Zayo Group dove deeper into the SD-WAN waters today with the acquisition of managed service provider QOS Networks.

While neither party disclosed the terms of the deal, it addresses a growing demand for SD-WAN services, especially those that can address remote and home workers, Brian Lillie, chief product and technology officer at Zayo Group, told SDxCentral.

“We’ve heard from customer after customer that access is important; it’s critical … but what they really want is a software-defined, ubiquitous way to serve applications to employees wherever they are,” he said.

COVID-19 has only accelerated this demand, Lillie explained. “Now a branch office is your bedroom, your kitchen, and so the challenge for the CIO is ‘how do I provide and provision services to people working from home, people still in the office, and people in a hotel lobby.’”

Zayo is no stranger to SD-WAN. Prior to the acquisition, the company offered SD-WAN through a partnership with Versa Networks, according to Lillie. However, the company’s core competency remains transport services like fiber deployments, and packet services like MPLS, Ethernet, and direct internet access.

The addition of QOS Networks is part of a larger effort by Zayo to automate its network services.

It’s why “we’re investing so much in automation of our optical transport and packet networks so that we can get to pre-provisioned capacity,” Lillie said, adding that SD-WAN provides a layer of automation on top of the underlying infrastructure.

The acquisition also addresses large enterprises’ need for choice when it comes to selecting an SD-WAN provider. With QOS Networks, “we can be Switzerland for the edge, we can offer service choice to the client, and we can orchestrate consistently,” he said. “We know enterprise CIOs want choice. I talk to this CIO, and they want Versa. I talk to that CIO, and they want VeloCloud.”

The acquisition of QOS Networks allows Zayo to provide customers with the choice of VMware’s VeloCloud, Versa Networks, and Palo Alto Networks’ Prisma SD-WAN, with plans to add additional services in the works.

However, Lillie notes that existing customers shouldn’t expect big changes in the near term. Zayo plans to retain all QOS employees, and its CEO Frank Cittadino will join the combined company as SVP of edge services.

“We’re keeping that team connected, and what we’re going to do is learn,” he said. “For the near future — 2022 — we’re going to execute and operate as it is today. People should see no change or an improvement.”

The timing of the acquisition couldn’t have been better for Zayo Group, according to Zeus Kerravala, founder and principal analyst at ZK Research.

“I think we’re going to see a pretty big shift this year in SD-WAN away from do it yourself to managed services,” especially as enterprise networks grow more complex, he said, adding that the acquisition positions Zayo to better capitalize on this trend.

Kerravala also highlighted Zayo Group’s extensive fiber network that, combined with QOS Networks, should enable the vendor to ensure a higher quality of service over competing service providers and SD-WAN vendors.

“There is some value in an SD-WAN provider owning its own network,” he said. “I think a lot of top SD-WAN vendors have a hard time guaranteeing” network performance because it's out of their control.

In this regard, the deal bears a striking resemblance to Comcast Business’ acquisition of managed SD-WAN service provider Masergy last summer.

However, Zayo is late to the game if they just want to compete in the managed SD-WAN space, Kerravala said.

“My belief has always been that if you’re going to gain marketshare, then you need to do so when the market transitions,” he said. “The SD-WAN market and the cloud computing market, they’re pretty well established now.”

Kerravala believes Zayo could be making an edge connectivity play to support growing interest in edge computing. “They’ve got to bring something a little different to the table and, to me, that would be connectivity to the edge.”

As computing becomes more of a fabric, Zayo’s expansive fiber network could position the company to connect edge locations, private clouds, and public clouds in a seamless fashion, he said. “For me, that would be their opportunity.”