The impact of SD-WAN adoption on digital transformation

The stars seem well aligned to accelerate the enterprise adoption of SD-WAN. Organisations are motivated by the need for digital transformation, the explosion of application traffic to the cloud and the need for homogeneous network performance at all sites.

SD-WAN has already been in use by the early adopters for several years, and it is swiftly moving to become a mainstream solution. Deployment rates are growing and accelerating. In a recent study by Frost & Sullivan, 61% of the companies surveyed said they plan to replace their routers within one to two years with SD-WAN.

The annual growth of the SD-WAN market is estimated at 40%, according to IDC. Though it is still in the maturation phase, SD-WAN offerings have already evolved well in adapting to new market expectations. So, is 2019 the year of SD-WAN?

Beyond simply reducing costs
SD-WAN’s explosive growth is in part due to its ability to enable the use of a combination of different access types at a site to deliver greater up-time and more available bandwidth for less money than legacy network services such as MPLS.

SD-WAN can potentially generate triple-digit ROI on accelerated payback intervals, contributing cost savings in the form of reduced network down-time, optimised network access costs and resource savings from a managed service. It’s worth taking a closer look at SD-WAN’s advantages beyond cost reductions and the implications for enterprise IT teams. The deployment of SD-WAN technology should also be considered for the benefits it can bring for applications that are sensitive to speed, latency and responsiveness.

The revolution SD-WAN brings can be summed up in its ability to identify the nature of the data flows, to prioritise them and to deliver them on any site of the company with the same homogeneity of performance - all orchestrated with a unique management interface. The IT department can use SD-WAN to arbitrate much more seamlessly between the decentralisation and/or globalisation of its enterprise footprint and its desire to have traffic managed through a central monitoring setup.

Legacy WANs had the advantage of being simple to administer and orchestrate. The SD-WAN layer, while providing agility, efficiency and better performance, also brings some complexity, requiring new skills for the teams responsible for operating the network.

Take, for instance, the security of data streams and direct access to services in the cloud from remote sites, which require a change in network architecture, mesh and route selection. Security must be thought about from the outset of the decision to adopt SD-WAN, and it must be integrated into deployments, cloud access, virtual instances, container services and beyond.

With network virtualisation, network monitoring has also become increasingly difficult, requiring IT teams to go beyond equipment and connections, and study applications and network topologies in different layers. This is where global network operators have an advantage over their non-operator competitors, as they can easily provide end-to-end monitoring from their supervisory portal.

Multiple actors from different horizons
This change is driving IT teams to abandon a do-it-yourself approach and to rely instead on outsourcing SD-WAN services. According to Frost & Sullivan, 80% of enterprises are choosing managed SD-WAN services, compared to 20% doing it themselves. 

Several types of providers offer SD-WAN, responding to the same problem with different approaches. Four general categories for SD-WAN service provider approaches are:

• Pure Players, in which the SD-WAN solution and cloud-based management infrastructure are delivered by the SD-WAN vendors, and the network sourcing and other service requirements are the responsibility of the enterprise client or their representative.
• Network Operators, in which the SD-WAN service, management, network infrastructure and any additional services are delivered by the network service provider as a comprehensive package.
• Integrators, implementing pure player solutions, typically in combination with network and security services procured from network operators.
• In-House Solutions, in which an enterprise IT team brings together all the components, including SD-WAN rollout, network sourcing and security implementation.

Each approach corresponds to different needs depending on the level of expertise of the enterprise’s IT teams.

The Gartner Magic Quadrant for WAN Edge Infrastructure of October 2018 lists 20 SD-WAN vendors. While this list is a good start, we can add at least as many other companies that offer SD-WAN integrated with other services - for instance, Unified Communications as a Service. Factoring in the emergence of new kinds of IT outsourcing and security companies, we are currently in a highly atomised SD-WAN market.

To choose the best service, a decision-maker has to pay attention to requirements for cloud connectivity, path performance, geographic reach and the service provider’s experience. Does the SD-WAN solution have direct connections to the cloud applications that the business uses? How exactly does the traffic get from point to point? Does the provider’s reach match the business’s footprint? Do the service providers have experience managing complex hybrid networks?

Strategy evolution
From a macro perspective, SD-WAN is well positioned to become a strategic enabler for companies.

CIOs are now part of the core executive decision-making hierarchy of a company, driven by digital transformation projects. According to Deloitte, 46% of large companies’ CIOs report directly to their CEOs. With the explosion of mobile tools and applications, companies need to reorganise. They must deploy the same application performance to all employees to enable them to work on any site using real time, seamless collaboration tools. To do this, SD-WAN provides an agile solution.

Indeed, thanks to the centralised orchestration of the SD-WAN performance at all sites, it is possible to adjust the level of performance of the connectivity according to the workload, and to aggregate the different types of access (fibre, copper, WiFi, 4G and beyond) site by site.

Thus, this new technology not only impacts IT, but also impacts corporate strategy at the executive committee level. For example, SD-WAN could enable a new organisational structure and geographical team distribution, resulting in real estate savings. SD-WAN can allow easier M&A, faster rollout of new offices and branches, more reliable broadband in shops to facilitate more digitally enabled and immersive shopping experiences, and so on.

While enterprise networks are a complex ecosystem, made up of disparate connections (Internet, Ethernet, etc.), operators have the necessary information to support companies in their digital transformation with SD-WAN solutions. Expertise with edge applications like 5G and IoT can also offer them competitive and technical advantages.

Looking ahead
The virtualisation of network technology that SD-WAN represents promises further upheaval to come. It used to be the norm for router equipment manufacturers to propose proprietary solutions. Over time, the telecommunications industry has evolved toward interoperability of equipment, in the hunt for increasingly meshed networks, reduced costs and increased capacity.

SD-WAN has so far enjoyed great success being delivered from proprietary vendor hardware. However, the next delivery model for SD-WAN, known as Universal Customer Premises Equipment (uCPE), breaks the link between hardware and software in an SD-WAN context. As these solutions become more capable and widespread, enterprises will be able to enjoy exceptional value and additional cost savings, thanks to increased flexibility for adding WAN optimisation, firewalls and more routing capabilities on a single hardware device.

We are only on the cusp of the SD-WAN revolution as the driver of network transformation for the cloud IT model underpinning the enterprise of the future.