It may seem counter-intuitive for service providers to offer software-defined wide area networking (SD-WAN) as a managed service when it could cut into their MPLS revenues. But the business case is actually pretty good for them, says Amir Khan, CEO of Viptela, an SD-WAN vendor.
“It’s amazing the speed at which providers are getting into this space,” he says. “Service providers are being pressed to offer services that provide hybrid capability – an ability to exit and enter from regional aggregation points to cloud services in a secure manner.”
SD-WAN can provide the flexibility that customers demand, but it also gives them the freedom to cut back on some of their expensive MPLS connections.
He gives the example of a financial customer that had been subscribing to two MPLS connections at each branch for redundancy: one connection from Verizon and one from AT&T. The company signed up for Verizon’s SD-WAN (provided through Viptela); it dropped its MPLS connection from AT&T; and it received connections from local cable and DSL providers via the SD-WAN managed service to provide redundancy.
The deal gives Verizon more revenue than it had before. It’s still selling its MPLS connection. But now, it also wins an SD-WAN managed services contract. And by partnering with local broadband providers, Verizon effectively expands into geographies it didn’t serve before.
“On top of that, they are partnering to enable higher layer services, like DPI and firewall, making money by offering their own layer 4-7 services from their own cloud,” says Khan. “They’re extremely excited.”
SD-WAN also saves money for the customer. They can eliminate redundant MPLS connections, and they also save money on multiple boxes at the customer premises. “We extracted routes and put them in the cloud,” says Khan. “So they don’t have to buy expensive boxes from Cisco and Juniper.”