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Service Provider Growth Demonstrates Enterprise Adoption of SD-WAN as a Managed Service

As Enterprise Digital Transformation accelerates, the demands on the network are also increasing and many Enterprises are embracing SD-WAN as part of their network transformation to support the shift to hybrid cloud and a more agile, dynamic infrastructure that can respond quickly and efficiently to the demands of the business.

The choice of DIY or managed service for Wide Area Networking is one that Enterprises have debated for years and it’s often a question of strategy and skills, not cost savings. When SD-WAN first appeared on the market, many Communication Service Providers (CSPs) saw it as a threat to their MPLS services and revenues, but as the market has evolved, most CSPs have embraced SD-WAN as a vital tool in their portfolio of managed services as it provides an overlay on top of business-grade Internet and/or MPLS as well as an opportunity to upsell a range of value-add services (e.g. managed security) on top of the SD-WAN service.

A recent report from ACG Research indicates the SP segment for SD-WANaaS was globally worth $178m in 2018 but is forecasted to grow at 59% CAGR, reaching $1.791B by 2023.

ACG Research analyst Liliane Offredo-Zreik noted that “Although the DIY segment started out strong, it is losing momentum against the service provider segment as enterprises take stock of the complexity of bringing SD-WAN in their networks and managing it.”

Nuage Networks now has more than 70 service provider partners delivering SD-WAN to more than 700 Enterprise customers and we are seeing an increasing set of common drivers behind the growth of SD-WAN as a managed service:

  • Increased complexity of multi-site corporate networking
  • Organizational distribution (e.g. more locations, remote users, M&A activity)
  • Network complexity associated with hybrid Private and Public Cloud-resident business applications, including a trend to spread business applications across multiple public cloud platforms
  • Increased dependence on business-critical IP-based applications (which need high quality bandwidth)
  • A shift in business communication paths (and network topologies) from a hub-spoke to a full mesh as branch to branch collaborative suites (Skype for Business, WebEx) style applications are deployed
  • Mixed access connectivity, leveraging fixed broadband Internet, MPLS and wireless technologies
  • Local Internet breakout at remote locations causing increased security concerns

Enterprise IT and network teams are facing unprecedented challenges to meet the rising demand for bandwidth and quality without increasing spend. SD-WAN helps mitigate this by supporting network-wide policies that define application security, traffic steering and QoS; reducing turn-up time for adding sites and network re-configuration; leveraging cheaper access underlay technologies such as broadband Internet. The factors affecting the Enterprise choice of DIY or managed SD-WAN are described in detail in a research brief by AvidThink.

Enterprises partnering with a service provider to manage their SD-WAN can also take advantage of outsourcing security and other complex network functions, while also having full visibility of their network, location, user and application performance through an SD-WAN portal. More insight into how SD-WAN can help Enterprises on their digital transformation journey is available in this report from AvidThink.

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