying solely on reselling means giving up control over your practice and profits. You will have limited customization options, and you may face restrictions when it comes to pricing and packaging the services. Additionally, if the manufacturer or distributor experiences any issues or outages, it will directly affect your customers' experience and satisfaction.
Option 1: Build Internally
The second option is to build your own NaaS practice internally.
Pros: Building internally gives you complete control over every aspect of your NaaS practice. From infrastructure to pricing and packaging.
Many vendors are transitioning their products to subscription models, making it seemingly effortless for MSPs to begin adding NaaS to their list of offerings.
Cons:
By reselling vendor-provided solutions, you will:
Fundamentally alter your profit structure: Much of your margin will flow back to the vendor, as you're essentially reselling their services.
Sever the direct customer relationship you've cultivated over the years: since the vendor has essentially become the service provider in this case.
May not align with the best interests of your customers: They would end up managing several different subscriptions (at least 7, on average).
Option 2: Build Your Own
This option of building your own NaaS practice promises more substantial rewards.
Pros:
Not only do you retain control over your profit margins, but you also gain the benefits of a tailored NaaS practice while preserving your pivotal role in your customer relationships.
However, this path may initially appear daunting to many.
Cons:
Constructing a comprehensive NaaS practice from scratch can be a complex and time-consuming venture. The challenge lies in creating the necessary business infrastructure to deliver this service effectively.
If you’re considering embarking on this journey, we've developed a checklist outlining the 5 key things that you'll need to construct your own NaaS practice.
What You Need to Build Your Own Network as a Service Practice
To effectively sell, fulfill, manage, monitor network services, MSPs must rely on a suite of advanced tools and capabilites to sell, fulfill, manage, and monitor network services.
1. A Client Portal:
A dedicated client portal is essential. Your customers need to be able to engage in an online experience with you.
Customers benefit from the convenience of accessing YOUR client portal, where they can efficiently manage SLAs, place orders, access support, and settle bills—all in one integrated online platform, without the hassle of logging into multiple vendor management consoles.
2. A Connected Tech Stack:
You can’t provide a useable client portal if your tools and partners aren’t digitally connected. Currently, many MSPs have systems that don’t talk together because they’re not integrated. Does your CRM talk to your quoting software? Does your quoting software talk to your accounting software? Do any of your tools talk to your partners like distribution?
Ironically, the MSP tech stack is very fragmented and not digitally connected.
The integration of various software systems into a seamless digital workflow is imperative for operational efficiency and delivering a superior customer experience.
3. Integrated Finance:
Perhaps the hardest challenge to overcome is finance. If the bulk of your business is already operating on MRR/ARR then you might be better positioned out of the gate.
However, if it’s the opposite scenario then cashflow is going to be an issue when moving to NaaS?
No matter which you fall under, many questions need to be addressed:
- Who will fund each deal?
- How does the funding work?
- Who will perform credit checks?
- Who will carry the liability with the customer?
The solution is XaaS finance, or digitally integrating a financial partner directly into your sales workflow. This allows the bank to be the bank and for you to continue to do what you do best.
4. CPQ Software Built for NaaS:
You need Configure, Price, Quote (CPQ) software that’s specifically built for selling on subscription. Network as a Service has “service” in the name for a reason. You need to be able to quote IT services on a recurring basis.
Unfortunately, most CPQ software can’t quote services so many service providers who are selling services on subscription are using spreadsheets and leveraging them with CPQ software that was built to only quote products.
In which case, you’ll need a CPQ that was built for Network as a Service.
5. Services Capabilities:
Last, but not least, you’ll need the capability to support the entire services lifecycle — from assessment and design services to technical support to renewals.
If you have owned the relationship for 60 months, you’re no longer just configuring a firewall, you need to be able to support it on the back end with software updates or support if something gets broken.
You’ll need to evaluate your current service offerings and identify any gaps you may have in the service lifecycle for your customers to create a comprehensive NaaS practice.
6. An ITSM Tool
An ITSM (IT Service Management) tool will be needed to manage and maintain your customers' networks. An ITSM solution should include:
- Asset management
- Service ticketing
- Remote monitoring
- Documentation
7. NOC & SOC Tools
NOC & SOC tools are necessary to monitor and ensure the health and security of the networks you manage for your customers.
- An NMS (Network Management System) should provide insight into the operational status of all network infrastructure (firewalls, switches, access points, smart power, ISP service, etc.).
