By Rosemary Cochran

May 16, 2019

More than one hundred SD-WAN products and services are available now – with more planned for launch this year. The term SD-WAN is being applied to nearly everything, including remodeled routers, WAN optimization and security equipment, appliance-based solutions, OTT service software, cloud-based offerings and integrated network-based services.

The focus of Vertical Systems Group’s SD-WAN research is Carrier Managed SD-WAN Services. These offerings address the rapidly changing networking requirements of enterprise and large business customers worldwide. What’s driving customer migration to SD-WAN services are the four interrelated Cs – Cost, Cloud, Connectivity and Control.

Managed VPN Segments: SD-WAN, MPLS and Site-to-Site

SD-WAN is one of the three Managed VPN segments that we track, along with MPLS and Site-to-Site VPNs. This segmentation is important. Our service migration analysis shows that the majority of billable Carrier Managed SD-WAN service installations are hybrid configurations that include partial conversions of existing Site-to-Site and MPLS networks.

SD-WAN, MPLS and Site-to-Site VPNs all enable secure transport of IP-based applications over network access connections between customer edge sites and data centers. However, there are significant differences when you compare these VPN service types based on functionality, service orchestration, underlying transport, access connectivity, application performance (e.g., latency, jitter, etc.), SLAs, cloud connectivity, network reliability, and recurring monthly costs.

Market penetration for Managed VPN services also differs considerably based on Vertical’s latest research. Worldwide revenue for Managed SD-WAN, MPLS and Site-to-Site VPNs combined is currently just over $40 billion. The emerging Carrier-Managed SD-WAN segment accounts for less than 5% of this market.

Definition Challenges

Defining the Managed SD-WAN Services market is a challenge, due in part to the broad and growing number of vendor-proprietary SD-WAN products and service solutions. Results of the most recent MEF/Vertical survey of Service Providers worldwide measured the extent of this diversity. Delivery of managed SD-WAN services encompasses Hybrid SD-WAN solutions, multiple SD-WAN vendors, OTT solutions – and more. Additionally, in conjunction with their goals to virtualize and automate all network functions, many network operators are developing their own SDN-based solutions that integrate SD-WAN and other applications.

That is why 82% of Service Providers said that their most significant challenge for offering Managed SD-WAN Services is the lack of standardized interoperability between SD-WAN devices from different vendors. The lack of an industry-accepted SD-WAN definition was also cited as a major challenge.

MEF is responding to these industry needs with MEF 70, the first standard for SD-WAN services. As an integral component of the MEF 3.0 Framework, MEF 70 defines a common terminology for buying, selling, assessing, deploying, and delivering SD-WAN services.

What is a Carrier Managed SD-WAN Service?

Vertical Systems Group’s definition for a Carrier Managed SD-WAN Service and its required components and functionality is described below. It aligns with MEF terminology for an SD-WAN service.

Security and cloud connect are two other capabilities that SD-WAN customers typically require. Security (i.e., firewall, malware protection, etc.) is most essential, and may be integral to the SD-WAN service. Cloud connect facilitates direct, secure connectivity to private or public clouds (e.g., to AWS, Azure, etc.).

Not considered Carrier Managed SD-WAN Services: DIY (Do It Yourself) SD-WAN solutions purchased from an SD-WAN technology supplier, systems integrator, or Cloud provider.

Service Providers Worldwide & LEADERBOARD

Carrier Managed SD-WAN Services are available from the following companies (in alphabetical order): Aryaka, AT&T, Bigleaf, BT, CenturyLink, China Telecom, Colt, Comcast, Frontier, Fusion, GTT, Hughes, Masergy, Meriplex, MetTel, NTT, Optus, Orange Business, PCCW, SingTel, Spectrum Enterprise, Sprint, T-Systems, Tata, Telefonica, Telia, Telus, TPx, Verizon, Vertel, Vodafone, Windstream, Zayo and others throughout the world.

See Vertical’s first Carrier Managed SD-WAN Services LEADERBOARD here. This new benchmark ranks the top U.S. providers based on market share results for year-end 2018.

Reality Strikes

Misperceptions about SD-WAN have delayed network purchase decisions and limited market growth. Migration to SD-WAN is a more complex undertaking than has been pitched to date, particularly for larger enterprise and global networks. It requires managing a customer’s digital transformation, providing education about SD-WAN alternatives, setting customer expectations, and delivering a quality customer experience. The reality is that it takes lots of experience and skilled resources to sell, deploy and manage SD-WAN networks with application and network visibility end-to-end.

Rosemary Cochran is a Principal and Co-Founder of Vertical Systems Group.