Communications Service Providers (CSPs), including carriers, managed service providers and cable providers, are challenged to maintain business services revenue and profit streams in the face of bandwidth commoditization (e.g. high speed, inexpensive Internet services). Software defined wide area network (SD-WAN) solutions could and should enable CSPs to increase the value of their managed services for business customers.
CSPs rake in roughly $40 billion per year (with good profit margins) selling WAN services such as MPLS, frame relay, Ethernet, Internet, T-1 and leased lines to business customers. These companies have been willing to pay a premium for highly reliable, low latency, secure links from their data centers to branch offices and between data centers.
The problem is that increased use of cloud and SaaS applications has significantly altered WAN traffic flows in distributed organizations. Remote users require direct access to SaaS/Cloud-based applications such as Salesforce, Office 365, Lync, WebEx, and off premise storage. Traditional managed network services such as MPLS, which link branches to a centralized data center, can’t offer low latency/high performance access to cloud applications.
See an opportunity, a plethora of product suppliers, including Cisco, Riverbed, Viptela, VeloCloud, Silver Peak, Pertino and Talari, have introduced SD-WAN technologies that allow organizations to better leverage Internet circuits to solve WAN traffic challenges. SD-WAN uses software and cloud-based technologies to simplify delivery of WAN services to the branch office, and software-based virtualization enables network abstraction that results in simplification of network operations.
But that approach requires customers to acquire and manage the gear, which leaves the door open for CSPs to march in with a managed alternative, an opportunity they desperately need. After all, CSP revenues for managed business services have peaked and will slowly decline due to the commodization of bandwidth services and, as mentioned, services like MPLS are threatened by the ability of customers to use SD-WAN technologies to leverage Internet circuits.
Internet circuits (Ethernet, DSL, cable, etc.) typically are 1/3 to 1/2 the cost of comparable speed MPLS links. And Internet services have the advantage of higher speeds (100MB to 1 GB), wide availability and rapid provisioning times as compared to MPLS. The ability of SD-WAN to minimize the disadvantages of the Internet (poor reliability, unpredictable latency, and weak security) is the key threat to traditional managed business services provided by leading CSPs.
CSPs need to adopt SD-WAN technologies to remain competitive in the market for managed services. SD-WAN can help CSPs deliver flexible, cost effective managed services that meet their customers’ current and future needs. A key service that CSPs can deliver is hybrid WAN. Hybrid WAN allows current MPLS customers to add managed Internet bandwidth to their branch network. The Internet circuits will handle non-critical traffic flows to the data center and the increasing amount of direct to cloud traffic (i.e. popular SaaS applications).
Sign up for Computerworld eNewsletters.