SD-WAN: Opportunity or threat for CSPs?
The pace and scale of SD-WAN deployment accelerated sharply in 2017. According to research company IHS Markit’s Data Centre and Enterprise SDN Hardware and Software Biannual Market Tracker, global sales of software-defined enterprise WAN (wide area network) hardware and software were worth around US$450 million (€386.42 million) last year. But, says Chris Gilmour of Axians, these sales are forecast to net US$3.3 billion (€2.83 billion) by 2021.
While the benefits of SD-WAN may be fairly straightforward for enterprises, SD-WAN in its purest form can be considered a threat to communication service providers’ (CSP) traditional business models. But that threat could also be seen as an opportunity for the CSP.
The future is digital
Digital transformation projects are increasingly high priority for enterprises — for very clear reasons. And as a result, digital transformation is creating a whole new set of applications for the network to handle. If the network cannot differentiate between those services, then enterprises are essentially being held back by part of their infrastructure.
In a survey last year, Axians found that 62% of network managers say their company would be more profitable if it invested in new technology, and 67% believe a digital strategy will reduce operational costs in the long term. This is critical, as 62% feel increasingly pressured to reduce operational costs of the network.
Yet in order to adopt a digital strategy, many enterprises have already outsourced elements of the network to third parties such as CSPs or Managed Service Providers (MSPs). For example, an enterprise customer of a CSP may be looking to adopt SD-WAN as a solution to support their digital strategy, improve control of the network, replace legacy technology and cut budgets yet they might not have the capability to do this themselves. They want to access the benefits without building out an internal IT team to manage it. This is where the CSP SD-WAN offering comes in.
The CSP product offering
For the CSP, SD-WAN can help them to differentiate themselves from their competitors and offer a larger variety of services. It can also build a brand reputation through the delivery of innovative cutting-edge solutions. Therefore, it offers service providers another value-add to their customers and important annuity business in an increasingly competitive market.
However, the type of product offering for the CSP will be determined by the end customer – and there does need to be some form of acceptance from the enterprise businesses. Some may be cautious at first.
For example, you could look to virtualise a whole communications room into one server which could include a firewall and router. However, this could currently be a step too far for a lot of enterprises.
So, a starting point would be to bring a basic SD-WAN offering to market, with the ability to run over a mix of transport infrastructures including their own MPLS network as well as DSL, 3G, 4G for example.
Closely after that, a consideration would be a secured SD-WAN service, where they can remove the router and firewall in each location and bring it all under central management. Additional features to support this offering would be the increased level and granularity of reporting on demand and the ability to prioritise applications which is a great benefit to any network.
Neglect is not an option
If CSPs were to neglect this opportunity it may put them at a disadvantage – particularly if their customers are requesting this. SD-WAN is one service which will bring interest and develop services among the enterprise customer base. It’s true it is a buzz word, but it’s also a good solution for a typical customer of the service provider as they look at the combinations of visibility, control, cost and flexibility to meet needs and maximise productivity.
The author of this article is Chris Gilmour, technical lead at Axians.