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Demand for managed SD-WAN services skyrockets

News Analysis
Feb 13, 20184 mins

Worldwide managed SD-WAN services are expected to grow to $10 billion by 2022 as organizations look to service providers to help them reliably connect distributed locations.

sd-wan survey
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Demand for SD-WAN delivered as a managed service is exploding as customers see the benefits that SD-WAN can bring to their distributed organizations.

For example, communications service providers (CSPs) such as Verizon, NTT, and BT all report strong demand for SD-WAN services. Plus, hundreds of other CSPs, cable providers (e.g. Comcast), managed service providers (MSPs), and system integrators have recently deployed new SD-WAN services.

We also see that managed SD-WAN revenues are growing rapidly as they displace traditional managed WAN services (e.g. private lines and MPLS) — an addressable market of over $40 billion in business services.

As a result, Doyle Research forecasts that worldwide expenditures by organizations on managed SD-WAN services will exceed $10 billion by 2022. (Disclosure: I’m the principal analyst at Doyle Research.)

Why organizations want SD-WAN

Many organizations rely on secure, high-speed WANs to deliver a quality IT experience to their distributed users. And they leverage a variety of partners (i.e. service providers) to help them reliably connect their distributed locations. SD-WAN, with its network software abstraction and centralized management, has enabled service providers to deliver new, improved quality of customer experience to remote locations.

SD-WAN technology continues to improve, with suppliers regularly enhancing the functionality of their solutions. Advancements include support for multi-tenancy, a critical aspect for many service providers and improved access to cloud-based applications. Other important features include better security, broad routing support, and centralized management features.

How SD-WAN works

SD-WAN uses software and cloud intelligence to simplify delivery of WAN services to the branch office. Software virtualization enables network abstraction that results in centralized network operations and management. It enables the rapid deployment of internet-based connectivity and hybrid WAN (e.g., MPLS and internet) with quality of service and security for critical applications.

What is a managed SD-WAN service and why would you want one?

SD-WAN is a relatively new technology that some organizations find challenging to select and install — especially including the requirement to provision (multiple) WAN transport circuits to many distributed branch locations. Service providers can simplify the process with their managed SD-WAN solutions — thus outsourcing the complexity of branch connectivity.

Further, CSPs such as CenturyLink, AT&T, Comcast, and Verizon bundle SD-WAN technology with their existing transport services (e.g., internet) to improve quality of service and reliability to the end customer. Service providers and system integrators that don’t have their own network deploy managed SD-WAN via provisioning of WAN connectivity from a third-party provider.

Managed SD-WAN delivery options

Service providers must select architecture and a supplier/technology for their managed SD-WAN solutions. CSPs have typically deployed routers on their customer’s premise to connect to their WAN offerings, such as MPLS. Network functions virtualization (NFV) has enabled virtual customer premise equipment (vCPE) — typically integrated in house by the largest CSPs. Many service providers have rapidly deployed SD-WAN services by selecting products from innovative SD-WAN suppliers.

Example: Aryaka has built its own global private network (28 POPs), which includes integrated SD-WAN technology, WAN optimization, and content delivery network (CDN) to deliver quality of experience to globally distributed organizations.

SD-Branch solutions are coming

Software-defined Branch (SD-Branch) combines a wide range of network functions on to one platform, including SD-WAN, WAN optimization, routing, security, and Wi-Fi/LAN features. Suppliers such as Cradlepoint and Versa have recently introduced SD-Branch solutions. Over time, service providers will adopt SD-Branch solutions from leading suppliers to enhance their managed WAN solutions.

Managed WAN platforms

The largest CSPs (e.g., AT&T and Verizon) have deployed a number of managed WAN platforms, including solutions based on traditional routers, specific SD-WAN suppliers, and internally developed vCPE solutions.

AT&T has its Flexware platform for virtual VPE. Verizon sells the flexibility of its deployment options, including SD-WAN, white box, and vCPE. And CenturyLink sees significant ramping up of demand for its SD-WAN solution during 2018. Other service providers are prioritizing leading-edge SD-WAN solutions as they phase out traditional routers on the customer premise.

SD-WAN and SD-Branch impact on managed WAN services

Managed WAN services remain a popular option for distributed organizations wanting to outsource often complex connectivity challenges. SD-WAN offers service providers new technologies to improve the quality of the user experience by delivering fast application performance. It enables IT to get more bandwidth for its dollars by increasing its leverage of low-cost, high-speed internet circuits as compared to MPLS.

There are several managed SD-WAN providers, which include CSPs, cable, MSPs, and system integrators — each with their unique technology and pricing options. The technology selected by the service provider is a critical aspect of the managed SD-WAN service. Many leading service providers are tactically deploying SD-WAN solutions now and evaluating their long-term platform for managed WAN services (e.g., vCPE). Advancements in SD-WAN and SD-Branch technologies will drive managed WAN services delivery over the next five years.

lee doyle

Lee Doyle is principal analyst at Doyle Research, providing client-focused targeted analysis on the evolution of intelligent networks. He has over 25 years’ experience analyzing the IT, network, and telecom markets. Lee has written extensively on such topics as SDN, SD-WAN, NFV, enterprise adoption of networking technologies, and IT-Telecom convergence. Before founding Doyle Research, Lee was group vice president for network, telecom, and security research at IDC. Lee holds a B.A. in economics from Williams College.

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