Who's playing?

With such a strong business case for SD-WANs, it’s no surprise that more than a few CSPs are getting into the game. AT&T, Verizon, CenturyLink, Masergy Communications, and others offer SD-WAN services, though the four I just mentioned actually resell service from other vendors. Firms specializing in SD-WAN (aside from Talari, whom I mentioned before) include VeloCloud, CloudGenix, HPE (Hewlett-Packard Enterprise), Cisco, Ciena, SilverPeak, Versa, Virtela (an NTT company, not to be confused with fellow SD-WAN provider Viptela), and Huawei.

When you combine the significant presence of some of these firms with the power of re-sellers, that $6 billion figure touted by IDC starts to come into focus. And new deals are inked every day. Just a few days ago, Tata Communications selected Versa Networks as its partner for a new managed SD-WAN service.

"We have a long-term strategy for enabling our customers to drive their digital transformation through the cloud and unleash the growth potential that new markets and geographies can bring," said Hon Kit Lam, VP of managed networks and IP Services for Tata Communications, in a statement about the deal.

And that’s what SD-WAN really represents, and why I think it’s one of the most significant trends of 2016. It is an example of digital transformation and virtualization that, in a fairly straightforward and tangible way, represents the promises that have been made by all the talk of SDN and NFV for several years now. But while terms like SDN are sometimes fuzzy and hard to nail down, SD-WAN is clearer.

Drawbacks?

But there are, of course, some drawbacks. As Edgewater Networks’ John Macario points out, SD-WANs are focused on the network as a whole rather than any specific communications infrastructure, which could result in dropped packets. Furthermore, providers may not have focused visibility into the customer environment, so troubleshooting isn’t always an exact science.

Macario emphasizes the need for network edge orchestration as a way to mitigate these service blind spots. It’s a sensible suggestion, and one that jibes with the wider discussion about the need for orchestration in an era of increasing virtualization.

In addition to the technical considerations, SD-WANs present the added concern for CSPs of cannibalization of their existing MPLS and managed service revenues.

Threats vs. opportunities

A recent whitepaper from PwC titled, “SD-WAN for Service Providers: Threat or Opportunity” addresses this very concern. While there are certainly threats, the paper concludes that they are outnumbered by opportunities for CSPs. Specifically, SD-WAN can create new revenue streams in a very cost effective way and reduce time-to-market through automated deployment. SD-WAN creates opportunities for metering for enterprises so they can put in pricing models based on consumption—which can also be an important tool in optimizing customer satisfaction. Zero-touch deployment reduces headcount, and the transport-agnostic nature of SD-WAN means CSPs can capture new customers in geographic areas that could not be feasibly served by MPLS.

In short, SD-WAN represents a tremendous opportunity for both end-users and CSPs, while also creating significant new revenue for the players in the space who got in early, especially those who have been fortunate enough to partner with major re-sellers.

As 2016 gives way to 2017, we will watch with great interest as SD-WAN is poised to take off in a big way. And if by some chance it doesn’t, we look forward to exploring that as well.