A new flavor of WAN optimization -- one that is delivered via the cloud -- is ready to shake up both the service provider and WAN equipment market. Startup VeloCloud is an early leader emerging in the field, having announced the general availability of its service, named VeloCloud, last month.

VeloCloud is among several startups in this area, including Pertino, which are taking WAN services to the cloud to eliminate the complexity for the customer. WAN links purchased from service providers to connect corporate offices and often employ expensive equipment and leased lines that must be managed by an IT department.

Some popular phrases used to describe this next phase of WAN development include “Cloud WAN” or “Hybrid WAN.”

“We call this the cloud-delivered WAN,” says VeloCloud Co-founder and CEO Sanjay Uppal, in an interview at the VeloCloud offices this week. “What remains at the edge is a very simpler function, understanding the app and knowing which line to send it out on it,”

While startups such as Pertino are targeting VPNs for Small Medium Business (SMB) using Virtual Private Networking (VPN), VeloCloud is going after large enterprises with a wider range of services to manage WAN connections. It also aims to optimize the connections and deploy services such as security, including VPN, and application-aware networking. The goal is to increased the quality, reiability, and security of a WAN link.

VeloCloud's entering the market at a good time, because the grousing about the performance and management of existing WAN services among IT managers seems to be growing. If you wanted to run down a general list of problems with the legacy WAN technology and business model, it might look like this: 1) Leased lines such as T-1 or MPLS are expensive and not always reliable 2) Enterprises want a way to leverage their Internet broadband connection while making it more secure and reliable for business applications 3) Managing WAN equipment and security in branch offices is a pain in the ass.

There is widespread proof that the customers are ready for something new. In a survey by Ashton, Metzler & Associates in 2013, 86.5% of respondents indicated that WAN connections negatively affect business-critical applications. Some of the major concerns listed by respondents were the reliability and cost of MPLS connections and the security and reliability of Internet connections.

The current WAN business model also frustrates enterprise customers because they feel as if their choices are limited. They are forced into buying specific WAN equipment and leased-line solutions from a limited amount of service providers, with little flexibility. Then they run up further costs maintaining and and managing the WAN Customer Premises Equipment (CPE).

VeloCloud delivers CPE, but it is packaged with the service and managed by VeloCloud, so the customer doesn't have to buy or own the WAN hardware. Other technology components of the service include a VeloCloud “gateway” that sits in service provider Points of Presence (POPs), and services software called Cloud Orchestrator, which offers one-touch provisioning of WAN services. The idea is that you buy your WAN service from VeloCloud like you would buy your home cable services, the box comes to you and you plug it in to activate services.

VeloCloud says that once all of the WAN connections are plugged in -- many enterprises use a combination of leased line (T-1 or MPLS), Internet (IP), and wireless to connect their offices -- the VeloCloud technology then ties them together in one virtual network, monitoring each connections for packet-loss and latency so that it can automatically direct traffic to the fastest path at any time using its “Dynamic Multi-Path” approach. It also locks down the IP connections with built-in firewall and VPN capabilities. It does all of this by using an algorithm to monitor and combine the WAN connections using the CPE box, then encapsulating the traffic with its own tunneling protocol.

You could think of VeloCloud as a sort of “Akamai for the corporate WAN.” Just as Akamai helped speed up the consumer network for accessing content by building a content delivery network (CDN), VeloCloud is offering a cloud-based WAN network that can optimize and accelerate corporate applications.

VeloCloud also has a good Return on Investment (ROI) story in its sales pitch: The savings it claims to deliver include reduced equipment cost (the equipment is included with the service), fewer “truck rolls” or visits to branch officers, lower circuit or connection costs, better remote management and security.

VeloCloud has already announced several enterprise customers, including the Coca-Cola Company, Merriman Capital, Coraid, Roka Bioscience and Rockford Construction. The VeloCloud service became available last month. VeloCloud has raised $21 million from New Enterprise Associates, Venrock, and incubator The Fabric.