When Cisco showcased updates to its SD-WAN portfolio earlier this month, including on-premises or cloud-based security, many of its smaller competitors in the SD-WAN market took notice. While some SD-WAN vendors including CloudGenix and Versa Networks viewed it as a gesture of flattery and recognition of their vision, they also embraced it as an opportunity to highlight what sets them apart from Cisco and other incumbent networking vendors.

“The best sign of flattery is when someone starts to follow you. Two years ago we came up with a concept called software-defined branch,” Versa Networks CEO Kelly Ahuja told SDxCentral. “We kind of set up the foundation for the next generation of not just the WAN, not SD-WAN only, but we said the industry’s moving toward a branch transformation.”

A confluence of changes brought on by new challenges in offices, retail stores, and other places of work requires IT managers to think beyond the WAN and consider implications for LAN, routers, WiFi, cellular connectivity, and security, Ahuja explained. “More than just SD-WAN, most enterprises are looking to re-architect their wide area networks. The wide area network in the past has been more site to site connectivity, but now it’s becoming more user to app connectivity based. As they do that the application performance in multicloud or [software-as-a-service] in the old architecture creates a poor user experience.”

Security embedded into SD-WAN is gaining a lot of interest and attraction of late. Although Cisco recently extended security technologies for SD-WAN to cloud based internet gateways, smaller companies like Versa and CloudGenix say they’re years ahead of Cisco on that front. “We set this vision out and over the past two years we’ve actually seen several of the incumbents follow along with that now. That’s a great sign of flattery that they actually are endorsing our vision. In fact some of them are even calling it SD-Branch,” Ahuja said. Count Hewlett Packard Enterprise’s Aruba and Cisco among that group.

CloudGenix CEO Kumar Ramachandran says Cisco has taken a long time to integrate new software and security into its routers. He also sees multiple factors including security, multicloud workflows, and collaboration as important points of differentiation in the SD-WAN space. “While I see WAN as a foundation capability that most customers need, what we’re finding is that there’s also a few other services that are very specific to transformation,” he told SDxCentral this week.

CloudGenix’s CloudBlades platform enables branches to be completely cloud delivered, and that’s something Cisco isn’t able to do today, Ramachandran said. “What Cisco is able to bring to the market is still mostly focused on hardware.”

That “core architectural differentiator” is something that “Cisco hasn’t been able to chase us down with in the last five years,” he said. “The Cisco router is still a packet router — it’s a Layer 3 system — and most of the SD-WAN vendors are Layer 3 systems too. If you have a Layer 3 system in the branch office you cannot enforce Layer 7 applications, you cannot enable capture of data at the Layer 7 level.”

Ahuja draws similar conclusions from his work at Versa, which recently earned high marks in a test conducted by NSS Labs. “There’s many companies that call themselves SD-WAN companies, but candidly they’re service providers leveraging somebody else’s tech,” he said.

“When a space is hot, everybody tries to attach what they do to it or form what they’re doing to it. We saw that when cloud came about — everybody became a cloud company. But ground-up innovation is what’s needed to drive the answer here” and very few companies are innovating on the technology front, Ahuja said.

“Over time everything consolidates,” he said. “We’ve gotten validated by the market and the customer, so we’re here to stay. Whether we stay independent or as part of another company, time will tell. As in any market, there is always evolution of the cycle, but what I can tell you is that decisions are being made and deployments are happening now in many large global enterprises that were initially only trialing, or testing, or thinking about this. With that we've crossed the chasm.”

Ramachandram is just as optimistic about the prospects. Among an estimated 20 million remote offices that use networking or WAN equipment today, SD-WAN has reached less than 10%, he said. “We’re in the early stages of a massive market transition.”