The COVID-19 pandemic slowed enterprise spending in what had been a white-hot software-defined WAN (SD-WAN) market. The economic impact of the ongoing global public health crisis forced organizations to shift budgetary priorities. In the area of networking, management, collaboration and remote work became more important than a technology largely aimed at connecting branch offices to data centers.
However, in the long run, the coronavirus outbreak, which forced businesses to temporarily close their offices and have most employees work from home, could mean a much larger market for SD-WAN technology, which offers a virtual WAN architecture that leverages software to manage connectivity to various transport options – including broadband internet, MPLS and LTE – and link users to applications. A trend building off of that has been SASE (secure access service edge), which delivers both WAN and security as a cloud service.
The underlying drivers for SD-WAN still remain, including ongoing digital transformation efforts by enterprises, the growing embrace of cloud services – which only accelerated during the pandemic – and increasing mobility are still occurring and still in place, fueling the need to replace traditional WANs. And some SD-WAN vendors retooled their offerings to support home workers in an effort to maintain sales and expand their market.
SD-WAN Market Rebounds
In a recent report, market research firm Dell’Oro Group said the emergence of the coronavirus slowed the growth of SD-WAN spending in 2020, but that businesses this year have more visibility into both economic and pandemic conditions, which will help boost spending around SD-WAN. The analyst group expects the global market to grow an average of 24 percent a year over the next five years, surpassing $4 billion in 2025.
At the same time, while corporate spending on SD-WAN deployments at branch offices may have slowed, the rapid shift to a highly distributed workforce forced companies to find ways to support and secure those employees, according to Zeus Kerravala, principal analyst with ZK Research. In addition, the result even after the pandemic lifts will be a more hybrid workforce, with many workers spending some days each week working from home and other days in the office.
“At the end of this, you’re going to see a lot more SD-WAN being used for home workers than you would have otherwise, ” Kerravala told InternetNews. “Traditionally you connected your branches over the WAN and [for] your home workers you used VPNs. Companies realized that with VPN, home workers that aren’t tech-savvy have a hard time with VPN. SD-WAN was a lot easier to do that with. Spending did slow down, but when it picks up, the overall TAM [total addressable market] will be bigger than it would have been had it not happened.”
SD-WAN also offers scalability, flexibility and – via SASE – more consistent security than traditional VPNs, he said.
“From a CIO perspective, you have to prepare for a scenario where everybody’s at home, nobody’s at home, and every possibility in between, ideally, ” the analyst said.
New Moves in SD-WAN
SD-WAN service providers and vendors are continuing to build out their offerings, including through partnerships. Verizon Feb. 18 expanded its partnership with Cisco Systems to grow out its managed SD-WAN services. The giant carrier rolled out three new managed service offerings for businesses with a global footprint. Verizon had provided organizations a self-managed platform for Cisco’s Viptela SD-WAN technology. Now it is rolling out a co-managed service that gives businesses the option of controlling security and application policies while Verizon manages fault, performance and configuration.
The goal is to lift the day-to-day management of the environment from the customer’s IT team while enabling them to make changes to SD-WAN policies and configurations.
Verizon also is offering a fully managed service aimed at smaller branch offices and based on Cisco’s ISR 1100 Series SD-WAN appliance.
Finally, the carrier is offering new managed service tiers for SD-WAN from Cisco’s Meraki group and the ability to manage Cisco Meraki MV smart cameras on the platform.
Like other top wireless carriers, Verizon over the past several years has partnered with a range of SD-WAN vendors – including Juniper Networks, Riverbed Technology and Versa Networks – to grow the SD-WAN services options it offers organizations. Similarly, AT&T partners with such companies as Cisco and VMware’s VeloCloud business.
For its part, cloud security provider Bitglass Feb. 18 expanded its platform by enabling organizations to secure their traffic from remote locations using technologies from such vendors as Cisco, Aryaka, Palo Alto Networks and Versa. That came a week after unveiling similar SD-WAN integrations with Citrix, Arista Networks, Aviatrix and Sophos. The vendor already had similar agreements with Aruba, 128 Technology, Fortinet and Silver Peak. Customers route traffic from branch routers through Bitglass’ SASE platform to ensure real-time security.
Kerravala expects consolidation in what is still a fairly crowded market to continue in 2021. Several years ago, when SD-WAN was emerging as a key sector in the larger software-defined networking (SDN) market, dozens of startups jumped into the space in hopes of gaining quick traction. Since then, there has been a steady drumbeat of acquisitions of smaller companies by established vendors looking to build out their own SD-WAN capabilities. High-profile examples have included Cisco buying Meraki and Viptela, VMware acquiring VeloCloud and Oracle grabbing Talari Networks.
Despite the slower enterprise spending on SD-WAN, the pace of acquisitions continued in 2020. Hewlett Packard Enterprise bought Silver Peak for $925 million, Juniper purchased 128 Technology for $450 million and VMware bought Nyansa to improve network monitoring and analytics for its VeloCloud platform.
Kerravala expects the market to coalesce around a number of larger players, with such smaller vendors as Aryaka, Cato Networks and Open Systems as possible acquisition targets. Buyers could include the likes of Arista Networks and Extreme Networks. There also is the possibility that one of these smaller vendors could emerge as a larger player in the market as the consolidation continues, something that has happened in other sectors of the networking space, such as load balancing and WAN optimization.
In addition, a security company like Zscaler could grab one of these SD-WAN vendors as a way of muscling deeper into the networking space.
2021 Moves Beyond ‘Pure Survival’
Whatever happens this year, spending on SD-WAN will go up, Kerravala said. After a year where companies were forced to quickly adapt to the rapid changes happening around them, they are going to need to find a more sustainable path forward in 2021.
“I think 2020 was the year that we had to scramble, ” he said. “It was just survival, how do I get my workers up and running, and we just sort of left everything alone. Now we’ve got kind of a big mess around here. We’re using a big mix of cloud services. … Some people are using traditional VPNs or SD-WAN. I think in 2021 we’ll take a step and ask, ‘What do we do with this mess we created?’ We’ll see some pick up in spend because companies need a strategy in place that can scale for the long term. What we did in 2020 wasn’t designed for the long term. It was pure survival.”