Raynovich: Opportunities abound for carriers' SD-WAN managed services

For decades, we have heard debates about whether major service providers could become trapped in the "dumb pipe" model for being commodity-based providers of voice and data services. With legacy cash cows such as International toll services (remember that?) and Multiprotocol Label Switching (MPLS) drying up, the urgency to come up with new value-added services is accelerating—especially in the enterprise market.

Software-defined wide area network managed services (SD-WAN MS) hold a unique promise for the enterprise segment of communications services. Providing a virtualized networking platform that can be easily linked to value-added services from the cloud, SD-WAN provides service providers with a unique opportunity to re-capture value in enterprise services.

SD-WAN gains momentum

In a trend I’ve been highlighting for years, SD-WAN represents the next platform for providing nearly all enterprise networking services, using a virtualized cloud model. Its popularity is gaining momentum with enterprises, as our recent research shows.

In Futuriom's recent SD-WAN MS survey (conducted in December with 120 enterprise end users), 82.5% of the enterprise end users (99 respondents) said their awareness of SD-WAN MS offerings was growing. A full 90.8% said that SD-WAN technology would grow as part of the strategy to replace alternatives such as leased lines.

Survey data and interviews with end users indicate that networking practitioners have a great interest in any number of a wide portfolio of cloud-based services that can be provided by SD-WAN platforms, such as security services, virtual private networks (VPN), application prioritization, and multi-cloud network access.

In our survey, value-added security services received the highest mean ranking of features needed. Next in line with the best scores were value-added bundles for SaaS and multi-cloud connectivity and self-service portals.

Self-service management and access to their own portal to control services ranked high on end users’ agenda. When we asked survey respondents whether co-management and self-service customer portals were key features of the SD-WAN MS offering, 78.3% (94) replied “Yes.”

Meanwhile, the timing could not be more perfect for using SD-WAN MS to deliver better security. The expansion of work-from-anywhere (WFA) drives interest in security solutions. Of those surveyed, 88.3% (106) said that that the trend toward more remote work would have an effect on how they view security components of SD-WAN MS solutions. COVID-19 has put more emphasis on finding more secure remote connectivity, said 88.3% of survey respondents (106).

Moving beyond the dumb pipe

In other words, the enterprises are telling the carriers that they want more than dumb pipes—and the service providers had better listen.

The reason that SD-WAN MS are popular is that they offer a wide variety of network services from the cloud—a model that service providers have been pursuing for many years using technology such as network function virtualization.

Many service providers are taking advantage of this, providing new SD-WAN MS. Some of the service provider leaders that Futuriom has identified include Aryaka Networks, AT&T, Colt, Comcast, Masergy, Tata Communications, Verizon, Vodafone, and Windstream. 

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Of course, this rush to provide SD-WAN services has been a boon to SD-WAN technology suppliers, setting off an M&A spree for traditional suppliers. Futuriom research indicates this market is growing at a 34% compound annual growth rate (CAGR). Many of the leading suppliers of SD-WAN infrastructure have already been snapped up, including Viptela (acquired by Cisco in in 2017), VeloCloud (VMware, 2017), 128 Technology (Juniper Networks, 2020), and Silver Peak (HPE, 2020). More are expected.

According to Futuriom’s research into SD-WAN technology partnership, the most popular technology partners for the leading SD-WAN managed services include Cisco, Fortinet, Juniper Networks, Nuage Networks (Nokia), Silver Peak (HPE), Versa Networks, and VMware. 

This move to SD-WAN as flexible platforms for networking and value-added services is going to last for at least a decade. The service providers that aren’t aggressively hopping on board risk missing their diversification away from the dumb pipes.

R. Scott Raynovich is the founder and chief analyst of Futuriom. For two decades, he has been covering a wide range of technology as an editor, analyst, and publisher. Most recently, he was VP of research at SDxCentral.com, which acquired his previous technology website, Rayno Report, in 2015. Prior to that, he was the editor in chief of Light Reading, where he worked for nine years. Raynovich has also served as investment editor at Red Herring, where he started the New York bureau and helped build the original Redherring.com website. He has won several industry awards, including an Editor & Publisher award for Best Business Blog, and his analysis has been featured by prominent media outlets including NPR, CNBC, The Wall Street Journal, and the San Jose Mercury News. He can be reached at [email protected]; follow him @rayno.

Industry Voices are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by FierceTelecom staff. They do not represent the opinions of FierceTelecom.