Oracle to acquire SD-WAN vendor Talari Networks

In the ever arcane world of proprietary/non standardized SD-WANs, Oracle announced that it’s acquiring SD-WAN technology provider Talari Networks for an undisclosed sum. The transaction is expected to close before the end of this year.

Talari’s SD-WAN technology is expected to complement Oracle Communications’ Session Border Controller (SBC) and network management infrastructure. Talari’s Failsafe technology is said to enhance the benefits of SD-WAN by adding greater reliability and predictability while maintaining security for site-to-site and site-to-cloud connectivity and application access over any IP network.

San Jose, California-based Talari currently serves more than 500 enterprise customers in 40 different countries across a variety of industries, including public sector, financial services, insurance, retail and manufacturing—and it expects to do even bigger things under the Oracle tent.

Talari CEO Patrick Sweeney, who joined the company last year, said the impact to existing and new customers will be tremendous. “Our loyal customers can expect to see powerful new network functionality and capabilities at an accelerated pace,” he said in a blog post. “And the vast span of Oracle’s brand and reach will extend the Talari solution across the globe. Together, Oracle and Talari plan to accelerate digital transformation and cloud adoption by providing companies with complete enterprise network solutions that deliver reliable real-time communications and performance of mission-critical applications over any network.”

Analysts were not particularly surprised by the deal given the competition now underway in the SD-WAN space. Talari ranked No. 9 in IHS Markit’s rankings of SD-WAN vendors based on second-quarter revenues.

“The musical chairs in the SD-WAN game is accelerating, so it’s good that Talari found a partner,” said R. Scott Raynovich, founder and principal analyst at Futuriom. “Talari’s technology is optimized for data center connectivity, and its recent move to deliver a cloud solution for Office365 and NetSuite make it a natural complement to Oracle’s cloud infrastructure. Given that Oracle is a software company and not an enterprise networking vendor, the goal of this acquisition is likely to improve the performance of Oracle’s cloud software.”

There’s not a lot of synergy between Session Border Controllers and SD-WAN, but Lee Doyle, principal analyst at Doyle Research, told FierceTelecom that he can understand why Oracle would want to acquire a product it can monetize in a hot space like this. It also has a history of buying communications companies, Acme Packet and Tekelec, both ongoing businesses.

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The Talari deal is one in a series of acquisitions Oracle has announced in recent weeks. Last month, the company announced plans to acquire data management and AI solutions provider DataFox. It also announced plans to acquire goBalto, a cloud platform developer in the life science industry.

Both Cisco and VMware have been working to blend more SD-WAN technology across their broader portfolios. Last year, VMware bought VeloCloud for an undisclosed sum while Cisco paid $610 million for Viptela.

SD-WAN vendors, connectivity providers, and application providers have begun to realize how much they need each other.  Total SD-WAN revenue, which includes appliance and control management software, reached $221 million in the most recent second quarter, which was up 25% quarter-over-quarter and twice the amount recorded in the second quarter of last year, according to IHS-Markit.

“Recently, cloud service providers have come to realize the importance of high-quality network connectivity to ensure a happy end user,” said Cliff Grossner, senior research director at IHS Markit. “For Oracle, purchasing Talari is an important move to be able to bundle SD-WAN with cloud services, remaining competitive with other providers that have established relationships with SD-WAN vendors such as Citrix.”

Citrix is an example of an SD-WAN vendor that has relationships with connectivity providers. For example, in May, Citrix partnered with the managed cloud provider RapidScale, which is offering Citrix NetScaler SD-WAN as a standalone managed service over RapidScale’s backbone. And Citrix recently partnered with Teridion to combine SD-WAN with a routing optimization network.

Gartner apparently values SD-WAN vendors with a connectivity play because it placed Aryaka and Citrix in the “Challengers” quadrant of its Magic Quadrant for WAN Edge Infrastructure.

