SD-WAN: Threat or opportunity for telcos?

By Doug Farndale November 5, 2015

At first glance, SD-WAN could easily be viewed as a competitive threat
But here’s how it could very well become the telco’s best friend

SD-WAN: Threat or opportunity for telcos? DISRUPT or be disrupted. That was one of the key messages that Cisco’s outgoing chief executive officer John Chambers gave in his keynote at the company’s user event, Cisco Live, earlier this year.

The message is short but clear: The business climate is changing and you can either change with it, or become irrelevant.

That has certainly been the case in networking and telecommunications, where the explosion of cloud services and mounting frustration surrounding the high cost and inflexibility of multiprotocol label switching (MPLS) networks is forcing enterprises to rethink their enterprise wide-area network (WAN) strategy.

Companies are now looking to the Internet to augment or replace their current WAN connections, which has opened the door for faster WAN provisioning and the ability to use multiple WAN paths at the same time.

This WAN transformation is being referred to as the software-defined WAN, or SD-WAN.

Why is SD-WAN so disruptive?

As an overlay technology, it enables customers to rapidly and non-disruptively augment or replace their MPLS networks with any form of Internet connectivity.

It provides visibility into all applications, and the capability to centrally-control all WAN traffic.

It ensures end-users are satisfied with consistent and enhanced application performance.

Finally, it can dramatically lower connectivity, equipment and network administration costs by up to 90%.

But is SD-WAN a friend, or a foe, of the telco?

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At first glance, it could easily be viewed as a competitive threat. After all, the objective of most implementations of an SD-WAN by enterprises is to offset the cost, rigidity and lack of control typically associated with MPLS.

And, for most service providers, MPLS is a huge source of revenue.

However, if you look a bit closer, one could argue that SD-WAN could very well become the telco’s best friend.

SD-WAN: Threat or opportunity for telcos? First, you start with reality. The rise of SD-WAN is already happening among global enterprises that want to leverage broadband Internet to augment or replace their existing MPLS connectivity.

Companies like memory products leader Kingston Technology and global manufacturer Interroll have already started to ‘broadband their WAN’ with SD-WAN technology, and are now benefitting from a lower cost and more agile network for their operations in Asia and across the globe.

With most telcos continually looking to differentiate their business and provide value to their customer base, SD-WAN can be their new, differentiated solution, delivering SD-WAN as a managed solution or as part of a network functions virtualisation (NFV) offering.

SD-WAN technology gives the telco a flexible software platform for delivering enterprise customers with a variety of virtualised network functions.

By leveraging SD-WAN technology, telcos can offer these differentiated services to customers, maximise operational efficiencies, and introduce new revenue-generating services faster and easier than ever before.

It can also set them apart from service providers who resist the SD-WAN trend or are trying to derail it.

If companies are already moving to an SD-WAN or possibly a hybrid WAN where they augment MPLS with broadband, which provider do you think has the advantage? The one who can deliver a solution that fits a need, or the one clinging to the old way of doing things and resisting the evolution of the market?

Adding SD-WAN to the mix can translate into building a customised WAN service portfolio that includes managed WAN optimisation, virtual private networking (VPN), compression/deduplication, and path-conditioning services.

When leveraging the right, complete solution, SD-WAN can provide automated licensing to help get new and innovative services to market quickly, which in turn means a faster time to revenue. Other benefits include per-instance tracking and metering of end-user customer usage to allow for easy and accurate billing.

The bottom-line is that the rapid adoption of cloud technologies and Software-as-a-Service (SaaS) applications are leading enterprise customers to use network resources in new ways.

For telcos looking to augment their existing business with new and innovative managed services, or NFV offerings, SD-WAN is a logical choice, not something to fear and/ or resist.

Doug Farndale is the vice president of Asia Pacific at Silver Peak.

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