What's the ground truth of SD-WAN today? What is the size of the industry and where is it heading? Do standards matter? The answers to those questions depend on who you ask.

The SD-WAN market is made up of many different hardware and software elements including vendors, managed service providers and, of course, end users. Perhaps one of the best ways to get a sense for the size and scope of the SD-WAN market is from market size reports from analyst firms.

For the forecast period 2021 through 2026, IDC projects a healthy Compound Annual Growth Rate of 14.1% for SD-WAN infrastructure. For 2023, IDC foresees year-over-year revenue growth of 17.7% to $5.3 billion, down somewhat from the revenue growth of 21.5% in 2022. IDC estimates that SD-WAN infrastructure revenue growth will continue with the market reaching nearly $7.2 billion in 2026.

Gartner has an SD-WAN market forecast of $5.3 billion for 2023, growing to more than $8 billion by 2026. Dell'Oro Group expects SD-WAN to double from 2022 to 2027, hitting $6 billion.

TeleGeography's data has both market sizing by revenue and some adoption predictions as well. Greg Bryan, analyst at TeleGeography, told SDxCentral that his firm's research projected that the 5,000 largest global enterprises by revenue would have SD-WAN installed at 61% of global WAN sites by the end of 2023, growing to 81% by 2026.

“This robust growth of SD-WAN, coupled with increasing site demand, leads to significant growth for global SD-WAN revenue in our model for the largest 5,000 global enterprises,” Bryan said. “We project that large-enterprise SD-WAN revenue will grow from $4.4 billion at the end of 2022 to $9.8 billion by 2026.”

Defining what is the current SD-WAN market is also the subject of some debate.

“Forrester believes SD-WAN is just a feature or set of features, not a standalone solution,” Forrester analyst Andre Kindness told SDxCentral. “Case in point: some networking and security companies gobbled up the original SD-WAN vendors and have integrated their SD-WAN solutions into routers, WAN-optimization controllers, and cloud-based security solutions such as [Cloud Access Security Broker], [secure web gateway (SWG)] and next-generation firewall.”

Kindness commented that Forrester calls the integration of networking and security services zero-trust edge (ZTE). ZTE is defined as cloud management and monitoring of eighteen security and networking services, such as SWG, SD-WAN and routing. Some of the services will be cloud-based while others will exist in hardware or software form at a remote location.

What is driving (or hindering) adoption of SD-WAN at this point?

SD-WAN adoption is being driven by multiple factors.

Gartner analyst Jonathan Forest commented that adoption is still being driven by applications moving to the cloud and the need to re-architect WANs to meet a more distributed environment from the traditional hub-and-spoke data center model. Also, the move toward secure access service edge (SASE) where SD-WAN is more tightly integrated with security services edge (SSE) is driving adoption.

“There are some vendors promoting that SD-WAN is no longer needed when connecting to cloud resources, implying that all that is needed is Internet access and cloud security,” Forest told SDxCentral. “We at Gartner don’t believe that as we believe there is still strong demand for SD-WAN as we see it continuing to play a strong role in Enterprise WAN and connecting to the cloud architectures.”

Gartner isn't the only analyst firm that sees continuing strong SD-WAN demand. Respondents to TeleGeography's WAN Manager Survey that had installed SD-WAN on all or part of their networks grew rapidly from 18% in 2018 to 47% in 2022. Only 5% of respondents in 2022 indicated that they don’t plan on adopting it. TeleGeography's Bryan noted the initial justification for SD-WAN was very much around getting better network performance and higher site bandwidths from cheaper alternatives to MPLS, such as Broadband.

“That driver hasn’t changed; if anything, COVID accelerated those trends,” Bryan said. “However, with the push in the industry for a SASE framework, SD-WAN as a security enhancer has increased in importance as well.”

For Dell'Oro analyst Mauricio Sanchez, another key driver is Application experience. As internet-based applications exploded with the arrival of the pandemic, it was no longer tenable for most enterprises to continue to backhaul traffic that’s destined for the Internet to HQ. Sanchez said backhauling injects undesirable latency and jitter that negatively impacts Internet applications and the resulting user experience.

“The ability for the intelligence of SD-WAN to do local breakout to the Internet has shown, for many enterprises, to improve Application experience and user satisfaction,” Sanchez told SDxCentral.

There are also some headwinds that could impact adoption. Chief among them is the risk from the “If it ain’t broke, why fix it?” mentality. Sanchez commented that traditional branch networking has been around for eons and entire careers have been dedicated to its care and feeding.

“Change is hard,” Sanchez said. “Enterprises usually need a crisis or some other significant externality, like a pandemic, to kick them into gear. ”

There are also challenges stemming from the tight labor market with a shortage of skill sets in the networking and security market.

“If there’s no one to help plan, deploy and manage a solution, it’s not going to happen,” Sanchez said. “It has been a key motivator for why many are looking at managed SD-WAN/SASE.”

The role of SD-WAN standards now and moving forward

Networking is a business that has long been defined by standards. When it comes to SD-WAN, however, the impact of standards is not as clear.

“We have seen some efforts regarding this in the market, but it is unclear what role it is playing in end-user buying decisions as it is a topic rarely raised in our client discussions,” Gartner's Forest commented.

Other analysts had a different viewpoint. Dell'Oro's Sanchez was particularly enthusiastic about standards. He noted that standards are vital, though they may not get the appreciation they deserve.

“Where would Ethernet be, if not for its early embrace of standardization within the Institute Of Electrical and Electronics Engineers?” Sanchez said. “I see standards continuing to play a role to help build interoperable technology solutions.”

For SD-WAN, the primary set of standards seems to be coming from the MEF (Metro Ethernet Forum), notably the MEF-70 specifications.

TeleGeography's Bryan commented that one of the key pain points his team often hears from Enterprise IT infrastructure managers is handling M&A activity and onboarding sites with networks already in place, often using different vendors. Bryan said SD-WAN vendors themselves also realize the importance of these and that 39% of the vendors profiled in TeleGeography research have been MEF-certified.

“Standards such as those MEF is working on for SD-WAN interoperability are crucial to the constant need to unify disparate networks,” Bryan said. “Definitions for SD-WAN such as MEF-70 have no doubt had a massive impact on adoption by helping the market get past SD-WAN-washing and settle on services that can easily be compared across vendors.”