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Gartner recently published its first-ever Magic Quadrant (MQ) report for the WAN Edge. The analyst firm researched more than 60 SD-WAN vendors, though only a subset of those met its criteria for inclusion in the MQ. Note that Gartner isn’t calling this an SD-WAN MQ, but the reality is that all the covered vendors are using the label SD-WAN to describe their products.
In recent years the research landscape has consolidated, and while there are well-known independent analysts who cover specific markets, the number of large research houses has dwindled. As a result, the remaining firms, like Gartner, have gained prominence. And the popular belief is that across enterprises and service providers alike, the Fortune 500 and Global 2000 look to the Gartner MQ to make decisions around key technology purchases.
This scenario brings back memories of my past roles running marketing at various startups. My team always made sure to engage with Gartner as soon as we could afford it and we worked hard to ensure we did well in the MQ.
The Gartner MQ has become an annual exercise for the marketing leadership at companies in each MQ segment. Companies that make the list try to leverage their “Leadership” or “Visionary” positions in their marketing collateral. Others tout their presence in the “Challenger” category as being a stepping stone and promise that their upcoming roadmap will make them a leader.
We’re already seeing the different SD-WAN vendors in the MQ make their moves. Here are a few of my thoughts on the report and the SD-WAN industry based upon my own conversations with enterprises and service providers, as well as some of my research and studies.
Do Managed Services Win?
What struck me when I read the report was the slight dichotomy as to the importance of managed services. Early in the report, a statement is made that in the North American market, historically, 60 percent of WAN edge solution purchases were DIY deployments while managed services are favored across the rest of the world. Gartner also made the observation that the largest enterprises were likely to be DIY buyers. Both these statements make sense to me given my own research.
And yet, in the report, it appeared to me that vendors that provided DIY approaches and had stronger enterprise go-to-market channels were favored based on their placement in the MQ. Vendors that preferred partnership with carriers providing managed offerings were apparently not viewed as favorably. And while Gartner itself admits that DIY is favored primarily by larger enterprises, one of the vendors had a con listed indicating lack of strength in DIY would hurt them in the mid-market (which ironically is more likely to go the managed route).
The Gartner report covers a lot of ground and provides a decent view of the SD-WAN market. However, I wonder if tying it to a historic WAN edge view skews the analysis in the wrong direction. My own research indicates that in a forward-looking view, managed services — from carriers, systems integrators, and other managed service providers — will be favored by almost all but the largest enterprises worldwide (including North America).
With the complexity of SD-WAN, most companies say that they would prefer to go the managed route. More and more, I see direct Internet access with 3G/4G/LTE/5G as a secondary option, and MPLS is selected only if needed. Most enterprises don’t really want to take on the task of figuring out the different carriers in each region that can provide multiple connectivity options.
Even for the largest enterprises, I’m expecting a good number of them to go the managed route via system integrators that can take into account their special needs while building out a managed SD-WAN solution for them.
And to be fair, Gartner is hedging its bet a little by indicating that almost all enterprises today are considering DIY versus Managed in their decisions and they recommend the same. However, if Managed SD-WAN is going to be the wave of the future, then the evaluation criteria needs to take into account features that facilitate building managed offerings — multi-tenancy, built-in customizable customer portals, or strong APIs for integration with orchestration and billing systems, etc.
Managed at the Edge to Managed at the Core
Beyond WAN connections to branches, I’m expecting that carriers and other providers worldwide will provide express lanes to the major cloud services as value-add so that Amazon Web Services, Google Cloud Platform, and Microsoft Azure are a short hop away, and do so similarly with major SaaS services. Most of these providers will take a shortcut and work with an exchange like Equinix, which already has these express lanes and multiple POPs worldwide. These value-add services in terms of cloud connectivity optimization will also be offered as part of managed offerings, with benefits from economies of scale in negotiating and running connections to these clouds.
Bottom line, the Gartner MQ might cover the historical and the immediate view today. However, I believe the view forward for the SD-WAN market is that of a predominantly managed offering — all the way from the edge to the core.