What Is Software-Defined WAN (SD-WAN)?

Software-Defined Wide Area Networking (SD-WAN) technology is used to provide WAN services to businesses, enterprises, and consumers using the cloud rather than proprietary hardware and software that is installed onsite. Typically the software can be provisioned and installed on generic hardware, often referred to as customer premises equipment (CPE).

Replacing Private Lines With SD-WAN

To understand the concept of SD-WAN, let's take a look at how the cable or broadband industry works. In the legacy markets, one would call up a service provider and order a service, which would be provisioned on the phone. The company would then schedule a service installation date and ship hardware that could be used for the service. Typically the consumer would wait for a service technician to install the service to provide cable service or broadband.

In the enterprise, a similar system for private WAN services could use broadband, private lines, or T-1. Typically this would require specialized hardware to be delivered and configured by either a service technician or an employee.

Flexibility of SD-WAN

In the SD-WAN model, most or all of this service delivery can occur using customer-based provisioning -- usually by accessing a cloud service via the web -- and commodity hardware. For example, the customer would go to a website and order a WAN service such as WAN Optimization or Virtual Private Network (VPN), and the software could be installed in CPE hardware via the Internet. Or, very lightweight CPE could be delivered and then configured remotely.

This model is growing in popularity because the SD-WAN approach provides a number of benefits to enterprises looking to expand their networking capabilities. For example, some of the benefits include:

• Reducing WAN connectivity costs by leveraging lower-cost services such as Internet broadband or by optimizing the use of private lines.
• Use of generic hardware to lower hardware costs.
• Centralized management can reduce complexity and operating expenses (OPEX).
• Enable customer self-provisioning of WAN links.
• Automated management.
• Avoiding vendor lock-in to proprietary hardware in branch offices.
• Use analytics to boost intelligence to drive more dynamic traffic prioritization and load balancing.
• Increase security with encryption and security analytics -- especially for sensitive applications such as financial transactions or retail PCI requirements.
• Provide efficient routing of traffic to access cloud applications such as SaaS.
• Redundancy of links.
• Transport independence (multiple providers for broadband or network links).

Leading SD-WAN Startups

There are many companies launching SD-WAN and related virtualized network services. The technology used to provide such services is often referred to as network functions virtualization (NFV). Some of the leading technology providers in the SD-WAN and virtual WAN optimization space include Aryaka Networks, Silver Peak, VeloCloud, Versa Networks, and Viptela.

At the same time, many leading service providers are using SD-WAN and NFV technology to launch their own SD-WAN services. For example, CenturyLink, Masergy, and Verizon have all launched SD-WAN services. Many more are planned.

The SD-WAN market is heating up and some of these companies are starting to become profitable. Unlike other areas of the software-defined networking (SDN) market, SDN-WAN, with its strong business model (SD-WAN services purchased in the cloud), seems to be holding more interest from customers and carriers alike. I expect that SD-WAN services are going to become a key differentiator for global service providers and this could drive a number of acquisitions as a shakeout looms in the market.