Awareness of, and demand for, Network Function Virtualization (NFV) exploded in 2015. This comes after just three years of life as a technology. It is no surprise to us that NFV is getting so much attention. The need for greater service agility, versatility and reduced costs around networking has never been clearer — especially in the wake of ongoing transitions to the cloud and DevOps operating modes, as well as the need to squeeze greater cost efficiencies from network resources.
Software-Defined WAN (SD-WAN) in particular is gaining momentum. In the past six months, inquiries regarding this nascent technology have soared, and interest at events and with partners have exceeded expectations. We’re also seeing a higher demand for virtual CPE (vCPE) and branch security, which was partly due to well publicized corporate and government security breaches. With an eventful year behind us, Versa Networks is well positioned to take advantage of these growing markets in 2016.
The demands on WANs are complex. Real-time communications need to be prioritized, but almost all the traffic transiting networks today is encrypted. Applications have become decentralized, with different apps in branch offices, corporate data centers and SaaS/cloud providers. Data has to get from all locations to all locations without breaking the bank. To top it all off, most networks and IT assets are under constant attack, making security a top priority.
Traditional approaches to networking, which rely heavily on siloed functions and proprietary hardware, are not meeting the needs of today’s enterprises or the service providers that manage much of their connectivity and security. The way wide area and branch networks are built and operated is going to continue to change this year.
Traditionally, organizations have faced a stark choice in WAN connectivity. They could obtain a consumer-class Internet connection with a slightly better SLA (“business broadband”) or they could obtain costly but secure and reliable managed private services such as MPLS.
The cost of MPLS is many times that of business broadband. While this hasn’t traditionally been a concern for large enterprises, it is a tough barrier to adoption for many mid-market companies. Yet they need a solution that provides many of the same benefits that are enjoyed by large enterprises, including highly available service, strong SLAs and security they can trust.
Network architecture is changing, quite aggressively in Europe with early deployments of vCPE. Add to that the fact that Europe has a good number of competing service providers at country and regional levels. In order to stay competitive, these providers are looking not only to increase the value of their services for existing customers, but are eager to make managed services available to market segments that haven’t previously been able to take advantage of (or afford) them.
Using vCPE, service providers are discovering they no longer need to ship multiple pieces of expensive CPE to each site. Smaller sites (or businesses) can connect to the provider’s premises-based (i.e. cloud-based) services, and the networking and security features that would traditionally have been provided by costly on-site equipment for larger enterprises are now available for many SMBs as provider-hosted services.
This has a number of benefits. The most obvious is saving money. By virtualizing network functions and providing simplified CPE, both the service provider and the customer can save a lot of money.
More so, organizations that might not have been able to participate in managed services now can, enabling greater functionality and security for the customer. This has proven quite important in Europe, as connectivity options vary greatly across the continent, and many organizations are present in multiple locations across multiple countries.
The service provider also gains the ability to offer self-service provisioning. The customer can select the services they want through a website without having to contact the service provider directly. This is a true win-win, as it reduces support costs for the service provider and provisioning time for the customer.
Perhaps more importantly, vCPE offers service providers the ability to extend the managed connectivity market beyond Europe’s finite number of medium to large enterprises. Europe is a continent with many small and mid-market organizations, many of which have never had the ability to explore the added value that carrier-supplied services can bring.
While the above might seem obvious after thinking through, it presents the real needs that were regularly shared with us throughout 2015 by organizations in Europe. vCPE is resonating well there, and you can see why read this.
We are also seeing excitement around our SD-WAN and branch security solutions and are entering 2016 with strong momentum in both North America and EMEA, along with new projects in Asia-Pacific and Latin America. In total, we currently have over 45 active customer engagements with Tier 1 and 2 service providers and large enterprises.
To keep that momentum going, we exited 2015 with 35 patents in process around network technology, provisioning and analytics, and we’re continuously investing in research and development to innovate even more.
In closing, I want to thank our team, partners, customers and investors for a great 2015 and look forward to knocking 2016 out of the park!
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