The Cloud: A Growing Driver for SD-WAN

Software-defined wide area networking (SD-WAN) has become one of the buzziest sectors in enterprise networking these days, promising agility and cost-savings. But a key driver of SD-WAN is that it can be used to intelligently optimize and secure connections to the cloud—including connecting users directly to cloud data centers—while offering centralized management across locations. Plus, it allows an application-aware approach to WAN, which IT managers see as an increasing imperative in an era where cloud services are becoming pervasive in the enterprise.

SD-WAN helps organizations overcome the complexity and rigidity of managing dynamic workloads, by providing automation and simplified management for cloud networking.

Overall, the SD-WAN sector is poised for mainstream adoption this year, with one in five U.S. respondents in a survey from 451 Research saying their companies are planning to deploy the technology in the next 12 months. An additional 30 percent of respondents reported that their companies are considering SD-WAN, pointing to additional future growth. One in 10 already have a solution deployed today.

Enterprise migration to the cloud meanwhile is happening independently of SD-WAN adoption, but it’s pulling along the SD-WAN market. Respondents in the 451 Research survey ranked improved cloud or internet performance as a top-three impetus for rolling out SD-WAN, right behind reducing deployment and reconfiguration times and MPLS replacement.

“Enterprise customers are using multiple cloud services and have multiple branches, and they need to make sure the performance for those services is acceptable,” said Mike Sapien, vice president and chief analyst US, Enterprise Services, Ovum, which also sees cloud enablement as a top-three use case. “They also need reliable connections to the main cloud resources, be it Amazon Web Services, Microsoft Azure, etc. That means implementing QoS, but also the ability to make changes in a network on the fly to improve performance or address increased usage, and using automatic traffic routing to create redundancy and diversity. SD-WAN fits that bill.”

SD-WAN: An Enterprise Game-Changer

In a traditional WAN configuration, satellite or branch locations are generally connected to a headquarters via MPLS or other dedicated circuits, which are all from the same service provider (thus limiting connectivity options). Each branch router acts independently, and traffic is switched based on static routing. Visibility into each connection is possible on a link-by-link basis, but taking a holistic view of the entire WAN has been the purview of very specialized software.

SD-WAN on the other hand abstracts the control plane from the physical devices at each location, allowing centralized visibility and management across everything in the WAN that’s forwarding traffic. Enterprises can “mix and match” the types of connectivity being used and the carriers that are delivering it, allowing for much greater flexibility and the capability for dynamic, automatic failover with no need to reprogram routers or call a provider to have one’s MPLS switched over to a new circuit.

And, because the WAN becomes programmable, IT admins can add analytics and app-aware policy engine control across the entire footprint, along with the ability to dynamically (and automatically) balance traffic across all of the links to enforce QoS thresholds for specific cloud applications.

“SD-WAN is a way to do away with the hub-and-spoke enterprise WAN architecture to instead allow branches to connect directly to the cloud or elsewhere, with QoS and the ability to centrally enforce policy,” said Cliff Grossner, senior research director and advisor for the Cloud & Data Center Research Practice at IHS Markit. “People first picked up on its ability to drive cost-savings through WAN optimization and the ability to reduce MPLS reliance with broadband links; but the cloud QoS story is now being spurred along by newer start-ups that have jumped into the market, and it’s an important use case for SDN in general.”

This is only going to get bigger as a market: Enterprises this year expect growth in their hosting and cloud services spending to outpace growth in overall IT spending by 25.8 percent to 12 percent, according to 451 Research. Among large businesses (1,000-9,999 employees), an average of 33.3 percent growth is expected in hosting and cloud services spending.

A full 88 percent of all respondents said they expect to increase their hosting and cloud services budgets in 2017 versus 2016, compared to 70 percent that expect to increase total IT budgets year over year.

Future Development

There are some lingering challenges to the SD-WAN market, despite the stars aligning for triple-digit growth this year. The top three barriers to deployment, according to 451 Research, are the cost of new equipment services (63 percent); worries about the maturity of existing SD-WAN offerings (53%); internet performance (52 percent); and security gaps created in the network (50 percent). To the latter point, half of respondents who have already deployed SD-WAN (53 percent) having increased their investment in security following the rollout.

“The SD-WAN market is poised for major growth over the coming years, which will be accompanied by growing pains,” said Jim Duffy, senior networking analyst at 451 Research, which is projecting a 200 percent year-over-year increase in the adoption rate for 2017. “IT practitioners are still ironing out the wrinkles when it comes to SD-WAN. The technology offers streamlined management and increased network agility, but its cost reduction impact is constrained by the need for increased security and the continued reliance on MPLS. The scope of SD-WAN is likely to expand to address these constraints and enhance customers’ return on investment.”

Sapien predicts that cloud providers will soon begin integrating SD-WAN service directly. In fact, cloud service brokers are already starting to offer a set of third-party resources from their own platforms to

stitch solutions together with a range of network offers (including SD-WAN), cloud connections and a variety of cloud services.

“Down the line, I can see, say, Microsoft bundling SD-WAN with Office 365 service. It’s a good marriage,” he said. “These are early days for SD-WAN implementation, and there will be changes and new versions coming along,” said Sapien. “We’re seeing a new iteration of these services every six months, because the technology, service providers offering it and adoption interest are all new things. It’s so rare to have this amount of dynamic growth for any technology.”