While the SD-WAN sector did see a slight slowdown in the first quarter due to supply chain and sales issues related to COVID-19, it's set for another banner year.
According to research by Futuriom, the SD-WAN tools and software market will accelerate to a growth rate of 34% CAGR to reach $2 billion this year. In fourth year of the annual Futuriom Software-defined Wide-area networking (SD-WAN) Infrastructure Growth report, the SD-WAN sector is expected to reach close to $3 billion in 2021 and $4.6 billion by 2023.
Despite the supply chain and sales challenges, the coronavirus pandemic spurred enterprises digital transformations in the first quarter, which included SD-WAN serving the growing demand for putting workloads and applications in the cloud. Futuriom expects SD-WAN demand will further accelerate in the second half of this year and into 2021.
According to Futuriom founder and chief analyst Scott Raynovich, the top four benefits of SD-WAN adoption include im-proved security, better management/agility, bandwidth optimization/cost savings, and faster cloud applications performance. These benefits rose to the surface of Futuriom 2020 SD-WAN Infrastructure Survey of 100 enterprise end users, which also indicated broadening use cases and adoption in the market.
While SD-WAN has been around for years, there's a growing awareness of it as the market matures. In the Futuriom 2020 survey, 92% of the respondents said they were evaluating SD-WAN services or software.
Because SD-WAN can integrate virtual private networking (VPN) for both remote workers and enterprise branches, the work-from-home (WFH) trend during COVID-19 gave SD-WAN a slight boost in Q1.
In addition to SD-WAN vendors, service providers, such as Colt Technology Services and Comcast, are currently evaluating SD-WAN solutions for home offices ahead of possible deployments later this year.
"The WFH trend has really strengthened the case for cloud-driven network and security automation, which is a sweet spot for SD-WAN solutions," Raynovich said. "We already see many SD-WAN vendors pivoting to provide security WFH solutions and this is going to help drive the market forward.”
Along with the market impact of the COVID-19 pandemic, the report said several technology trends would drive additional innovation and evolution in the SD-WAN sector.
"Enterprise IT departments need more efficient ways to build networks that connect multiple clouds, driving the creation of a multi-cloud networking (MCN) market," according to the report. "As SD-WAN platforms continue adding direct cloud connectivity to their feature sets, it’s likely that the next phase of their development will be aimed toward enabling MCN. And on the security front, SD-WAN platforms are becoming important tools for orchestrating and managing both endpoint and cloud security products—a trend that will grow in importance."
With the current business environment driving IT and networking departments to look for more efficient ways to deliver secure and better cloud connectivity, SD-WAN is poised to become key for managing networking, cloud connectivity and security for the foreseeable future, according to Futuriom's report.
After predicting last year that CloudGenix, which is being bought by Palo Alto Networks for $420 million, was ripe for M&A, this year's report said Aryaka, Cato Networks, FatPipe, Silver Peak and Versa Networks are all strong candidates for either being bought or conducting initial public offerings.