SD-WAN for the Cloud Era: Enterprise Priorities and Telco Opportunities

Emir Halilovic, Principal Analyst

Summary Bullets:

  • SD-WAN adoption is growing and the number of vendors in the market stays high, but the architecture of SD-WAN mimics legacy WAN infrastructures, not necessarily aligning with public cloud adoption trends and evolving traffic patterns in the enterprise.
  • SD-WAN solutions need to evolve by adding capabilities that align with enterprise ‘cloud-first’ priorities and allow operators to use their edge infrastructure as a competitive differentiator.

The history of SD-WAN started with the first solutions designed to offer enterprises a way of building secure and controlled WAN environments, without resorting to costly and often scarce telco services like MPLS. The market has grown to dozens of vendors, and most telecommunication operators offer one or more SD-WAN solutions in their portfolio. But the development of the market so far has brought to light two main shortcomings of most SD-WAN solutions, affecting enterprise users and telco operators, respectively:

  • SD-WAN Is Usually Optimized for Legacy Traffic Patterns: At the time the SD-WAN concept was introduced, the focus of the solution was reducing enterprise OpEx and increasing their WAN’s reach. This was achieved by enabling enterprises to build their WANs without having to resort to secure, dedicated, and costly connections, like MPLS leased lines. But the design logic of most SD-WAN solutions remains firmly tied to traditional traffic patterns, where branch offices access data and applications residing in one or more private cloud locations. In the age of cloud, when public cloud adoption in the enterprise is booming, this means that SD-WAN service – automatically routing all the traffic to central office location – becomes sub-optimal in terms of application performance and bandwidth utilization. Moreover, routing cloud-bound traffic to central offices also reduces resilience, as all public cloud services for an SD-WAN connected branch will cease to function if a central office connection is down.
  • SD-WAN Relegates Telcos to a Reseller Role: At first, SD-WAN solutions were unapologetically aimed at circumventing the telco infrastructure and were targeted at, and sold to, enterprises directly. The market has evolved since, and telcos are now probably the most important market channel for SD-WAN solutions. Yet, SD-WAN offerings are still designed with circumventing the telco infrastructure in mind – denying them the opportunity to use their unique network assets to their, and their customers, advantage.

These shortcomings open space for innovation in the SD-WAN solution design, with the following characteristics:

  • Build SD-WAN with Cloud Traffic in Mind: The idea of connecting enterprises to public cloud is not new; so-called cloud connect services have become quite prominent in the marketplace, but mostly designed to serve large campuses or central offices, not solving the problem of cloud-bound branch traffic. SD-WAN solutions can cater to cloud-bound branch traffic by combining operator edge-based cloud gateways with application-awareness, offloading this traffic to public cloud, and relieving the pressure on central office connectivity.
  • Bring Telco Service Edge into the Game: Beyond optimizing for cloud-bound traffic, the combination of SD-WAN with telco service edge-based assets opens a way for wider engagement of both telco and enterprise, to the benefit of both sides. Operators can use SD-WAN as a vehicle for development of edge-based enterprise services, such as secure access service edge (SASE) and others. This, in turn, allows enterprises to simplify their branch infrastructure and migrate their branch CPE functions to the operator’s edge, reducing the footprint, power draw, and cost of branch CPE devices. This further simplification of physical branch infrastructure will allow for creating smaller branches with full enterprise-grade functionality – even to employee’s home offices, which is especially beneficial for enterprises operating under lockdown and homeworking rules.

Operators and SD-WAN vendors thus have an opportunity to innovate, create value, and bring operational benefits to their enterprise clients. With the use of public cloud in the enterprise increasing steadily, and the number of ‘born-in-the-cloud’ companies growing, synergies of SD-WAN, service edge, and cloud connectivity represent a growing opportunity for all participants in the SD-WAN ecosystem.

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