April 9, 2019

The SD-WAN Enterprise Business Case

Weighing the pros and cons of an SD-WAN service is critical for enterprises deciding to make the switch.

Enterprises searching for SD-WAN solutions to replace their existing MPLS branch connectivity packages need to consider a series of variables when building a business case for the switch. The advantages of SD-WAN solutions fall broadly into two groups: the monetary savings that can be achieved over their legacy network solution and the less tangible operational benefits.

An in-depth look into these factors can reveal if SD-WAN is right for an organization. But what are the pros and cons of SD-WAN and what does the cost structure look like?

Pros

  • SD-WAN is an Overlay
    SD-WAN creates an overlay on the existing WAN network topology, so there is very little new capex for the physical network that the service provider may have to partially pass on to the customer. For enterprise customers, this is a significant bonus, allowing them to dispense with a large upfront capex spend, gain visibility into the simpler installation requirements and accelerate lead times.
     
  • Scaling is Easy and Inexpensive
    Growing businesses may want to increase the available bandwidth in the WAN as they add more sites and users. In MPLS, this was always an expensive operation. Under SD-WAN, however, expansions can be cheap and, using a dynamic bandwidth scheme, can be agreed with service providers, making easy scaling down possible.
     
  • Costs are Moved to a Subscription Model
    Pricing for SD-WAN services are more usage-centric and have a very low initial setup cost compared to MPLS or other DIA services. This smooths out the annual cost and makes it easier to handle in an opex model, which suits many enterprise customers.
     
  • Application-Centric
    SD-WAN allows network administrators to have visibility into applications using the bandwidth across the WAN. This allows them to prioritize traffic based on which applications are more business-critical.
     
  • Self-Service Configuration
    Enterprises using an SD-WAN solution often have little verbal contact with their service provider once the initial rollout is over. Bringing a new site online is much simpler and can often be installed by the company’s IT staff. Then the SD-WAN will auto-configure over a DSL connection with custom WAN settings being applied via the web portal.

Cons

  • Security Holes
    Using DSL links from the branch sites creates a security hole as confidential traffic passes over the public internet. This was not a problem with MPLS, in which a single security measure was often enough for the whole solution. This concern is the greatest inhibitor of enterprise SD-WAN adoption today. As a result, a whole subsection of the industry is growing around the need to secure direct-to-internet enterprise branch connections.
     
  • Self-Management and Maintenance
    Extra internal IT staffing hours are certainly needed over the managed service arrangement of MPLS and must be rationalized against the perceived savings. Hiring another expensive member of staff purely to manage and maintain an SD-WAN service would nullify any financial saving made for many deployments.
     
  • Public Internet Performance
    ADSL is used in many cases to connect the branch sites to the network. The performance of ADSL is often not guaranteed to the same standards as enterprise-grade DIA connections. However, this lower performance may be just in the form of jitter and buffering, which will not affect many non-real-time applications.

Cost Structures for SD-WAN

WAN costs are usually around 10-20 percent of an enterprise’s overall IT budget, so this is a significant portion of spending for any company. Removing some of that cost, irrespective of the operational benefits, is high on the agenda for many businesses.

So how do the SD-WAN numbers stack up against MPLS? Analyzing purely the bandwidth costs savings, SD-WAN internet connections can produce a 60-70 percent saving over an MPLS connection. Commoditized hardware and software-centric networking models mean that high-cost proprietary hardware on customer sites is a thing of the past. Additional security controls may add another 20 percent to the initial SD-WAN cost and people costs for SD-WAN will likely be 20-30 percent higher. Yet over the first five years, SD-WAN costs are roughly half of those for MPLS, making it a very attractive economic alternative in the long term.

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