Five years ago, the role of the network for Service Providers (SPs) was critical to their success. The dominant architecture for corporate WANs was hub and spoke and the dominant technology was service provider MPLS. The service intelligence to support WANs was complex, built by the SPs and based on large-footprint carrier grade networks, where the end user had little interest and no say in the technology the SP had chosen (Cisco, Juniper or Alcatel/Nokia being prevalent).
The role of the network is changing
However, the shift of corporate architectures to favour “cloud” computing with target destinations now best reached “on the internet” and the introduction of new SD-WAN technology changed all of this. Service creation intelligence moved to the edge rather than the core. Features such as path selection and forward error correction, implemented at low(ish) cost in clever CPE all managed via centralised policy-based controllers, meant that enterprises could take back control of their network. They could manage performance over a mix of underlay services and exploit the internet, both as a lower cost transport platform, and directly as the destination for their growing Skype, Teams, O365 traffic demands.
Nonetheless, Service Providers are still going strong, and MPLS still makes up over 75% of market spend according to TeleGeography. SD-WAN appliance sales took-off first in the US, where enterprises have historically shown a greater desire to “DIY”, Europe and Asia markets being dominated by managed services. But even in the US, managed SD-WAN is looking to be the future faster growth area, and so the key question for service providers has been how to best build a portfolio of managed SD-WAN services without over-rapid cannibalisation of their MPLS revenue.
Building SD-WAN portfolios: the two approaches
In principle, two approaches emerged. The first is the traditional approach to build a managed SD-WAN service by integrating SD-WAN equipment and controllers into the SPs existing MPLS network/service and their existing OSS/BSS environments. Some of the SD-WAN vendors target this approach, for example Nokia Nuage is used by many service providers to address complex enterprise SD-WAN requirements and Ekinops is used often for white label solutions targeted at mid-market customers for whom the brand of the service provider is more influential than the brand of SD-WAN device. These companies have technical and commercial solutions optimised for service provider environments and do not actively target and support direct sales to enterprise customers. AT&T and BT were exemplars on offering these integrated services with VMWare and Nokia Nuage respectively – offering their existing customers the opportunity to deploy one, ten, one-hundred SD-WAN devices and route instantly into their existing MPLS services through service provider gateways.
The second approach is about selling customer the brand of SD-WAN they have chosen. This appeared to start from IT departments wanting to investigate new technologies, evaluating a few SD-WAN solutions in their labs or as limited field trials and then seeking a managed service provider who could design, install, cut-over and in-life manage their full SD-WAN deployment of their chosen vendor. With over 30 SD-WAN vendors in the market this has presented a challenge for SPs in choosing which SD-WAN vendors to “on-board” – too many SD-WAN vendors drives up the cost of the expertise and systems needed whereas too few limits the addressable market and may mean they lose some of their existing customers.
Today this market is perhaps more driven by the fact that the very large vendors have snapped up leading SD-WAN players and put massive budgets behind marketing their flavour of SD-SWAN direct to the end user – Cisco with Viptela, VMware with VeloCloud, HP with Silver Peak, Oracle with Talari, Juniper with 128 Technology etc. Whilst this direct marketing to end-users seems to reduce the ability of an SP to differentiate its own services, in a way it has made choice of which vendors to work with easier, as current market reports generally agree that over 60% of the SD-WAN market can be addressed with five vendors – Cisco (Meraki and Viptela), VMware (VeloCloud), HP (Silver Peak), Versa and Fortinet.
Insights from Heavy Reading‘s report
Some valuable insight into what service providers are doing to build their SD-WAN portfolios has just been published by Heavy Reading. A summary of the report is available in an article from their parent company Light Reading which can be found here , with a link to the full 24 page report.
In this report, Heavy Reading have surveyed over 100 service providers, half of which are US based, three quarters of which offer fixed network services and a quarter of whom have revenues in excess of $5Bn.
Their respondents were split half and half when asked if they saw the SD-WAN market as a “push” market (where they were encouraging their SD-WAN solutions into customers) or a “pull” market, where the customers were asking for SD-WAN services – suggesting room for both of the approaches above.
Asked for their preferred approach to differentiating their SD-WAN portfolio, most preferred to offer their customers the option to choose from several on-boarded SD-WAN vendors, with less favouring the offer of tiered bundles of SD-WAN and security with different feature sets aimed at enterprise, mid-market, SME etc.
“Almost three-quarters of Heavy Reading’s respondents are providing only one or two SD-WAN vendor solutions as managed services” with “Almost one-quarter of respondents [who] use three to four solutions. The majority of these are large Tier 1 operators for which restricting the number of vendors to three or four solutions is, in itself, a victory.”
When asked about the key challenges to their ability to offer a managed SD-WAN service the most frequent issue was the operations complexity involved in managing multiple SD-WAN vendor solutions.
The report also offers a glimpse into the future for managed SD-WAN offerings indicating that around half of the respondents would be adding SASE platform to their managed SD-WAN offerings in the next 12 months, with only a very small percentage of companies ruling this out in the 2-year timeframe.
However, regardless of the choice of approach by each service provider, some things are clear – use of internet will increase in enterprise WANs as internet performance improves year on year and more and more traffic is destined for internet-based locations – with transformations often funded by the savings on underlay from a move from MPLS to internet-based transport. Moreover, as the underlay costs are so dominant in solutions, having at least as good a solution for supplying and managing this underlay is equally important to a service provider today as its choice of managed SD-WAN services – and this of course is where Brodynt can be of most help.
How can Brodynt help?
If you are considering SD-WAN for your connectivity needs, Brodynt is ready to find the best solution according to your specific requirements and configuration. Click here to learn more about our SD-WAN solutions.
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