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Recently, Gartner published its first Magic Quadrant for WAN Edge Infrastructure and placed Talari in its “Niche Players” quadrant. The report, which profiles 20 vendors, placed VMware in the top position for completeness of vision, followed by Cisco and SilverPeak in its coveted “Leaders” quadrant.

The Gartner report stated, “Talari’s strength lies in its sophisticated link aggregation and remediation, which provide seamless failover for sensitive applications such as UCaaS/VoIP. Talari should be shortlisted for WAN edge opportunities for global mid-market enterprises, especially when link remediation and sophisticated traffic steering are required.”

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References:

https://www.fiercetelecom.com/telecom/oracle-to-acquire-sd-wan-provider-talari-networks

https://www.zdnet.com/article/oracle-to-acquire-talari-network/

https://www.sdxcentral.com/articles/news/oracle-buys-sd-wan-vendor-talari-networks/2018/11/

Report: Cisco, VMware are cashing in on their SD-WAN deals

http://techblog.comsoc.org/category/sd-wan/

 

 

 

Sapio Research Survey: 20% have SD-WAN project, but 48% of those are proof of concept

In a survey of 200 senior IT and networking managers in the US and the UK, Sapio Research found 20% of respondents said they have a software-defined WAN project in progress, while 32% haven’t explored the technology and 27% may look at it in the future. About one-third of respondents said they wanted to reduce network costs and to better manage their network infrastructure.  The research study found that 48% of those are running SD-WAN proof of concept at select sites or other limited deployments. That means only about 10% are transitioning fully to SD-WAN.

The survey was commissioned by Teneo and based on input from 200 senior IT and networking managers evenly split between the U.S. and U.K. The companies have worldwide operations and revenues between $127 million and $38 billion.  The survey found that 32% have not yet explored the technology, though 27% may do so in the future.

When senior IT professionals were asked why they were considering SD-WAN, the most common reason was the increasing complexity of network infrastructure and performance tasks (cited by 36% of interviewees), closely followed by the need to cut network costs (34%) and the need for better management of network infrastructures (also 34%).  Increasing pressure on both company resources and budgets as IT team look after more complex network infrastructures is driving companies to examine SD-WAN’s potential.

Exactly half of companies questioned say that deploying and managing networking infrastructure is time-consuming. Interviewees estimate that these upkeep tasks take up 36% of their overall IT budget. One third of the survey (33%) admit that they had used ‘as a Service’ models from external providers to keep on top of maintenance tasks.

Researchers also found that companies are blending connectivity options to get necessary bandwidth: nearly four in ten (38%) of interviewees want to add more MPLS, 22% want more Internet connectivity, and 20% want to add more Internet and MPLS combined.  Under one in five (17%) said their needs were satisfied.

Half of the respondents pointed to the time-consuming nature of deploying and managing a network as their main driver. Overall, those interviewed said that upkeep consumes as much as 36% of their IT budgets. One-third said that they have used “as-a-service” platforms to keep pace.  Varied offerings have emerged. “Due to the immaturity of the SD-WAN space each vendor has come to the market with a different strategy,” wrote Steve Evans, Teneo’s vice president of solutions engineering in response to emailed questions from FierceTelecom. “We are seeing this converge in some areas. However, there are still noticeable differences between the major players in the space. I would not say that the vendors do not know what to bring to market. I think it’s more that some vendors favor particular features over others.”

The SD-WANs enterprises deploy will look different from one another, according to the survey. Thirty-eight percent of respondents want to add MPLS, 22% want to add broadband and 20% want to add both. Seventeen percent are happy with their current connectivity.

It is perhaps surprising that companies want to add MPLS, since reducing costs is seen as a key driver of SD-WAN. “SD-WAN is not about removing MPLS, although there can be cost benefits,” Evans wrote. “With the reliability of Internet circuits or broadband improving, the usage of MPLS will still have a place until people are comfortable with running business critical applications over circuits with no SLAs.”

Evens did point to cost savings of using broadband where it makes sense. “We have seen SD-WAN being used to enable businesses to utilize all of the MPLS bandwidth they are paying for to improve service for critical applications and then augment this bandwidth with the cheaper options for less important traffic, thus removing the expensive backup circuits and gaining more bandwidth for less cost,” wrote Evans.

