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The global software-defined wide area network (SD-WAN) market size is expected to reach $43.0 billion by 2030, exhibiting a CAGR of 38.6% in a span of ten years. North America undoubtedly accounts for the largest size in the SD-WAN market. The major factors supporting the industry growth in this region include the presence of established market players, the launch of advanced SD-WAN solutions, and the commercialization of the 5G network infrastructure.

When it comes to network infrastructure, if a wide area network (WAN) is seen as a jungle, SD-WAN is an alluring tropical rainforest. The traditional WAN is no longer suitable mainly because backhauling all traffic can be subject to latency and impairs application performance.

With SD-WAN’s software approach and virtualized network overlay, managing WAN is made simpler and easier, alongside offering ease of deployment, central manageability, and reduced costs. Moreover, it can improve connectivity to branch offices and the cloud.

With the internet used as a secure and reliable form of WAN transport, Gartner expects SD-WAN to reach 60% of enterprises in the next four or five years. Moving forward, SD-WAN allows the transition of networks to become agile than fragile.

Importance of SD-WAN Today

The worldwide SD-WAN market grew 50% in the fourth quarter of 2020, according to Dell’Oro Group. This is caused by the combination of demand caused by the COVID-19 pandemic and acceleration to innovate away from legacy technologies.

Overall, SD-WAN controls the connectivity, management, and services between data centers and remote branches over vast geographical distances and cloud integration. It specifically uses software to intelligently route traffic across the WAN based on the business requirements of an application. Unlike the traditional router-centric WAN architecture, the SD-WAN model is designed to either be within on-premise data centers, public or private clouds, and software-as-a-service (SaaS).

To explain it further, a traditional WAN consisting of a collection of routers, switches, and other purpose-built equipment is a fragile operation with changes requiring lots of time, work, and costs to pull off. On the contrary, software rather than hardware manages the network and all its connections, across many locations where necessary. 

Jeff Seal, Global SD WAN Analyst noted that automation and orchestration are key to improving network performance. SD-WAN opens a horizon that allows automation, orchestrations, and security in ways that were not possible before. Together with edge computing and 5G technologies, both communication service providers (CSPs) and businesses alike benefit from intelligence, reliability, performance, and superior network experience.

In addition, the increasing requirement for a simplified enterprise network architecture, need for cost-effective WAN management and automation, adoption of the bring-your-own-device (BYOD) policy at workplaces, enhanced utilization of internet of things (IoT) and big data, demand for network privacy, and rapid deployment of cloud-based solutions, also influence SD-WAN adoption growth.

Indeed, SD-WAN can address network optimization as it lays the ground for intelligent edge and innovative technologies of the future. Let us take a look at its two business models.

Managed SD-Wan Service

SD-WAN typically uses any available circuit type such as fiber, broadband internet, 4G, LTE, or MPLS, to provide resilient connectivity and bigger bandwidth. Thus, carriers have also been involved in offering these services. Taking this into consideration, carrier-managed SD-WAN design, build, and maintain an SD-WAN using the customer premise equipment (CPE). 

However, the quality and performance of carrier networks — delivered as a managed network — are outside of the control of manage service providers (MSPs). Furthermore, MSPs usually partner with third parties (SD-WAN vendors) to provide network security and additional services. 

The challenge with this approach is that, while some managed SD-WAN vendors have great brand names and market awareness, MSP can have limitations in accessing the SD-WAN environment. These include boundaries in managing, controlling, and determining service intervals.

Hence, some businesses may be hesitant to let a third party completely handle all aspects of WAN operations and network services without oversight. As a result, with managed SD-WAN, the enterprise customer prefers to maintain a level of company control as agreed upon with the MSP.

The lack of full control and flexibility are among the reasons to consider when opting for a managed SD-WAN solution. With MSPs providing services over the years, speed and agility with robust service level agreements (SLA) must be maintained at all times.

In terms of pricing, managed SD-WAN is typically available in multi-year service contracts, based on the customer sites, locations, and link speeds. 

SD-Wan as a Service

SD-WAN is the initial building block of WAN transformation as SD-WAN appliances are placed at the WAN edge for optimization. Nevertheless, SD-WAN alone can’t address the essential digital business needs being faced by enterprises.
As businesses become more global in nature and cloud workloads continue to account for more traffic sent to and from enterprise networks, this is where SD-WAN as a Service (SDWaaS) can extend its core capabilities.

By putting together the WAN into the edge, building a global backbone infrastructure, and integrating a full network security stack, a unified cloud-enabled platform is facilitated. Into the bargain, given that many cloud infrastructure providers such as Microsoft Azure and Amazon Web Services have a shared network footprint with SDWaaS providers, additional gains in performance can be leveraged.

Where the traditional WAN was firmly about the HQ and branch offices, SDWaaS focuses on connecting the user in a secure way to their required resource. This current transformation is driving SD-WAN adoption towards applying agile Internet-based solutions.

Accordingly, this service offering is a new way to architect, deploy and operate intelligent corporate WANs. It provides a simplified way of developing and managing remote connectivity and optimizing network performance.

By and large, the SDWaaS provider maintains an underlying shared infrastructure — the networks, servers, storage, and software applications — forming a cloud network. For this reason, a dynamic, fast, and cost-efficient solution is delivered. 

Through a network function virtualization (NFV)-based service with built-in elasticity and fully automated setup and configuration, SD-WAN software becomes more scalable. The edge SD-WAN device can select the transport data processing that leads to the nearest PoP. 

Moreover, SD-WAN accelerates time-to-service from weeks or months down to hours, while reducing the total cost of ownership. As based on the cloud, it handles the heavy lifting needed to ensure that network processing, routing, throughput maximization, onboarding, and cybersecurity are running smoothly. 

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