When software-defined wide area networking (SD-WAN) technology first hit the scene a few years ago, service providers were concerned the technology would cannibalize their profitable MPLS businesses. And that has been true, to a certain extent. But, according to the analysts at GlobalData, the bigger threat has come from the fact that enterprises have sought help to manage their increasingly complex IT estates from systems integrators. And this has led them away from service providers.
In an astonishingly short period of time, overlay networking has become the de facto WAN technology in the enterprise telecoms market, according to the data and analyst company GlobalData.
SD-WAN uses a combination of tunneling technology and orchestration and control software to create the appearance of a single, unified network regardless of the physical transport medium over which it is running. SD-WAN can run over several different types of underlying connectivity.
SD-WAN technology was initially thought to be a threat to telcos because enterprises could strip out their expensive MPLS connections in favor of SD-WAN. And service providers also worried that enterprises would take charge of their own WAN infrastructure in a do-it-yourself fashion.
“The reality has proven to be somewhat different,” said Gary Barton, principal analyst at GlobalData, in a statement. “Overlay networking has meant that the tried and trusted argument from service providers that owning the network means the highest quality of service has been undermined.”
In response to competition from IT systems integrators, which are garnering some of service providers’ enterprise customer relationships, network operators are setting up their own network services departments.
Global network operators such as BT and Telefonica have created new Digital Company internal divisions separating the creation of telecom services from the network-owning and operating parts of the business.
Barton said service providers need to expand their mind-set when they work with enterprise customers on SD-WAN, even when that means favoring a competitor’s network infrastructure.
“A proprietary, ‘our network first’ approach is not in line with a growing expectation from enterprises of a best-fit approach,” said Barton.