There still is a learning curve for both vendors and end users. “The challenge around understanding SD-WAN is that vendors are all talking features and that they all fit every situation,” Evans wrote. “They are not starting with what the customer is trying to achieve and then showing how their technology would fit the needs. There is also a misunderstanding on what is meant by certain features and in comparing how well one solution executes on a feature.”

Progress is being made, however. “More and more businesses already have a basic understanding of SD-WAN and are able to articulate their requirements, but some are still looking to get an understanding of the market and the technology,” according to Evans. “Both groups need help understanding exactly how their requirements map to the available SD-WAN technologies.”

Another element that is not yet clear is who companies prefer to work with. Thirty-nine percent of survey respondents want to partner with a global network vendor, 24% with a telecommunication partner and 24% with a management consultancy.

The survey found that 8% of respondents are considering specialist SD-WAN vendors, 3% are considering specialist integrators of SD-WAN and 3% will use multiple partners.

“Network managers are looking at SD-WAN strategies to run multiple networking environments in standardised ways – whether the underlying motivation is greater simplicity, cost efficiency or transforming critical applications’ performance across their company’s operations,” said Marc Sollars, CTO of Teneo.

“Many firms are clearly putting a toe in the water on SD-WAN, or doing a proof of concept, but it’s still very hard to say when this test phase will start to translate into enterprise-level implementations,” added Sollars. “In many ways, the broad range of choice that SD-WAN brings is what’s causing companies to hesitate over their decisions.”

References:

One in five companies implement initial SD-WAN projects as IT teams grapple with network maintenance workloads and costs, says Teneo research

https://www.teneo.net/us/services/managed-services/network-managed-services/manage/service/managed-sd-wan/

https://www.fiercetelecom.com/telecom/research-sd-wan-drivers-strategies-are-broad-and-deep

AT&T exec: SD-WAN is “killer app” after MEF says they will define SD-WAN service

https://info.aryaka.com/sdwan-primer.html?utm_source=bing&utm_network=search&utm_medium=cpc&utm_campaign=sd-wan-primer-americas&utm_adgroup=sd-wan&utm_term=sd-wan&utm_content=ad2&_bt={creative}&_bk=sd-wan&_bm=p&msclkid=e6507f51cd901bff70e1248da39c177e

AT&T exec: SD-WAN is “killer app” after MEF says they will define SD-WAN service

AT&T’s Josh Goodell at MEF 18 conference in LA:  “SD-WAN is the killer app — we’re deploying 28,000 end points, it has really exploded.”  Really?  We’re from Missouri= show me

Meanwhile, the MEF has definesd an SD-WAN service and its various attributes. With strong support from service provider and technology provider members, MEF currently is on track to ratify and publicly release its MEF 3.0 SD-WAN Service Attributes and Service Definition standard in 1Q 2019. SD-WAN service standardization will enable a wide range of ecosystem stakeholders to use the same terminology when buying, selling, assessing, deploying, and delivering SD-WAN services. The SD-WAN service definition is a foundational step for accelerating sales, market adoption, and certification of MEF 3.0 SD-WAN services orchestrated across a global ecosystem of automated networks.

SD-WAN Service Standardization
SD-WAN service standardization is being conducted within the context of the MEF 3.0 Global Services Framework. It is part of a transformational initiative to standardize a complete family of dynamic Carrier Ethernet (CE), IP, Optical Transport, SD-WAN, security, and other virtualized services that will be orchestrated over programmable networks using LSO (Lifecycle Service Orchestration) APIs.

MEF’s SD-WAN service definition specification describes requirements for an application-aware, over-the-top WAN connectivity service that uses policies to determine how application flows are forwarded over multiple underlay networks irrespective of the underlying technologies.

