SD-WAN Can Reduce WAN Costs by Half

I’ve seen enough business case proposals and implementations of SD-WAN to be able to put a stake in the ground that SD-WAN can cut WAN costs in half. Typically, WAN costs are about 10% of an enterprise’s overall IT budget. Anytime a project can save money, improve performance, increase reliability, and provide additional security controls, it would seem that it would be a slam dunk.

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But just like with SIP trunking 10 years ago, there are many folks who are still reluctant to believe the magnitude of the opportunity with SD-WAN. If you talk to sourcing managers, some of them just think that issuing an RFP for traditional WAN services will save 25% and that the implementation costs to move to SD-WAN do not outweigh the risks and effort. If you talk with network engineers, they tend to see the SD-WAN opportunity only for small sites where broadband Internet can deliver enough bandwidth and replace T1/MPLS. Many do not see large sites that require greater than 500Mbps as appropriate targets for SD-WAN.

These are the primary steps U.S. enterprises need to take in order to ensure the 50% savings, in rank order:

1) Buy Wholesale Access and Be NSP Independent – No one network service provider has complete coverage. Access, whether fiber or copper, is 60% of WAN costs. Network, fiber, and Internet service providers sell access to others at wholesale rates that are significantly less than heavily discounted retail rates. Earthlink (now Windstream), Global Capacity (now GTT), and Mettel are examples of Virtual Network Operators (VNOs) that buy wholesale network access and can turn around and provide an enterprise a single entity to work with for ordering, installing, support, and billing. Large enterprises can buy wholesale bandwidth at large carrier-neutral colocation providers like Equinix, CoreSite, and Cologix, including wholesale access to large cloud providers (IaaS, SaaS, UC/CCaaS). This is a model wherein an enterprise goes to the ~1,000 fiber networks versus bringing in one or two network service providers.

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