Software-defined WAN (SD-WAN) has gained traction and become an industry buzzword for valid reasons. International Data Corp. (IDC) reports seeing more than a 50% reduction in legacy MPLS spends and an approximate 2000% bandwidth increase by adopting hybrid setups (MPLS and internet). Additionally, nearly one-third of enterprises worldwide will adopt SD-WAN by 2023, according to IDC.
Among the many rich advantages of adopting SD-WAN, bandwidth augmentation (the ability to use the internet for enterprise traffic along with MPLS rather than using it as a backup) is an important SD-WAN use case and presents lucrative commercial savings. However, this presents a rather peculiar viewpoint from the perspective of traditional service providers. The legacy MPLS providers stand cornered by the fact that their long-time associated enterprise customers could be planning to move away from the MPLS links they had procured for their WAN connectivity so far.
That being said, this is a great time for the service providers to start providing managed service offerings and adapt to this challenging landscape. It also presents an opportunity to increase profitability and expand their market footprint.
SD-WAN vendors made early roads in this changing landscape and offered SD-WAN as a product that could be consumed by enterprises just like the way it had been so far with traditional routing and switching. However, the fact is that many enterprises are finding out that deployment and management of the SD-WAN by in-house IT teams is more complicated than the product datasheet makes them look. This is especially true for mid-size enterprises with skeletal IT staff but a large geographical footprint.
This is exactly where the opportunity lies for MSPs to increase profitability and improve customer relationships. They can transform into trusted partners for their enterprise customers, moving away from just providing bandwidth to offering value-added services, such as security, firewall, IPS, and optimization.
Once the enterprise customers start this journey with other players, it will continue to get stronger and more strategic over time. If the service providers fail to change and adapt in time, it will be difficult to make a comeback.
If the MSPs want to catch this wave and transform, the following aspects should be considered very carefully:
- The go-to-market strategy should be clear, instead of a part piece approach for each customer it onboards.
- The skill set of the MSP’s IT team would need to ramp up.
- Service Orchestration and assurance will be a key role the MSP would need to accomplish.
- Smaller SD-WAN deployments are simple, however, large-scale deployments have the need for greater flexibility.
The time is now, and service providers have to act right away. With a huge upcoming demand and clear forecast about the inevitable adoption of SD-WAN by enterprise customers, service providers stand to gain the most in terms of revenue and market capture if they quickly adapt to take advantage of this opportunity.