SD-WAN and vCPE have emerged as the leading use cases in the SDN and network functions virtualization (NFV) markets. This has been confirmed by our ongoing research, including the findings from our NFV survey this past spring (see diagram below). In addition, our research over the past year indicates that SD-WAN appears to have growing interest from both the service provider and end-user community.
In our NFV survey from this past spring, 78% of service provider and end users surveyed (total of 79 respondents) said that SD-WAN and vCPE were a leading use case for development of their NFV platforms.
These survey results have been backed up by real-world examples of service-provider deployments in the past 12 months. Network operators including AT&T, CenturyLink, Masergy, and Verizon have announced commercial SD-WAN offerings utilizing vCPE and NFV technology. It’s becoming clear that virtualized services offerings will become key competitive differentiators in the service provider world.
Before we take a deeper look at the benefits of these technologies and why both end users and service providers want a virtualized edge, it’s helpful to gain a better picture of the some of the networks we look at and what particular enterprises, SMBs, and service providers are looking to do.
Return on Investment (ROI) for vCPE, SD-WAN
Our research indicates that both service providers and enterprises have a rising interest in SD-WAN and vCPE technology. The reasons cited at the top of the list are the promise of better flexibility and manageability of networking technology – which can result in lower operating costs and capital costs, providing a return on investment (ROI).
How does this happen? The SDN movement promises a more flexible networking architecture to solve these problems. In the past, individual WAN applications or challenges – for example virtual private networks (VPNs) and WAN optimization – were solved with specialized hardware appliances and software installations. The SD-WAN movement allows individual WAN applications to be installed as software only. In addition, by using vCPE, the need for hardware can be greatly reduced, as software can be installed on any commercial off-the-shelf (COTS) hardware. This is especially useful in the WAN, where sometimes reaching the customer or installing equipment in remote locations can come with considerable expense.
Below is a summary of the varieties of virtual edge technology and their potential ROI and business benefits.
|Virtual Edge Technology||Examples of Potential ROI or Business Benefit|
|Web Portal for self-provisioning of WAN apps||· Can lower costs and management overhead for both provider and customer with customer provisioning.
· Accelerates provisioning and service velocity.
· Offers potential opex savings via self-serve mechanisms.
|WAN optimization in the cloud||· Can be used to speed access to cloud applications.
· Does not require specific devices on-premises to save capex for both the customer and service provider.
· Speeds access to data center and cloud applications.
|Application delivery controller in the cloud||· Does not require specific devices on premises to save capex.
· Speeds application access, reducing network costs.
|Cloud-based VPN||· Does not require specific devices on premises to save capex.
· Can turn plain-vanilla Internet into “business class” using encryption.
· Can be offered as a value-added service.
· Improves ease-of-use for customers or end users, providing better overall security.
|Cloud Security Services||· Allows customers to subscribe to hosted security services, such as Intrusion Detection System (IDS) and antivirus (AV) from a service provider.
· Enables service providers to offer value-added security services via a cloud-based WAN.
· Lessens the need for specialized security hardware.
· Supports real-time security updates.
· Delivers cloud-based security analytics.
|SD-WAN Controller||· Makes intelligent routing decisions in the cloud.
· Can route the right applications to the right path to help optimize the network.
· Can load-balance WAN connections to data centers.
|Full Network as a Service (NAAS)||· Allows customers to outsource their entire network.
· Enables service providers to use SD-WAN technologies to load-balance traffic.
· Helps customers easily add or subtract features and applications via a software-based provisioning model, with little hardware involved.
|Internet of Things (IoT)||· Provides virtualized machine-to-machine connectivity, for example, Automate Teller Machines (ATM) to a bank security monitoring network.
· Uses software overlays to provide additional security to network links.
· Provides analytics and monitoring capabilities in a wide range of industries, such as medical and transportation.
Cloud Services as an SD-WAN Driver
Another big trend in driving WAN services is the growth of cloud. Enterprise cloud services have changed the way SMBs and enterprises access applications. Whereas in the past an enterprise may have built internal networks for access to applications, users are often going outside the enterprise network to use the WAN or even the Internet to access cloud applications. Enterprise IT managers would like the WAN to become aware of this cloud traffic – potentially managing it and securing it for the enterprise users.
Our survey demonstrated the growth of cloud. Of the respondents who have private or hybrid clouds, 79% indicated it is important to have their WAN connectivity solution include secure connectivity to a private/hybrid cloud. The dominant reasons for having this security is to protect the privacy of sensitive data and address regulatory mandates. In an open ended question about the top cloud services used, Amazon Web Services (AWS), Microsoft Office 365, and Salesforce were the services most frequently cited.
The growth of cloud is a driver of SD-WAN technologies because often, SD-WAN can be used to intelligently optimize and secure connections to the cloud – and in some cases connect users more directly to the cloud data centers they are accessing.
Service Provider Opportunities with SD-WAN
It’s evident that vCPE and SD-WAN technologies can be used for anything, ranging from basic connectivity to a suite of data center applications and VNFs. The SD-WAN services market will be driven by the new need for services – both on the enterprise end users and service provider side.
Service providers are investing in the technology because they see it as a huge opportunity to offer new services to their WAN customers as VNFs. The IT services business is a $300 billion industry, so service providers are interested in many different kinds of applications and business services they could sell to customers once a WAN link is established. Enterprises and network managers want their network services simplified; they want a simple, IP-based connection that can get them access to a wide range of cloud services.
The end market also expresses demand for these services. According to the SMB/enterprise respondents to the SDxCentral survey, the functions they expect a WAN solution to deliver include security (67%), application prioritization (63%), load balancing (57%), WAN optimization and network management and monitoring (53% each).
When asked which they would prefer “an overlay-based WAN solution that provides a virtualized network layer above their physical connectivity or a solution that exposes direct controls over their physical topology,” an overwhelming 80% of SMB/enterprise respondents chose a fully virtualized solution.
We compared what SMBs/enterprises want with what service providers expect to deliver and found that there might be a slight disconnect when it comes to security. Only 50% of service providers are planning on delivering security features. There is alignment, however, in terms of application prioritization and awareness (63%).