“MEF’s groundbreaking work in standardizing an SD-WAN service addresses one of the biggest obstacles impacting SD-WAN service market growth,” said Nan Chen, President, MEF. “In a recent joint MEF and Vertical Systems Group survey of service providers worldwide, nearly 80% of respondents identified the lack of an industry-standard service definition as a significant challenge for service providers to offer or migrate to SD-WAN services. MEF’s SD-WAN service standardization will undoubtedly accelerate sales of SD-WAN products and services like MEF accomplished with Carrier Ethernet service standardization.”

Just as the industry has benefited from MEF standardization of CE services – which now exceed an estimated $50 billion in annual revenues globally – there are numerous potential benefits associated with a common SD-WAN service definition. These include, among other things:

  • Reducing market confusion about service components, core capabilities, and related concepts, thus saving valuable time given the scarce availability of skilled personnel.
  • Enabling service providers and technology providers to focus on providing a core set of common capabilities and then building on that core resulting in differentiated offerings.
  • Facilitating inclusion of SD-WAN services in standardized LSO architectures, thereby advancing efforts to orchestrate MEF 3.0 SD-WAN services across multiple providers.
  • Paving the way for creation and implementation of SD-WAN services certification, which will give users confidence that a service meets a fundamental set of requirements.

SD-WAN Implementation 
MEF member companies are involved in multiple SD-WAN implementation-related initiatives that can be leveraged to provide feedback on standardization requirements and create software-oriented artifacts that can be used to accelerate efforts to orchestrate standardized SD-WAN services. These initiatives include the MEF 3.0 Multi-Vendor SD-WAN Implementation project, the MEF18 LSO Hackathon, and several SD-WAN Proof of Concept (PoC) demonstrations at MEF18.

The MEF18 LSO Hackathon is focused on developing and validating data models for SD-WAN services. This presents a unique opportunity for those involved in technical aspects of SD-WAN services and products to learn in a hands-on way about the latest SD-WAN service and LSO standardization work at MEF as well as the related API and YANG work at ONF and IETF.

Three MEF18 PoC demonstrations directly related to LSO-enabled orchestration of SD-WAN services include:

  • Zero Touch Services with Secure SD-WAN
  • Towards a Multi-Vendor Orchestrated SD-WAN – LSO-enabled Solution with Open Source Orchestrator and Container-based uCPEs
  • Instantiation and Delivery of SD-WAN over a Virtualized and Orchestrated Wholesale Carrier Ethernet Access Service.

MEF 3.0 SD-WAN Service Certification
MEF currently plans to introduce a pilot version of certification for MEF 3.0 SD-WAN services in the first half of 2019. This certification will test a set of service attributes and their behaviors defined in the upcoming SD-WAN standard and described in detail in the MEF 3.0 SD-WAN Service Certification Blueprint.

IHS Markit: SD-WAN revenue was $221M in 2Q-2018; P&S Intelligence: CAGR of 54.1% during 2018-2023

IHS-Markit Analysis, by Cliff Grossner, PhD, IHS Markit Sr Research Director

IHS Markit: SD-WAN revenue = $162M in 1Q2018; MEF to Define SD-WAN Service

IHS Markit SD-WAN Revenue Report:

by Cliff Grossner, PhD, Senior Research Director and Advisor at IHS Markit

IHS Markit: Enterprises Evaluating SD-WAN; Ethernet Access Device Market up 8% YoY

Companies Evaluating SD-WAN As Enterprises Embrace the Cloud, IHS Markit Survey Says  

LONDON (April 25, 2018) – IHS Markit (Nasdaq: INFO), a world leader in critical information, analytics and solutions, today released findings from its WAN Strategies North American enterprise survey, which reviews the evolving requirements for wide-area networks (WANs) of medium-to-large companies, including the adoption of software-defined WAN (SD-WAN). Nearly three-quarters (74 percent) of respondents conducted SD-WAN lab trials in 2017; by 2018, many will move into production trials and then to live production.

