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Industry Insights

The Promise of Software-Defined Wide Area Networking

By Versa Staff
Versa Networks
August 23, 2016

A recent IDG report predicted that the nascent software-defined wide area network (SD-WAN) industry, worth a mere $225 million last year, will experience a 90 percent compound annual growth rate over the next five years to become a $6 billion industry by 2020. SNS Research revealed that by the end of 2020, service provider investments in network function virtualization (NFV), SD-WAN and software-defined networking (SDN) will total more than $18 Billion.

The Growth Drivers

Telcos are aggressively jumping on the NFV and SDN bandwagon, targeting deployments across a multitude of areas. SNS Research said that operators are driven by the promise of several industry factors:

  • The growing use of cloud applications and services by enterprises
  • The focus on converged infrastructures (compute/storage/network) and the software-defined data center
  • Lessons learned regarding the benefits and best practices of server virtualization
  • Increased demand for network flexibility to support mission-critical technologies based on third-party platform technologies, particularly cloud, mobility, Big Data and Internet of Things (IoT) applications

Taken as a whole, market forecasts and research surveys from analyst and vendor organizations such as SNS Research indicate SD-WAN will move past the hype cycle to become a commonplace, real-world implementation in fairly short order. The rising need for surging cloud apps and services, varying traffic patterns, and increasing network complexity, as well as data center consolidation and server virtualization, are the major SD-WAN and NFV market drivers pushing this growth.

At this year’s Interop, IDC announced that nearly 70 percent of enterprises expect to use SD-WAN in the next 18 months. IDC believes that now is an exciting time for networking and that SD-WAN is not just an idea, it’s a tangible reality with attached revenue streams. Another key aspect of the market that IDC touched on was the importance of open-source networking. IDC’s Research Director Brad Casemore noted that the open-source community really does count and will decide winners and losers. He suggests that vendors integrate with open source where appropriate and focus on areas where they can add value and differentiate.

While hybrid WAN has been around for several years, adoption has not been immediate. The networking industry has been slow to deliver true innovation, and networks largely have not changed in the last 20 years. But now that they’ve discovered SD-WAN and its potential, service providers have defined the vision, goals and architectures that it can enable, and are progressing through use cases, proof-of-concept projects, field trials and a small but growing number of commercial deployments. This rapid “work-in-progress promise” keeps the industry moving quickly, but of course it’s going to be a multi-year transformation before the technology is adopted across the majority of service providers.

As the SD-WAN market hits its stride, enterprises stand to benefit from networks that are easier to manage, more cost-effective and adjust more readily (and securely) to cloud-based applications. The industry is quickly transitioning from haphazardly adding Internet connectivity to building an SD-WAN as a must-have, and this is a natural progression.

In addition, the adoption of SD-WAN will help organizations build new business-enabling services for their customers. Many enterprises lack the necessary capital to build their own SD-WANs and will rely on service providers to deliver the benefits of fast service delivery, lower cost, cloud application performance and visibility. In fact, CenturyLink recently revealed its managed SD-WAN offering and was applauded.