Enterprise uptake of SD-WAN is happening faster in Australia than in other countries, according to GlobalData. While cost optimisation is a big factor, there are a variety of reasons for the move to the software-defined networking technology.
GlobalData research released this week shows that nearly 60 percent of Australian enterprises with more than 200 employees have already adopted SD-WAN and one in three are considering implementing it in the next 12 months. The adoption appears to be accelerating faster than in some other markets, which GlobalData said is partly to do with the migration of last-mile access to the National Broadband Network (NBN).
SD-WAN uses software to control connectivity between data centres, remote offices and the cloud, managing connections among different types of networks.
According to Gartner, there has been a 23.9 percent decline in the compound annual growth rate (CAGR) of spending on traditional branch office routers due to the lower average selling price of SD-WAN hardware and software. Meanwhile, SD-WAN has seen a 23.4 percent CAGR growth.
Gartner senior principal analyst Bjarne Munch said that as enterprises renew their WAN services they are looking at how they can move to new WAN architectures.
Cost, cloud connections drives WAN uptake
There are a few reasons behind the increase in adoption, including cost reduction and also the opportunity to create a WAN architecture that can better connect to cloud services. The main driver, though, has been interest in reducing the cost of connectivity, Munch stressed.
He explained that businesses adopting cloud services may want to keep some applications in a private data centre that would use a private WAN service, but other applications would still need to connect to the internet to access the cloud.
"So SD-WAN came in as well, as being seen as a better way to make decisions in the branch office, 'Which way do I send my traffic: do I send it to the internet or a public cloud service, or do I send it to MPLS, for example, to an internal data centre?'. So it's all tied into the cloud strategy of many of these enterprises," Munch told Computerworld Australia.
"We are now seeing enterprises decommissioning MPLS in their small branch offices. Two percent of all connections annually are being decommissioned. And at the same time, we can see enterprises increase internet connectivity by some 28 percent," Munch said.
There has also been an increase in the number of systems integrators offering managed SD-WAN services, according to Munch.
More managed SD-WAN options on offer
GlobalData senior technology analyst Siow Meng Soh said SD-WAN has changed the competitive landscape of the WAN market in Australia and opened up the playing field. Several system integrators see corporate networking as a natural complement to their cloud, IT, security and professional services business.
"With several SD-WAN vendors trying to gain market share, they are working with different channel partners including system integrators, value-added resellers and local providers. Expanded choice is changing buying behavior," Meng Soh said.
"It is evident that potentially 80 percent of the enterprises are considering SD-WAN as an over-the-top (OTT) solution. This comes at a time when the network has taken a new importance in the current work-from-home environment.”
But Meng Soh warned enterprises need to have a long-term network strategy instead of treating SD-WAN as a standalone solution for quick fixes.
In August 2019, Australia Post announced it was moving away from Telstra and giving its more than 4,000 shops to a "smaller system integrator", Comscentre, to manage its SD-WAN. This shows how the market progressed since early 2018 when SD-WAN started being sold in Australia, Munch said.
"How someone like the Australia Post would allocate more than 4,000 outlets to a smaller system integrator, that really rocked the market."