128 Technology's President On Breaking Away From The SD-WAN Pack

"We have the entrepreneurial zeal to figure out what works best for everybody," 128 Technology President Sue Graham Johnston said. "We want partners to make money."

'Disruptive Economics'

128 Technology is out to disrupt the traditional, hardware-centric networking market, and President Sue Graham Johnston says the company's change-the-status-quo approach is quickly finding traction with large enterprise customers.

In one recent case, 128 Technology won a large deal with tech titan Sony. In North America, the Burlington, Mass., start-up has outshined networking industry stalwarts in particularly demanding use cases, including oil fields and remote locations.

In addition to the technology benefits that come with 128's software router and networking platform, Graham Johnston says the company comes to market with "disruptive economics," namely, pricing that is "about 80 percent less than all the other solutions in the marketplace," she said.

That is a boon not only for customers, but for partners with the wherewithal and drive to go deep with 128 Technology as it makes a push into large enterprise accounts and sets its sights on the red-hot SD-WAN market.

What follows is an edited excerpt from Graham Johnston's conversation with CRN.

What can a partner expect as far as profitability is concerned with 128 Technology?

An advantage of working with us is we are entrepreneurial. It's not as if you'll come in like you would to a big-name hardware vendor and they have a very structured program, very clear metrics and very clear percentages. We're just excited to win, and we want to work with people who want to win in the marketplace. We want to enable the partners to be successful. We have the entrepreneurial zeal to figure out what works best for everybody. We want partners to make money.

Where are you seeing the most traction in the market? What are you seeing in the market generally that's encouraging to you?

Where we're seeing the most traction is where partners really want to deliver and innovation to their end customers. Sony has a strong history of innovation, but secondly, they've been a disruptor in the Japanese market with their internet services and they wanted to go to market in a new way with a differentiated technology. It's not only a technology differentiation, but also disruptive economics. They've come into the market at about 80 percent less than all the other solutions in the marketplace. They're able to do that because we've decoupled the hardware and the software. It's really changing the game. They anticipated this appealing to small- to medium-size enterprises, and they have been overwhelmed with large enterprise demand.

Are you having similar success in the North America market?

Closer to home, the companies we work with are looking at the trajectory of what's happening in the networking hardware space and saying that that won't solve our customers' problems for the future. We need new solutions. That's where we come in. We partner extremely well with companies who are in more traditional services who are seeing where the game is changing, and particularly well with companies that are changing the status quo and looking to bring innovation into the marketplace.

Can you give examples of some of your larger North American customers, or characterize them?

One is a big oil field services company. They tried multiple technologies, many companies that you would see as potential competitors to us in the SD-WAN space, and because of the tunneling and additional overhead, they actually couldn't even get the solution to work in their application. When they came to us, they realized we could solve their problem and we're now live in a field trial in an oil field running our software router.

A lot of vendors are piling into the SD-WAN space. Does that make it difficult to differentiate?

One of the things that unique about our solution, and probably one of the things that I find the most compelling, is that it is the same underlying technology that solves many different problems. A manufacturing company might have a lot of IoT data coming in from the edge that they need to segment. They want to process some of that locally and send some of it to the cloud, and then they want to backhaul some of it to their data center. We're the only solution that can work across all three of those areas. When a company, whether it's a partner or an end customer, looks to bring in our innovation, they're building a brand new networking fabric that solves multiple problems and they can manage it uniformly. Things like global policy – implementing policy regardless of whether you're in an internal data center or Google or Amazon or Azure – is really profound and tremendously simplifying.

Have customers become more knowledgeable about using public cloud versus private, or on-prem?

It's a multi-phase journey. Most of what I see today is companies just moving workloads to the cloud. It varies tremendously by geography. In North America, there's a lot of push to get things into the cloud. I don't think anybody has really thought about steps two and three around how you make sure you're not locked into one cloud, or you make sure your workloads are best matched to a particular cloud's capabilities and tools. They start getting a bit of sticker shock around their bills, so they are becoming smarter, and then they're looking at what can help them operate across multiple clouds.

How do you and your partners navigate relationships with the big data center vendors, like Dell EMC and HPE?

We have some reference configurations in hardware that we've supported, but we find generally that customers have their preferred vendors, so we focus on the software being able to be enstantiated on a VM, on pretty much any hardware that has the requisite capacity. We try to make it easy for partners. If they don't have a preferred vendor, Kevin's team provides them an easy channel to either buy that hardware or our software on that hardware, like an appliance. If they have a preference, or the end customer has a preference, we can deal with the software and run it on any hardware that meets the spec.

What do customers' budgets look like? What are they telling you about deployment timelines and how much they're willing to spend?

Our pipeline has increased by probably 50 percent so far this year. That's across all geographies, and that's a testament to a couple of factors. One is the amplification partners can give us. They're bringing us into more end customers, and end customers who are already deployed and are finding new use cases, and then net-new customers. You can start quite small. We've had a lot of success with companies that say let's just try it in these two locations and see if we're getting the zero-touch provisioning benefits, if we're getting the ease of management and orchestration. In many cases, they're getting a layer of security for free that they didn't even anticipate. They start finding ways they can leverage their IT spend better because of how we've reevaluated networking. You can start with our technology quite small, which dramatically reduces the barrier to entry. Once they see the benefits, they're accelerating deployments into a much larger footprint.

Are customers looking to SD-WAN primarily because of the potential cost savings involved?

We have one partner who was looking to bring up a call center for their end customer on a Caribbean island. Picture getting MPLS to that island. They were up and running in six days on our technology, completely seamless to the customer. That sort of acceleration saves months when you're looking to do a network transformation like that. A lot of what's looking to move to SD-WAN is retail. They live and die by the phone. Because of our Session State, you can actually pull the phone connection and it will not only fail over, it will not lose the call. If you're a retail operator, that's amazing.

What are your plans for partner recruitment over the next couple of years?

We're in discussion with probably 100 different companies right now about partner opportunities. We're absolutely looking to expand in every geography. It's a key focus.