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SD-WAN opportunities

SDWANCommunications Service Providers (CSPs), including carriers, managed service providers and cable providers, are challenged to maintain business services revenue and profit streams in the face of bandwidth commoditisation. With this in mind, software-defined wide area network (SD-WAN) solutions open up possibilities to enable CSPs to increase the value of their managed services for business customers.

CSPs make about $40 billion per year selling WAN services such as MPLS, frame relay, Ethernet, Internet, T-1 and leased lines to business customers. These companies have been willing to pay a premium for highly reliable, low latency, secure links from their data centres to branch offices and between data centres.

The problem is that increased use of cloud and SaaS applications has significantly altered WAN traffic flows in distributed organisations. Remote users require direct access to SaaS/cloud-based applications such as Salesforce, Office 365, Lync, WebEx, and off-premise storage. Traditional managed network services such as MPLS, which link branches to a centralised data centre, can’t offer low latency, high performance access to cloud applications.

Seeing an opportunity, a plethora of product suppliers, including Cisco, Riverbed, and Silver Peak among others, have introduced SD-WAN technologies that allow organisations to better leverage Internet circuits to solve WAN traffic challenges.  SD-WAN uses software and cloud-based technologies to simplify delivery of WAN services to the branch office, and software-based virtualisation enables network abstraction that results in simplification of network operations.

But that approach requires customers to acquire and manage the gear, which leaves the door open for CSPs to march in with a managed alternative, an opportunity they desperately need. After all, CSP revenues for managed business services have peaked and will slowly decline due to the commodisation of bandwidth services and, as mentioned, services like MPLS are threatened by the ability of customers to use SD-WAN technologies to leverage Internet circuits.

Internet circuits (Ethernet, DSL, cable, etc.) typically are 1/3 to 1/2 of the cost of comparable speed MPLS links. And Internet services have the advantage of higher speeds – 100MB to 1 GB – wide availability and rapid provisioning times as compared to MPLS. The ability of SD-WAN to minimise the disadvantages of the Internet is the key threat to traditional managed business services provided by leading CSPs.

CSPs need to adopt SD-WAN technologies to remain competitive in the market for managed services. SD-WAN can also be instrumental in delivering flexible, cost-effective managed services that meet customers’ current and future needs.

Another service that CSPs can deliver is hybrid WAN. Hybrid WAN allows current MPLS customers to add managed Internet bandwidth to their branch network. The Internet circuits handle non-critical traffic flows to the data centre and the increasing amount of direct to cloud traffic. CSPs can offer customers managed, secure hybrid WAN services – a key benefit for those aspiring to outsource complex WAN management to a business partner. CSPs can market the reliability, security, and traffic handling benefits delivered via SD-WAN technology.

CSPs can drive the adoption of SD-WAN by reducing the risk of introducing new technology, assisting in the migration to hybrid WAN, and by providing professional and support services. By leveraging SD-WAN to deliver new, valuable services to their business customers, CSPs can avoid the likely disintermediation to their managed service business via the inevitable increased used of Internet circuit for business traffic.

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