The Rise of the Software-Defined Wide Area Network (SD-WAN)

By Doug Farndale, Vice President, APAC Silver Peak

Doug Farndale, Vice President, APAC Silver Peak

Talk of the evolution of the Wide Area Network (WAN) has been around for decades now, but it never quite gained the traction it deserved due to the fact that there wasn’t a good alternative to the traditional Multi protocol Label Switching (MPLS) network. MPLS has provided enterprises with a stable, high-performance and highly-scalable means of more easily interconnecting offices, but it has come at a price.

Businesses tired of paying the high cost associated with MPLS have looked to the Internet as an alternative, but have hesitated due to concerns about security and performance. But the times have changed.

Over the past few years, we’ve seen a significant rise in SaaS-based applications and cloud computing traffic. According to IDC, the worldwide SaaS enterprise applications market will increase to a total of $50.8 billion by 2018, representing a Compound Annual Growth Rate (CAGR) of 17.6 percent for the five-year period starting from 2013. The explosion of cloud services and mounting frustration surrounding the high cost and inflexibility of MPLS is forcing a rethink of the enterprise WAN.

Now, many companies are now asking themselves these questions: If a significant portion of enterprise traffic now goes to Internet-based applications, why not connect to those applications over a broadband Internet connection? If I can deploy enterprise grade broadband Internet for my WAN that is cheaper, why should I still be stuck with MPLS?

The WAN Evolution = SD-WAN

Enter the Software-Defined WAN, or SD-WAN. In layman terms, SD-WAN is a WAN transformation that allows companies to use the Internet(in the form of cable, DSL, LTE, etc.) to augment or replace their current WAN connections (often MPLS). It opens the door for faster WAN provisioning and the ability to use multiple WAN paths at the same time.

Why is SD-WAN so disruptive? Apart from enabling customers to rapidly and non-disruptively augment or replace their MPLS networks with any form of Internet connectivity, the overlay technology also provides visibility into all applications, and the capability to centrally-control all WAN traffic. It ensures end-users are satisfied with consistent and enhanced application performance. Last but not least, it can dramatically lower connectivity, equipment and network administration costs by up to 90 percent.

With SD-WAN, customers can “broadband their WAN” at their own pace, either via a complete swap from MPLS to pure Internet-only WAN, using a site-by-site approach, or through a hybrid WAN that uses both MPLS and Internet.

Such appealing use cases may explain why network managers are increasingly challenging the status quo of the traditional MPLS network. For example, memory products leader Kingston Technology and global manufacturer Inter roll have already started to broadband their WAN and are now benefitting from a lower cost and more agile WAN for operations in Asia and across the globe.

What about Telcos? Is SD-WAN friend or foe?

It is said that Communications Service Providers bring in approximately $40 billion doing business-to-business sales of WAN services such as MPLS, frame relay, Ethernet, Internet, T-1, and leased lines. For most service providers, MPLS makes up a huge chunk of the revenue pie. At first glance, SD-WAN could easily be viewed as a competitive threat to communications service providers. After all, the objective of most implementations of SD-WAN by enterprises is to offset the cost, rigidity and lack of control typically associated with MPLS. And, for most service providers, MPLS is a huge source of revenue.

However, if you look a bit closer, one could argue that SD-WAN could very well become the telco’s best friend.

For forward-looking telcos that continually look to differentiate their business and provide value to their customer base, SD-WAN can be their new, differentiated solution, delivering SD-WAN as a managed solution or as part of a network functions virtualization (NFV) offering.

SD-WAN technology gives the telco a flexible software platform for delivering enterprise customers with a variety of virtualized network functions. By leveraging SD-WAN, telcos can offer these differentiated services to customers, maximize operational efficiencies, and introduce new revenue-generating services faster and easier than ever before. It can also set them apart from service providers who resist the SD-WAN trend or are trying to derail it.

In essence, with the rise of SD-WAN, businesses are no longer confined to MPLS as they can use enterprise-grade broadband Internet to replace, or augment, their existing corporate WAN connections. And while SD-WAN provides significant cost savings, flexibility and enhanced performance for businesses compared to MPLS, SD-WANs are not, by default, a threat for telcos. Forward-looking telcos should embrace SD-WAN to offer differentiated, managed services to customers.