SD WAN: The key to global expansion
12 March 2018 | Mirko Voltolini
More businesses are demanding agility and on-demand functionality from service providers. The growth of SD-WAN has begun to meet this demand. How is the enterprise market changing and how are carriers tackling this shift?
For global companies, operations in multiple countries and sites have become the norm. Nestlé has 418 factories in 86 countries, while GE has operations in more than 170 countries. Even relatively young companies have pursued aggressive international strategies.
It’s paying off. Earnings from tech giants have been bolstered by international expansion, with Netflix reporting profit from its international operations in Q4 2017, and Amazon seeing a strong international sales trajectory. London-based Transferwise raised $280 million to expand to Latin America and Asia.
Different countries are vying to attract the best companies in the world. Berlin, Hong Kong, London, Amsterdam and Dublin have all been picked out as cities that are ripe for expansion, boasting advantageous corporate tax rates, developed infrastructure and well-educated and talented workforces.
In its predictions for the year, analyst firm Forrester described the dynamic of the market as one that will favour the bold. It predicted that this will force companies to decisive action, following the lead of Amazon and Google.
For many enterprises, much of this control is related to costs, the need for efficient business models, and the ability to scale up and down according to business needs. According to IDC, at least 50% of global GDP will be digitised by 2021, with growth driven by digitally-enhanced offerings, operations and relationships.
Yet many global businesses are already struggling with connectivity issues, faced with a growing demand for bandwidth. This is driven by a number of trends including the dramatic shift in the number of enterprises moving applications to the cloud, and the proliferation of data-intensive content such as video. There is an increasing need for bandwidth across enterprises, with demand rates soaring by 20-30% a year. These companies are also struggling to get a handle on maintaining increasingly complex and diverse networks in a cost-efficient way.
Global business power
International companies must prioritise connectivity to ensure that they are operating cost-efficiently. Much of that is targeting the part of the network that is simply not seeing enough return on investment: the wide area network (WAN).
For many, the WAN has become one of the most expensive portions of the network to maintain, far ahead of the data centre or network security. Despite the growth in bandwidth need, the majority of WAN budgets are not growing at the same rate.
Moreover, for expanding global companies, many WAN offerings do not afford the necessary agility they need, making it difficult to add new sites, increase bandwidth, or change connectivity settings.
In order to overcome these challenges, network infrastructure must no longer be an afterthought. Most IT investment is allocated to applications, which are kept closely aligned with the business model. Meanwhile, considerations for the wider network are retro-fitted once the core business strategy is in place.
Instead of continuing to see the network as a cost, enterprises can use technologies such as software-defined WAN (SD-WAN), which will allow them to treat the network as an asset to enable global expansion.
Industries such as automotive, finance and transport/travel are fast waking up to the power that true SD-WAN offers. For today’s companies with sites across several countries, including a number of remote branches, SD-WAN provides a better way to expand in a cost-efficient way.
It uses commodity hardware to host virtualised network functions (VNFs), enabling fast deployment of additional capabilities such as security and WAN acceleration. SD-WAN has a logical SDN structure without the constraints of the physical network, allowing a global business to dial its presence in a particular region up and down depending on market needs.
For example, if an opportunity presents itself in Germany, companies can easily ramp up connectivity for a trial period.
Agility and dynamism
Most enterprises recognise the ability to do business at a global level in 2018 demands an unprecedented agility and dynamism which can only be powered by SD-WAN technology. Yet with many enterprises undergoing network refreshment every three to five years, we are still some way from an SD WAN-first model.
In the meantime, the necessary scale and agility needed can be achieved by a hybrid SD-WAN model that gives enterprises the best of every world – the cost effectiveness of public internet links; the security of MPLS private lines for confidential data; the flexibility that comes with being able to self-configure where and how data should travel and the security policies applied to the network. And the precaution of having a backup in place should it all go wrong.
An aggressive international strategy presents huge growth opportunities. If market conditions are to indeed favour the bold, those who treat the network as an asset in their international expansion will be at a distinct advantage.
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