- Any SOC tool should provide insight into the Cybersecurity posture of your managed networks. Vulnerabilities should be exposed, and attacks should be detected and thwarted.
8. Network Performance Monitoring
MSPs should also consider the inclusion of a solution to monitor network performance. While the operational status of the network infrastructure is critical to the delivery of NaaS, a solution to assess how the network is functioning from the user's perspective is just as important.
What are the Benefits of Selling NaaS?
Transformed Service Delivery
NaaS enables MSPs to transition from selling individual products to offering comprehensive solutions.
This allows customers to shift their focus from technical specifications and manufacturer reputations to ensuring their network operates like a utility — reliable, with high uptime, and optimized performance.
This shift enhances the value proposition for MSPs, emphasizing the delivery of outcomes and performance rather than just the components themselves.
Increased Company Valuation
Selling NaaS can significantly boost your company's valuation, potentially up to 8X, by growing annual recurring revenue.
By easily converting hardware and services quotes into comprehensive, bundled, and subscription-based technology solutions, MSPs can create a robust and predictable revenue model.
This increases financial stability and attractiveness to investors, further driving company growth.
Increased Customer Retention
With NaaS, customers are more likely to stay engaged due to the ongoing nature of the service.
The continuous relationship fostered by a subscription model promotes higher customer retention and loyalty, leading to increased lifetime value of each customer.
Enhanced Cash Flow
Selling NaaS allows MSPs to transition from one-time sales to a subscription-based model, ensuring a steady and predictable revenue stream.
The subscription model associated with NaaS helps MSPs manage cash flow more effectively. Regular monthly payments ensure:
- Consistent influx of funds
- Reduced financial strain of fluctuating revenues
- Better resource allocation
Opportunity for Upselling and Cross-selling
NaaS creates opportunities for MSPs to upsell additional services and cross-sell complementary products. As customers experience the benefits of the subscription model, they may be more inclined to invest in other managed services, further boosting MSPs' revenue.
Simplified Service Delivery and Automation
NaaS allows MSPs to automate the entire service delivery process, centralizing information and coordinating all stakeholders in one platform. This:
- Reduces administrative overhead
- Streamlines operations and increases efficiency
- Allows the MSP to focus on higher-value activities
Flexibility and Agility in Service Provision
NaaS enhances MSPs' ability to be agile and responsive to customer needs, especially in disruptive situations. The flexibility of the subscription model allows MSPs to scale services up or down quickly, adapting to changing market demands and customer requirements.
Enhanced Security and Monitoring Capabilities
NaaS enables MSPs to offer advanced security and monitoring tools as part of their service package. Providing 24/7 network security and management enhances the value proposition and helps build trust with customers, positioning MSPs as reliable and comprehensive service providers.
Sustainable Business Practices
By facilitating proper recycling of end-of-life equipment and promoting a sustainable approach, MSPs can align themselves with environmentally conscious customers. This commitment to sustainability can enhance the MSP’s brand reputation and appeal to a broader customer base.
Efficient Onboarding and Expansion
NaaS simplifies the process of bringing new locations online, making it faster and more efficient. This efficiency allows MSPs to onboard new customers and expand their service reach with minimal disruption and effort.
Access to Expert Resources and Talent
Selling NaaS allows MSPs to provide their customers with access to expert resources and specialized skills. This enhances the MSP's value proposition and can lead to additional revenue streams through professional services and consulting.
Customer Benefits of NaaS Solutions
From the customer perspective, financing a NaaS solution enables them to acquire more comprehensive network implementations than traditional purchasing methods allow. This leads to:
- Standardization of manufacturers and configurations across the organization, reducing administration and support overhead for the MSP due to increased homogeneity.
- A predictable refresh cycle ensures customers remain current with the latest technology, aligning network performance closely with the capabilities of client devices and reducing support tickets for the MSP.
While these benefits enhance the customer's network performance and operational efficiency, they also serve as compelling selling points for you as the MSP.
A Simple Solution to Build Your Own NaaS Practice
If you’re considering taking our advice and want to build your own Network as a Service practice, you’re probably looking for the best way to move forward.
When we were an MSP, we also decided to embark on this journey and solve for the challenges ourselves. We ended up creating software which is designed as a platform for VARs and MSPs, so you can have everything you need to start building your own NaaS practice.
With TechGrid, you can plug your existing tech stack and partner programs to begin selling Network as a Service now.
If this sounds like something your business would be interested in, you can book a demo today here.
