Enterprises Look to Service Providers for SD-WAN

Service providers have been jumping on the software-defined WAN bandwagon at a rapid clip, teaming with SD-WAN vendors to offer next-generation WAN services to enterprises. The latest partnership was announced at Interop ITX: Comcast said it's beta testing an SD-WAN service for mid-market and enterprise customers based on Versa Networks' Cloud IP Platform.

Last year, Verizon announced a deal with Viptela to offer SD-WAN while Century Link partnered with Versa and AT&T teamed with VeloCloud to provide managed SD-WAN. Other service providers jumping into the crowded SD-WAN market include Sprint, Mitel, TelePacific, Vonage, Earthlink, and Windstream (all with VeloCloud), and Masergy (Silver Peak).

With the SD-WAN market expected to grow to $6 billion by 2020, service providers are tapping a lucrative opportunity, according to market-research firm IDC. Nearly 75% of enterprises will implement SD-WAN within two years, the firm's research shows.

As enterprises looks for SD-WAN solutions, service providers appear to be the preferred source, according to an IDC survey earlier this year. When asked how they plan to implement SD-WAN, 42% of 722 enterprises polled said they plan use an integrated solution from a traditional communications service provider. This was the most popular source of SD-WAN, the survey showed.

For many service providers, SD-WAN is a way to augment their traditional MPLS and other transport services, Rohit Mehra, VP of network infrastructure at IDC, told me in an interview. Enterprises, meanwhile, can simply go to the service provider they buy transport services from for services to automate the WAN.

"All in all, it's a good combination of technology that is well suited to the service provider making the offering," he said.

Traditional WANs are costly and cumbersome to manage, making SD-WAN with its promises of agility and efficiency highly attractive. According to IDC, some of the key elements of SD-WAN include the ability to leverage hybrid networks (broadband, MPLS, LTE), a centralized policy controller, application and network performance monitoring, and a software overlay that abstracts and secures underlying networks.

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While it's still relatively early days for SD-WAN, the market has already seen one major M&A deal, with Cisco's acquisition of Viptela. As more enterprises adopt the technology over the next 18 months, consolidation will accelerate, Mehra said. "By then, it will be clear what the differences are between the leaders and also-rans," he said.

Cloud 2.0

SD-WAN is part of a broader enterprise transition to the cloud in the drive towards digital transformation, according to IDC. It was among the enterprise networking trends IDC analysts discussed last month at Interop ITX.

IDC envisions a "cloud 2.0" world where 67% of enterprise IT infrastructure and software will be cloud-based by 2020. In this environment, there are multiple types of cloud -- public, private, and industry specific clouds that are fine-tuned to meet the security, performance and regulatory needs of a specific market such as retail or healthcare, Mehra said.

The cloud also will extend to the edge of the enterprise, which IDC calls local cloud. From a network perspective, this means increased virtualization of infrastructure that enables the branch or remote office to "get all the benefits of on-premises without having what we call 'appliance clutter' at the enterprise facility," he said.

"These cloud-like capabilities bring a new level of flexibility and agility that an on-premises architecture never had before," Mehra said. "SD-WAN will definitely be a play from that perspective."

While this cloud is emerging, it's clear that the transition from hardware to software is well under way, he said.

"Software-defined networking and more broadly, network virtualization, is here to stay," Mehra said. "It's making inroads into the mainstream, whether it's the data center, the WAN as in SD-WAN, or even the broader campus environments," he said, adding, "The question for enterprise IT is really what's the right time for them to embrace it because you don't want to be a digital resister for too long."