While software-defined networks (SDNs) within the data center remain a nascent opportunity for managed service providers, software-defined wide-area networks (SD-WANs) represent one of the hottest segments in IT.
The research firm Futuriom expects the market for SD-WAN tools and network-as-a-service (NaaS) revenue to reach $1.5 billion by 2019 and $2.5 billion by 2021. At least three SD-WAN platform and NaaS vendors could exceed $100 million in annual revenue this year. The vendors most likely to do this are Aryaka, VMware/Velocloud, and Silver Peak, says Futorium. VMware acquired Velocloud last year.
SD-WANs essentially replace traditional routers in branch offices with a programmable framework for managing network traffic. Instead of backhauling all network traffic from the branch office through the data center, an SD-WAN makes it possible to route some traffic over a public Internet connection directly to a cloud service, while more latency-sensitive application traffic is routed over a leased MPLS line to, for example, an ERP application. This approach creates the opportunity to significantly lower operating costs to the point where the SD-WAN essentially pays for itself.
Of course, a transition of this scale is going to spark considerable competition. There are now well over 50 providers of SD-WAN platforms. In addition, providers of routers are moving to make their equipment more programmable, and some vendors that provide wireless networks used in branch offices are also moving to converge the management of SD-WANs and local area networks.
SD-WAN opportunities for MSPs
From an MSP perspective, the existence of SD-WANs expands the opportunity to deliver networking services to the point where MSPs can even decide to retain ownership of the customer premise equipment (CPE). That approach transforms the cost of delivering those network services into an operating expense. It also lays a foundation through which additional security and data protection services can be delivered more easily. In the future, most of those services will be delivered in the form of a virtual network function (VNF) or lighter weight Docker container that can be deployed on a commodity server running in the local branch office.
The transition to #SD-WANs creates an ideal opportunity for #MSPs to acquire new customers. @SmarterMSP
The transition to SD-WANs creates an ideal opportunity for MSPs to acquire new customers. It requires a significant amount of programming expertise to manage SD-WAN deployments at scale. The rate at which those programming skills can be acquired by internal IT staffs is constrained compared to the level of demand being generated for SD-WAN technologies. That gap creates a unique opportunity for MSPs to fill.
The biggest challenge that MSPs might face is deciding which SD-WAN platforms to master. Each SD-WAN platform is essentially its own proprietary island on to itself. Interoperability specifications between SD-WAN platforms today are still on the drawing board.
Nevertheless, even in the absence of interoperability standards demand for SD-WANs will continue to accelerate as organizations discover it’s becoming much simpler to provision a broad range of IT services to branch offices, which enables organizations to create a physical presence much closer to wherever their end customers are located. That may seem a little counterintuitive in the online age. But, there is still no substitute for a little human touch when it comes to providing the best customer service possible.