• 04/06/2016
    6:00 AM
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The Economics Of SD-WAN And NFV

Software-defined WAN and network functions virtualization offer clear and simple cost-containment benefits.

Nothing beats direct economic benefit when adopting new technologies.  That’s why I continue to focus on software-defined WAN and NFV adoption in 2016.

It’s easy to tout some new technologies because they’re cool (nice technical implementation!) or make vague management agility claims. But ultimately, if they do not deliver outcomes, these products are pretty much useless and may remain as shelf-ware as some crazy-pants technology purchased for the wrong reason. I’m not saying that they’re not useful. It’s just that they are not supremely simple for consumers to understand and benefit from.

Going back a decade or so, server and desktop virtualization was adopted rapidly for one simple primary reason: the need to buy less equipment.  It’s possible to claim that virtualization provided other great benefits – whether it’s easier provisioning, consistent management or whatnot -- but in the end, people looked at hardware consolidation ratios since it delivered the most economic benefits.


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In IT networking, we’ve had our share of interesting new developments that made great promises, but few have managed to deliver clear-cut economic benefits to enable rapid adoption. We’re still looking for a direct benefit. It’s not about two degrees of separation where some smooth agility leads to quicker revenue-generating magic one year later. We’re talking of direct connections in two forms: capital expenses and operational expenses.

But in 2016, I expect two networking technologies to break out and deliver these direct benefits: SD-WAN and NFV.

NFV in its various forms is a direct descendant of virtualization in the 2000s, which reduces the hardware footprint. It takes network functions, typically services such as NAT, firewalls, and application delivery controllers, and places them in virtualized network functions deployed as virtual machines. 

This capability has been available for several years, garnering initial interest from telcos, but now we’re starting to see enterprise NFV use, and the technology even can be deployed within public clouds.  

Cisco’s new Enterprise NFV product supports its own VNFs and even third-party ones; Juniper has a carrier-grade NFV solution; and Brocade has virtual routers and virtual ADC. Almost every vendor has some form of virtualized network functions. If you are going through an upgrade cycle, it will pay to ask your vendor if a VNF edition is available.  By replacing hardware-based “service middle boxes” with VNFs, enterprises gain the benefit of reduced capital expenses, and also the ability to scale easily by adding more virtual machines as network demands grow.

SD-WAN is another case that offers clear benefits, but from an operational expense angle.  Customers have had to deal with expensive MPLS circuits (on a dollar per megabits basis) for years, but as network usage has changed from users accessing traditional data center applications or resources (like client-server apps) to accessing data on the internet via SaaS -- the old network didn’t match new usage patterns.

Plus, buying more old-style circuits is expensive compared to all the other alternatives like broadband internet (cable), LTE mobile data networks, and even plain old DSL.  With SD-WAN, clever new dynamic path optimization routes appropriate traffic to the right path, or combines multiple networks to create MPLS-like quality of service.

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There are a slew of companies in the SD-WAN space, including startups such as Aryaka, CloudGenix, Cradlepoint, VeloCloud, Viptela and Talari Networks.  Established vendors such as Cisco (with iWAN), Citrix, FatPipe, Ipanema (part of InfoVista), Mushroom, Riverbed, and Silver Peak Systems also provide SD-WAN products. Note that some SD-WAN solutions are not only available as a product from a vendor, but also from service providers, who sell it as a managed service. Think “branch as a service” with respect to network connectivity to remote branches.

Bonding links isn’t a new innovation, but some of these companies have managed to combine a variety of technologies to offer a more compelling solution such as providing service in the cloud (via NFV) and services such as security. Many of these reduce service truck rolls to remote sites.

The benefits are simple: You reduce the operational telecom expense of costly MPLS circuits, and reduce the operational cost of truck rolls to remote branches.

Both SD-WAN and NFV are cost-effective technologies I’ll keep a close eye on as they evolve.

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