Making sense of the SD-WAN business case

As enterprises finalize budgets for 2018, a common question in IT departments is how to budget for the implementation of SD-WAN technology. The fact that these conversations are even happening is noteworthy in itself; this is a technology that has gone from being a curiosity 18 months ago to a top-5 initiative for many IT teams in recent months.

There are many variations between SD-WAN vendors and service providers on what the technology offers, how it’s paid for, and how the business case stacks up. Here are a few items to consider:

For most enterprises, SD-WAN savings are based on transport savings

One of the headline benefits of SD-WAN that attract most enterprises is the prospect of significant savings. This can mean many things, but the bulk of these savings typically comes from replacing private MPLS connectivity with Internet-based services, and using SD-WAN to glue these together. Internet “may” be poorer quality (more on that later), and may not have performance guarantees, but the path performance tracking and steering capabilities of SD-WAN can work around these limitations. This may be the case, but it isn’t universal:

  • It is highly dependent on geography: the MPLS-Internet price gap can be much smaller in North America and Western Europe than it is in Asia Pacific or Latin America.
  • You have to consider broadband to see the biggest savings: replacing a leased line MPLS connection with a fiber-based DIA service often won’t deliver any real savings, as most of the underlying infrastructure is the same. Broadband services, especially asymmetrical products, open the door to far greater savings, but come with some performance limitations.
  • Somebody has to manage these all new Internet services: this can be a big surprise for enterprises – the real savings come from contracting with in-country providers, but this creates a lot of fragmentation. This requires internal staffing or a managed service wrap to deliver a high-quality service.
  • You have to work around your contractual limitations: most MPLS networks are contracted for multiple years, often 3 to 5. A well-negotiated agreement will provide more flexibility, but you may have to start with MPLS in the transport mix, impacting savings opportunities.

Yes, there are some big potential opportunities at the transport layer, but it can be one of the hardest areas to get right. Doing a poor job here means you may not find sufficient savings to pay for the new costs of the SD-WAN layer itself.

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