Nine-year-old Talari Networks, which announced the latest virtual version of its software-defined wide-area network (SD-WAN) offering on Monday, originally got its start because of a failed IPsec deployment.

John Dickey, Talari's president and COO, says a good friend tried to rip out an expensive ATM/MPLS private network in Bangalore, India, and replace it with a site-to-site IPsec virtual private network (VPN) to help a company save money.

“His career did not take a good turn after that,” says Dickey, who posted a blog about the scenario on Talari’s corporate site. "To say it simply, the project was a disaster. The IPsec VPN underperformed dramatically."

Some of the problems were that the broadband service providers had no accountability, the bandwidth was unreliable, links were oversubscribed, and the IT team had no insight as to how to solve issues when they occurred.

But the IPsec fiasco in 2001 got him thinking about using multiple service providers and adding an intelligent layer to broker the traffic.

San Jose, Calif.-based Talari has been in the SD-WAN space for a number of years. It had 12 customers by 2008, and its SD-WAN product is now in its fifth generation. Talari has also raised $37.6 million in five rounds.

But Dickey still talks quite a lot about IPsec.

“We have an extremely intelligent underlay. IPsec can’t do that.”

Talari cites two vendors that approach SD-WAN similarly: Viptela and Cisco as part of its iWAN. “Cisco’s underlay is not intelligent; it’s just encrypted,” says Dickey. “Viptela eliminated a lot of complexity of the IPsec tunnel, but it’s still an IPsec tunnel.”

He says what makes Talari’s technology unique is that it tags every packet in one direction for Layer 2 and Layer 3 traffic. In addition, it tags Layer 4 traffic.

“We monitor at the transport layer and the app layer. That’s what gives us a break-out advantage to others.”

The virtual appliance announced Monday, the VT800, is built for enterprises to deploy a Talari SD-WAN.

The VT800 extends Talari's previously announced VMware ESX and Amazon Web Services integrations to now include Microsoft Azure and Microsoft Hyper-V, so that customers can capture the benefits of Talari’s SD-WAN natively on their Microsoft infrastructures.

Talari says the new virtual appliance answers a need, because enterprises are increasingly using cloud and hypervisor-based services in the WAN and branch.