Believe The Hype: Analysts Say 2016 Is The Breakout Year For Software-Defined WAN

Analysts say 2016 will be the breakout year for software-defined WAN adoption and implementation, as customers seek cost-saving technology solutions, increased agility and simplified infrastructure compared with router-based WANs.

"2016 is absolutely the breakout year for SD-WAN, and you could argue that the second half of 2015 was when it started," said Andrew Lerner, research director at market research firm Gartner, Stamford, Conn. "We've observed several large-scale SD-WAN deployments totaling hundreds of sites, particularly in the retail vertical. SD-WAN is one of the hottest topics amongst Gartner clients, as the cost savings and simplified operational approach to managing WAN equipment is extremely compelling."

Gartner said that by the end of 2019, 30 percent of enterprises will have deployed SD-WAN technology in their branches, up from less than 1 percent today. The SD-WAN market will reach more than $5.55 billion by 2020 because of the increasing need for mobility services and simplified network architecture, according to a recent report from Pune, India-based MarketsandMarkets.

[Related: 10 Networking Predictions For 2016]

Zeus Kerravala, principal analyst at ZK Research, Westminster, Mass., said 2016 will be the year for SD-WAN because organizations are picking the technology over more expensive network services such as MPLS.

"In the past, I'm not sure customers believed this, but the technology has matured, and there are a number of early adopters that have had success with SD-WAN to give the broader audience comfort [that] it does work," said Kerravala.

Analysts said traditional WANs are having difficulty keeping up with the increased traffic demand, forcing service providers and enterprises to seek SD-WAN solutions. In a survey last year conducted by Campbell, Calif.-based IHSInfonetics Research, 45 percent of North American businesses expect to increase data center spending on SD-WAN over the next two years.

The vendor landscape is also rapidly evolving to meet the increasing demand, according to analysts. The space is becoming crowded -- with companies like Silver Peak, Viptela, CloudGenix, Nuage Networks, Glue Networks, Talari Networks and VeloCloud all tussling to take market share.

SD-WAN startup VeloCloud revealed this month that it has raised $27 million in its most recent round of funding, bringing the total raised to nearly $50 million. The most recent round included funding from market competitor Cisco Systems.

Kerravala said Cisco's SD-WAN strategy is centered around premises-based technology.

"VeloCloud takes an alternative approach by placing that infrastructure in the cloud," said Kerravala. "It allows Cisco to interoperate with VeloCloud, giving Cisco the ability to augment its IWAN [SD-WAN] solution with a cloud-based product."

On Tuesday, application performance vendor Riverbed Technology acquired Germany-based Ocedo, who specializes in products designed for SD-WAN, for an undisclosed amount. Riverbed executives told CRN the purchase was in part because of the growing SD-WAN market and the need to be able to offer SD-WAN as a service.

"So Riverbed acquiring Ocedo gives them an immediate product they can position in competitive deals," said Gartner's Lerner.

Analysts are expecting more M&A around SD-WAN in 2016.

"In many senses right now, SD-WAN is a land grab from a vendor perspective," said Lerner. "There's a lot of opportunity and no established market leader."

PUBLISHED JAN. 21, 2016