The latest annual survey of network managers from IHS Markit shows that investments in WANs continue unabated, driven by traffic growth, company expansion, adoption of the Internet of things (IoT), the need for greater control over the WAN, and the need to put WAN costs on a sustainable path. Security in particular is the number one network change by a wide margin, and the top reason to invest in new infrastructure, as companies must fend off the constant threat of cyber attacks.

“As companies shift a greater portion of their IT infrastructure into the cloud, and expand their physical presence to go after new markets or be closer to customers and partners, the need for reliable, secure and high-performance WAN and internet connectivity has never been greater,” saidMatthias Machowinski, senior research director for enterprise networks at IHS Markit. “However, companies don’t have unlimited budgets to fund growing WAN bandwidth consumption, which is why a majority are planning to deploy software-defined WAN in the next three years, to better control how their WANs are used.”

Following are some additional data points from the survey:

  • Respondents expect their WAN bandwidth usage to grow over 20 percent annually — data center usage is the highest, while branch offices are experiencing the highest growth, at nearly 30 percent per year.
  • Reflecting the significant demands placed on WANs, total WAN expenditures rose nearly 20 percent annually, to reach $300,000 per respondent in 2017.
  • 71 percent of respondents will use off-premises cloud service providers by 2018, which will become the top application strategy in 2018.

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Ethernet access device market up 8 percent year over year in 2017

Worldwide Ethernet access device (EAD) revenue totaled $987 million in 2017, increasing 8 percent over 2016. The market is forecast to reach $1.47 billion in 2021, achieving a 2017–2022 compound annual growth rate (CAGR) of 8 percent.

“The EAD market is growing as a direct reflection of the continuous, steady demand from operators for mobile backhaul and wholesale services — and from business, broadband and building applications,” said Richard Webb, associate director, mobile backhaul and small cells research at IHS Markit.

“A new sub-segment is beginning to make an impact in the EAD market: the universal CPE, or ‘uCPE’ — a device that provides a ‘pico cloud’ of computing, storage and switching capable of executing virtualized functions,” Webb said. “Still, there will be an ongoing role for EADs even as virtual CPE takes off.”

Additional EAD market highlights

  • Increasing demand for fiber-connected EADs will be the main driver of the market though at least 2022; in 2017, there was a 6 percent increase in the fiber segment
  • Ciena was number one in EAD revenue market share for 2017, followed by ADVA, RAD, Actelis and MRV
  • North America remained the largest market for EADs in 2017, with 50 percent of EAD revenue; Europe, the Middle East and Africa (EMEA) had 24 percent, Asia Pacific held 20 percent and the Caribbean and Latin America (CALA) had 6 percent
  • For now and in the foreseeable future, North America maintains its lead through the early adoption of higher-capacity ports over fiber

Ethernet Access Devices Market Tracker

The biannual EAD report from IHS Markit tracks fiber and copper (EFM bonded and EoTDM bonded) Ethernet access devices by port speed, form factor and application. It also tracks uCPE. The report provides worldwide and regional market size, vendor market share, forecasts through 2022, analysis and trends.

FCM9003 Ethernet Access Device: End-to-End Management and Monitoring

                                             FCM9003: Ethernet Access Device solution

Image courtesy of Metrodata in the U.K.

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About IHS Markit (www.ihsmarkit.com)

IHS Markit (Nasdaq: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world’s leading financial institutions.

 

IHS-Markit: SD-WAN revenue reached $444M in 2017; Aryaka wins award

by Cliff Grossner, PhD, Senior Research Director and Advisor at IHS-Markit

SD-WAN (appliance + control and management software) revenue reached $147M in 4Q17, with CY17 up 3.9x over CY16. VeloCloud (acquired by VMware) led the SD-WAN market with 19% share of 4Q17 revenue, Aryaka was in second place with 17% revenue share, and Silver Peak rounded out the top 3 with 12%, according to the DC Network Equipment market tracker early edition from IHS Markit.
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Reviewing recent wins, we can see a market that is maturing with a transition from early market adopters to mainstream buyers. Other signs of maturation include expansions at existing clients and incremental product offerings such as security and WAN optimization on top of basic WAN transport virtualization,” said Cliff Grossner, Ph.D., Senior Research Director and Advisor for the Cloud and Data Center Research Practice at IHS Markit.
         Worldwide SD-WAN revenue
 Company
Revenue (US $M)                                    
% Change
   
