Gartner estimates that software-defined Wide Area Networking (SD-WAN) has less than 5% market share today, but the analyst predicts that up to 25% of users will manage their WAN through software within two years.
Revenue from SD-WAN vendors is growing at 59% annually, Gartner estimates, and it is expected to become a $1.3 billion (€1.16 billion) market by 2020.
One of the chief characteristics of an SD-WAN is its ability to manage multiple types of connections, from MPLS to broadband to LTE.
SD-WAN can be thought of as a little brother to its more well-known sibling software-defined networking (SDN). They are related, both are software-defined, but whereas SDN is meant for internal data centres at a campus or headquarter location, SD-WAN takes those similar software-defined concepts and the decoupling of the control plane from the data plane to the WAN.
“SDN is an architecture, whereas SD-WAN is a technology you can buy,” explains Gartner analyst Andrew Lerner, who tracks the SD-WAN market closely.
Much of the technology that makes up SD-WAN is not new, it is how it is being packaged together that has changed. Internet vendors offer various aggregation technologies and are happy to sell multiple links to a site, so that itself is not novel. Centrally managing a WAN is not new either. But the combination of those, plus SD-WAN’s ability to dynamically share network bandwidth across connection points, is a new value proposition.
As WAN used to be
Many enterprises have complex infrastructure at their branch offices consisting of routers, WAN path controllers, WAN optimisers, firewalls and other components. It is expensive to buy and maintain and complex to manage.
“SD-WAN has basically lobotomised traditional branch routers,” Lerner says. “Most enterprises just need a small subset of functionality. SD-WAN vendors package up the four or five most important features—path selection, low cost—and bundle it together. It’s a smart car compared to an SUV.”
Lerner estimates that an SD-WAN can be up to two and a half times less expensive than a traditional WAN architecture. A 250-branch WAN over three years is estimated to cost $1.285 million (€1.15 million) in a traditional WAN architecture, but only $452,500 (€379,700) with an SD-WAN deployment. The ability to use commodity routers is the biggest savings, along with staffing and a small decrease in router maintenance and support.
Market buckets
The market for SD-WAN vendors can be broken into multiple buckets: Incumbent routing and switching vendors who are rolling out SD-WAN products (i.e Cisco, Hewlett Packard Enterprise, Huawei and Brocade); WAN optimisation specialists who extend their products to include SD-WAN (Silver Peak, Riverbed, Talari Networks); pure-play SD-WAN start-ups (VeloCloud, CloudGenix, and Cato Networks); and vendors who offer managed SD-WAN products (AT&T, CenturyLink, Spring, Comcast Business, etc.) Some vendors have already been aggressive making mergers and acquisitions. Cisco bought Viptella in April and Riverbed bought Ocedo.
This ease of deployment, central manageability and reduced costs make SD-WAN an attractive option for many businesses. At VMworld 2015 29% of 260 attendees surveyed by Riverbed were exploring SD-WAN while 5% had adopted it. That compares to 77% who were exploring SDN, with 13% who had deployed it. Lerner says leading adopters of SD-WAN have been retailers and financial institutions that have a large number of branch offices.
So, if SD-WAN is so great why is it not ubiquitous? Many organisations have custom built ASICs controlling their WANs and LANs, which have long refresh cycles.
Network engineers are traditionally averse to dramatic changes too, Lerner says. When the hardware is ready for an upgrade Lerner expects organisations will consider SD-WANs, but that could be a multi-year process.
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