Why Managed Service Providers Cannot Ignore the SD-WAN Opportunity

Software-defined Wide Area Network (SD-WAN) has created a lot of buzz in the WAN space in the last couple of years. An SD-WAN utilizes intelligent, application-aware software to route traffic over the optimal network technology, based on business policies. This means that enterprises do not have to depend on Multiprotocol Label Switching (MPLS) links for multi-site connectivity, but instead can consider hybrid WAN deployments that make the best of internet (inexpensive and widely available) and MPLS (private and reliable) connections. The ability to ensure optimal application performance irrespective of the underlying transport, and to control branch-site routing policies remotely, has attracted significant interest from enterprises, especially from verticals with highly distributed branch locations (e.g., retail, healthcare, banking and financial services, education).

Why SD-WAN

In a recent Frost & Sullivan survey, we asked respondents to rate the reasons that compelled or would compel them to deploy SD-WAN.  Forty-five percent of the respondents rated “speed to deployment of new sites” as the #1 reason. The second and third most compelling reasons were a tie between “optimized cloud connectivity and experience” and “cost savings,” with 43 percent of the respondents choosing them as key reasons for adoption of SD-WAN. Figure 1. shows the top rated reasons that compelled or would compel enterprises to adopt SD-WAN.

Figure 1: Key Reasons Compelling Enterprises to Adopt SD-WAN

Figure 1: Key Reasons Compelling Enterprises to Adopt SD-WAN (Source: 2016 Frost & Sullivan SD-WAN End User Survey) [click to view full-size]

Interest in Managed SD-WAN on the Rise

Managed WAN services are proactive monitoring and management of network and infrastructure elements, and customer premises equipment. The managed service provider could be a NSP that may own or not own the underlying infrastructure, value-added resellers, managed service providers (MSPs) and systems integrators providing managed services over network services that that may have been purchased wholesale.

In the same Frost & Sullivan survey, we asked respondents their preferences for purchasing and managing their SD-WAN, 48 percent of the survey respondents indicate they would prefer to “buy SD-WAN and network service separately, and outsource deployment to a MSP,” and 47 percent of the respondents indicate that they would prefer to buy SD-WAN from their existing MPLS VPN provider. 40 percent of the respondents stated they would have the internal network/IT team manage SD-WAN.

Figure 2: Preferences for Buying and Managing SD-WAN

Figure 2: Preferences for Buying and Managing SD-WAN (Source: 2016 Frost & Sullivan SD-WAN End User Survey) [click to view full-size]

 

The increasing proliferation of various cloud services (on-prem private cloud, hosted private cloud, public, bare-metal, SaaS) in the enterprise IT environment has resulted in a hybrid IT architecture. To meet enterprise needs for agility, cost-effectiveness, and application performance, the networks connecting the hybrid IT environment should keep pace with the IT infrastructure. As with the choice of cloud for enterprise applications, where no one size fits all, the networks connecting the various IT models do not have to be one type. SD-WAN enable enterprises to optimize cloud connectivity by using private and public networks in an effective manner. In managed SD-WAN, the service provider installs and manages the edge devices, procures and manages access links from multiple NSPs, and manages the day-to-day network management aspects of the solution. Hence, the increased interest in managed SD-WAN as depicted in Figure 2.

Conclusion

While the demand for managed SD-WAN is undeniable, the road to SD-WAN is not without challenges for MSPs. As enterprises make the shift from predominantly MPLS-focused WAN to a hybrid, SD-WAN, MSPs have to take on the responsibility for tying together disparate public and private network services, backed by Service Level Agreements (SLAs). In my next blog post, I will discuss the reasons why managed SD-WAN services are gaining traction among enterprises, and how MSPs can take advantage of the opportunity it presents to them.

 

About the author
Roopa Honnachari
Roopa Honnachari
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Roopa leads the Business Communication Services practice at Frost & Sullivan. She is an authority in the wholesale and business network services space, with 14 years of experience spanning market research, growth consulting, and technical marketing in the communication services industry. She monitors market developments for the following topics: wholesale and retail network services (MPLS VPN, Ethernet, Waves, etc), managed network services, SD-WAN, SDN, NFV and cloud networking.