Software-Defined Wide Area Networking (SD-WAN) has definitely gained traction and become an industry buzzword. IDC reports are seeing a more than 50% reduction in legacy MPLS (Multi-Protocol Label Switching) spends and an approximate 2000% bandwidth increase from adopting hybrid setups (MPLS and Internet). Additionally, nearly 1/3 of enterprises worldwide will adopt SD-WAN by 2023, according to another report by IDC — and we are just getting started.
Among the many rich advantages of adopting SD-WAN, Bandwidth Augmentation (the ability to use the Internet for enterprise traffic along with MPLS rather than using it as a backup) is an important SD-WAN use case and presents lucrative commercial savings. However, this presents a rather peculiar viewpoint from the perspective of traditional service providers. The legacy MPLS providers stand cornered by the fact that their long-time associated enterprise customers could be planning to move away from the expensive MPLS links they had procured for their WAN connectivity so far.
That being said — this is a great time for the service providers to start providing managed service offerings and adapt to this challenging landscape. It also presents an opportunity to increase profitability and expand their market footprint.
SD-WAN vendors made early roads in this changing landscape and offered SD-WAN as a product that could be consumed by the enterprise just like it had been so far with traditional routing and switching. However, the fact is that many enterprises are finding out that deployment and management of the SD-WAN by in-house IT teams is more complicated than the product datasheet makes it look. This is especially true for mid-size enterprises with skeletal IT staff but a large geographical footprint.
This is exactly where the opportunity lies for Managed Service Providers (MSPs) to increase profitability and improve customer relationships. They can transform into trusted partners for their enterprise customers, moving away from just providing bandwidth to offer value-added services such as security, firewall, IPS, and optimization.
Once the enterprise customers start this journey with other players, it will continue to get stronger and more strategic over time. If the service providers fail to change and adapt in time, it will be difficult to make a comeback.
If the MSPs want to catch this wave and transform, the following aspects should be considered very carefully:
- The Go-to-Market strategy should be clear, instead of a part-piece approach for each customer it onboards.
- The skillset of the MSP’s IT team would need to ramp up.
- Service orchestration and assurance will be a key role the MSP would need to accomplish.
- Smaller SD-WAN deployments are simple, however, large-scale deployments have the need for greater flexibility.
The time is now, and service providers have to act right away. With a huge upcoming demand and clear forecast about the inevitable adoption of SD-WAN by enterprise customers, service providers stand to gain the most in terms of revenue and market capture only if they quickly adapt and transform to take advantage of this market opportunity.
Sharad Chandra, Senior Solutions Architect for Criterion Networks, is a seasoned information security and data networks professional with more than 15 years of experience providing training, consulting & design guidance to some of the largest enterprises worldwide. He is an IP networks expert with deep insight into evolving technologies such as SD-WAN, cybersecurity and network automation.