The increasing need for compute resources can strain traditional infrastructure, as well as the IT teams responsible for delivering on time and under budget. Previously, scaling a business required major investments in equipment and agreements with service providers to supply connectivity. Now, cloud providers have made the investment to provide state-of-the-art facilities, experienced staff, and fantastic equipment distributed across the globe.

Public cloud offers to lower capital costs and increase on-demand flexibility, but integration across clouds and existing implementations remains a challenge. How can enterprises connect and manage different technologies and systems while simplifying and securing networks spread across both private and public clouds?

Overlay-based software defined networking (SDN) is proving to be the most reliable way to securely link cloud-based infrastructure with existing data-center networks. In fact, overlay networking uses SDN features to give control over routing, firewalls, and VPN endpoints. This control allows application users to specify addressing, topology, protocols, and encrypted communications in any cloud or virtualized environment.

IT teams using overlay networks have the freedom to deploy practically any hybrid cloud resource across hardware vendors or geographic locations. Overlay networks offer security that is fully owned, controlled, and visible, and governed by the enterprise user. Overlay SDN also has advantages of working with existing hardware and software stacks, which preserves investments while offering the security, automation, and control of SDN.

Networks, from data-center networks to cloud-based VPNs, can use overlay SDN to disrupt traditional approaches to networking. The InfoPro Wave 5 Cloud Computing Study from 2013 found 38 percent of enterprises surveyed break out cloud computing budgets, while 60 percent include cloud-related spending as part of their enterprise-wide IT budgets. In other words, some firms are testing different cloud strategies and technologies, while others have recognized the need for cloud computing with their production-ready systems.

Public cloud infrastructure offers the compute and storage capacity needed to scale up and down and expand the global footprint of the business. IT teams at most companies are also eager to offer new solutions for customers. Public cloud is an ideal playground to test IT teams' and business managers' concerns.

Consider a supply-chain-management software vendor based in the U.S., with customers scattered around the globe. Like most modern IT shops, it wanted to test the public cloud, and specifically the networking capabilities that would connect their existing resources. Starting over in public cloud was not an option, because legacy applications and systems of record tied IT teams and budgets to physical and on-premises hardware.

As the business grew, they looked to leverage the scalability of the public cloud but discovered it is still not realistic for most organizations to move enterprise infrastructure to a public cloud. Instead of building a new cloud application and connecting it down to physical IT resources, the team decided to tie production networks and resources together in an overlay network.

Furthermore, this network had to scale with the necessary security and connectivity that public cloud providers did not offer as part of their security networking features. To properly link internal infrastructure across clouds, encrypted connections were needed with both IPsec edge connectivity and SSL/TLS VPN.

Overlay networking allowed this company to construct a joined cloud-based network across public clouds and connect those clouds to existing physical environments. They created a secure, global virtual network for their existing internal IT and customer implementations across the public Internet and provided on-premises solutions for their retail data analysis and management products.

Overlay SDN defines the networks in software, meaning designers can operate, control, and configure networks without physical access to the hardware. Effectively, SDN frees the network and applications from underlying hardware.

The overlay SDN solution provides Layer 7 control over the Layer 2 and 3 features necessary, such as routers and switches. Overlay SDN users can operate virtualized networks over any type of hardware in any physical location — including using overlay networks to unify physical data centers and federate cloud-based applications. Most importantly, overlay networking frees users to deploy practically any hybrid cloud resource across hardware vendors or geographic locations. Overlay networks offer security that is fully owned, controlled, visible, and governed from the application layer — where enterprise application owners operate.

The costs are less than one might imagine. Traditional networks need a lot of highly specialized resources to carry out configuration and management. The interface to the network had been a trouble-ticket system. Now software defined networks use an API interface, which enterprises can connect into a broader automation and orchestration system.

Enterprises are starting to outgrow the pod architectures where they used automated compute within the constraints of statically defined networks (and storage). Automation at greater scale means that everything needs an API, so the time has come for networks (and storage) to fit into the software-defined data center (SDDC) concept. From a cost perspective, SDN hasn't previously been a premium offering, and might even benefit from greater commoditization in the network equipment space.

With overlay SDN, the human skills requirement moves from low-level configuration to higher-level concerns around architecture and integration with adjacent systems. Just like the cost benefits of cloud computing, overlay SDN can shift enterprise capital expenses from capital expenditures to ongoing operating costs. The opportunity cost is not just about using SDN, but a more general move to on-demand models, greater agility, and reduced capital expenses.