 3Q17   
4Q17
4Q17
vs 3Q17
VeloCloud
$26.0
$28.3
9%
Aryaka
$21.3
$24.4
15%
Silver Peak
$14.1
$17.6
25%
Cisco
$3.1
$15.6
404%
InfoVista
$9.6
$12.3
29%
Citrix
$4.4
$6.0
38%
Talari
$4.1
$5.4
31%
FatPipe
$3.8
$4.5
21%
Huawei
$2.8
$3.3
18%
Riverbed
$1.7
$2.5
49%
CloudGenix
$2.5
$2.5
0%
ZTE
$0.6
$0.7
30%
Viptela
$9.5
N/A
N/A
Other
$18.9
$23.5
25%
Total SD-WAN
$122.1
$146.7
20%
Source: IHS Markit
© 2018 IHS Markit
             
 
“One noteworthy element—we must not lose sight that SD-WAN is equally important for voice and data even though data gets much of the attention in discussions. We can also expect a next wave of features focused on analytics, making use of the rich telemetry data available with SD-WAN,” said Cliff Grossner.
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More Market Highlights:
 
·            Software-defined enterprise WAN revenue increased 20% QoQ from 3Q17
·            4Q17 ADC revenue increased 1% QoQ from 3Q17 and decreased 3% YoY from 4Q16; in CY17, ADC revenue was down 5% over CY16
·            Virtual ADC appliances stood at 29% of 4Q17 ADC revenue
·            F5 garnered 42% ADC market share in 4Q17 with revenue down 4% YoY. Citrix had the #2 spot with 30% of revenue, and A10 (9%) rounded out the top 3 market share spots.
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Research Synopsis:
 
The IHS Markit Data Center Networks Intelligence Service provides quarterly worldwide and regional market size, vendor market share, forecasts through 2022, analysis and trends for (1) data center Ethernet switches by category [purpose-built, bare metal, blade, and general purpose], port speed [1/10/25/40/50/100/200/400GE] and market segment [enterprise, telco and cloud service provider], (2) application delivery controllers by category [hardware-based appliance, virtual appliance], and (3) software-defined WAN (SD-WAN) [appliances and control and management software], (4) FC SAN switches by type [chassis, fixed], and (5) FC SAN HBAs. Vendors tracked include A10, ALE, Arista, Array Networks, Aryaka, Barracuda, Broadcom, Cavium, Cisco, Citrix, CloudGenix, Dell, F5, FatPipe, HPE, Huawei, InfoVista, Juniper, KEMP, Radware, Riverbed, Silver Peak, Talari, TELoIP, VMware, ZTE and others.
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Cliff will chair the  OCP Market Impact Assessment session at OCP Summit in San Jose, CA and be at the Open Networking Driving Cloud Innovation panel session at ONS in Los Angeles, CA.

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Related SD-WAN News:

chosen by Alan J Weissberger

  1.  Aryaka wins 2018 SD-WAN Leadership Award

A March 1st press release noted that  Technology Marketing Corp (TMC) has selected Aryaka for the 2018 SD-WAN Leadership Award, recognizing the company for its industry-leading SD-WAN technology. Aryaka’s global SD-WAN solution was honored for its technology leadership, market-driven innovation, growth, and outstanding business execution.

“Aryaka’s year-over-year momentum in the SD-WAN space continues to impress, with many vendors, resellers, and service providers fighting for their share of the market,” said Rich Tehrani, CEO of TMC. “Aryaka’s global SD-WAN solution delivers top performance for both on-premises and cloud-based SaaS applications anywhere in the world. In the past year, the Aryaka team has demonstrated extraordinary industry leadership, growth and customer success, which is why we selected the company for this year’s 2018 SD-WAN Leadership Award.”

