The Multiplier Effect of Transformative Investments with SD-WAN

‘Show me the ROI.’ This oft-repeated financial management mantra does little to excite the imagination about the strategic value of any particular IT investment.

Let’s say you could increase the speed of WAN file transports by 20 percent, reduce network outages and backup switching times by 10 minutes a week, or reduce shared application costs across a workforce by $50,000. You can run the numbers to calculate the ROI on such results, but considered in isolation they don’t stack into huge jumps in value.

Before taking a risk on any new IT investment, the business should expect a potential payback of between 5-to-10X, so we really need to seek out potential value wherever it exists to justify the investment into the future.

This means we need to transcend the conventional ROI figures of ‘speeds and feeds’ improvements and hard-dollar cost savings if we want our network investments to deliver real transformational value for an evolving business.

The business network as a money machine

Consider the IT complexity of operating any business with a network that extends beyond its own administrative HQ, into multiple facilities or branches, supporting local offices or remote workers that serve customers. That extended wide area network (WAN), and the application work, data and transactions flowing through it, is the lifeblood of the enterprise.

Virtually any mid-to-large sized company could have such a footprint, with service employees and associates connecting to hundreds of applications across the WAN from multiple store or branch locations, distribution centers and warehouses.

We’ve already placed significant investments at all of the company’s network edges. MPLS switching, some 4G wireless and direct Internet access backup circuits, and an array of hardware and virtual routers accumulate as the company expands to new locations.

The network is like a printing press in a US Mint. Any slowdown or interruption of network service means less money is being made from operations.

The legacy network infrastructure is idle or underutilized most of the time, as it was installed long ago with maximum capacities in mind. However, when a capacity issue or outage does occur, answering the call to restore service requires manual intervention, and costs time and money, impairing the flow of business.

What are the levers of value in a next generation WAN?

Increased asset utilization. Since every existing piece of technology has an initial price and operating expense, we want to use SD-WAN to not only expand the network with new nodes, but to provide a software controller that can also bind all of the existing transport services such as MPLS and 4G together to optimize application availability and performance across the enterprise.

Lower operational costs for network transport and data backhaul, lower hardware costs over time as the WAN is simplified, and lower labor costs for administrative firefighting and responding to issues. The reduced OpEx of an SD-WAN can offset initial CapEx investments within a year in some cases.

Increased employee productivity. Consider the network cost per employee for things like VoIP and Office 365 seats. And rent, and salaries. What do you spend today per site, per employee, and what revenue flows from that? With the right WAN infrastructure, significant ROI flows from making applications work better, eliminating downtime and raising employee and per-site productivity.

Ability to extend security with network footprint. When security tools must be manually installed or configured at the node or device level, they can be very tedious and costly to keep in line. With SD-WAN you can assume a proactive network security posture, centrally orchestrating policies, while ensuring the best-in-class technologies for the authentication and authorization of unique users, application groups and systems according to the optimal security needs of each location and device. Risks are offset, and network vulnerabilities are remediated with less effort and investment.

Maintain higher quality of service. QoS is the granddaddy of all of the value metrics, as a slow application lookup or failed network connection directly throttles the business being conducted and impacts customer experience. An SD-WAN reduces the chance of failure and can stand ready for sub-second failover to backup resources and faster time-to-recovery.

From additive value to multiplied value

Clearly there are outcomes far beyond the sum of the ROI values we might calculate for any of the above improvements a modern SD-WAN can deliver.

One major grocery supplier, C&S, worked with its implementation partner Synacktek to predict a 60 percent annual reduction in overall communications and network costs across 60 warehouse locations and two data centers, before beginning their SD-WAN migration to the Silver Peak Unity EdgeConnect™ SD-WAN edge platform.

But more importantly, they were able to increase their overall network quality of service, while increasing the utilization of all of their WAN investments to near 100 percent, using path binding to manage MPLS and direct internet connections under the same secure control plane while retaining 4G LTE for some of their data backups.

The Intellyx Take

Following a general additive model of value calculation, even if the value of all these criteria are uncorrelated when measured, they all add up to create a multiplier effect once the benefits are working in harmony.

The final evaluation of any strategic network IT investment won’t be reflected in ROI numbers, it will go beyond the numbers. It will be the answer to ‘does our network make us more competitive?’ or ‘can we survive a disruptive shift in the way we must deliver services?’

Ultimately, it will be reflected in happier, longer-term employees who are more productive than ever, and incredibly loyal customers.

© 2020, Intellyx LLC. At the time of writing, Silver Peak is an Intellyx customer. No other companies mentioned here are Intellyx clients. Image source: Kristina Hoeppner and Matthew Dillon, flickr.

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