“Aryaka is disrupting the enterprise connectivity space by combining a cloud-native private network, SD-WAN, WAN optimization, application acceleration techniques, connectivity to cloud platforms, and network visibility in a single solution that is delivered as-a-service,” said Gary Sevounts, Chief Marketing Officer at Aryaka. “Our goal is to continue to push the envelope and deliver a best-of-breed global SD-WAN solution that enables enterprises to seamlessly manage all of their global connectivity and application delivery needs.”

Deployed by 800 global enterprises, Aryaka is the leading global SD-WAN provider and has the fastest growing SD-WAN solution in the market today, delivering enhanced performance for cloud and on-premises applications worldwide. Aryaka’s global SD-WAN has quickly become the only viable MPLS replacement solution for global enterprises requiring alternatives to legacy WAN infrastructures for mission-critical application delivery.

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2.  Windstream’s SD-WAN revenue tops 15% of sales, CEO says

Software-defined WAN revenue accounts for more than 15% of Windstream Communications’ sales, a little more than a year after the company first offered SD-WAN, CEO Tony Thomas said. The regional carrier is getting 30% to 40% of its business segment sales from SD-WAN, unified communications-as-a-service and on-net services.

Telecompetitor (3/1),  FierceTelecom (3/1) 

 

 

Cogent Communications CEO: MPLS VPNs to be replaced by VPLS & SD-WANs; Reasons to Deploy SD-WANs?

Dave Schaeffer, CEO of Cogent Communications, told investors during last week’s 2018 Citi Global TMT West Conference that there is a migration away from MPLS VPNs to Ethernet VPLS (Virtual Private LAN Service) [1] and SD-WANs.

“Cogent has focused on selling dedicated Internet access which is still the primary product (actually service) of our company. However, VPN services represent 17% of total revenues and 25% of corporate revenues.  Most corporate customers supplement Internet access with a private network.  The vast majority of those private networks are based on MPLS based services (e.g. MPLS VPNs), which are very difficult to install, manage, or modify. They’re also very expensive on a per transmitted bit basis.”

  • VPLS, which is based on MPLS in the core network, has been a very successful offering for Cogent (see reference below). Shaeffer said that at the end of Q3-2017 an average of 12.5 customers out of 50 in a commercial building are using it (in addition to Internet access).  VPLS has a huge advantage on a cost per bit basis over MPLS VPNs.

Note 1. Virtual Private LAN Service (VPLS) is a way to provide Ethernet-based multi-point to multi-point communication over IP or MPLS networks. It allows geographically dispersed sites to share an Ethernet broadcast domain by connecting sites through pseudo-wires.

  • SD-WANs are very effective at low speeds.  SD-WAN vendors are consolidating on IP SEC with 2**32 bit encryption (15% encryption overhead).  At higher bandwidths (10M-100Mb/sec), the encryption tax has been 40% to 50% which resulted in a very low adoption of higher speed SD-WANs.

“As the equipment vendors have improved the efficiency of their processors, allowing encryption to occur in a multipath format through the processor instead of serially we’re seeing that efficiency go from like 40 or 50% to the high 80%.  As that occurs, SD-WAN will become the dominant platform for location-to-location private networking and will replace MPLS,” Schaeffer added.

“The result for Cogent is an expansion in our addressable market.  As we think about our corporate business in the U.S. and Canada, it is a $9 billion dedicated internet access market of which 10% of the market is on-net for Cogent and 90% is off-net.”

Schaeffer added that “out of the 90% off-net, roughly 40% of that total market is addressable through circuits we can buy from one of 90 off-net fiber providers.”  However, approximately 1/2 of potential corporate customers don’t have fiber to their buildings.

“Fifty percent of corporate locations still don’t have fiber to them today and are therefore out of Cogent’s addressable market because we have made a conscious decision not to support fixed wireless, coax or twisted pair as a last mile connection due to low reliability, long provisioning times and low throughput,” Schaeffer said.

Since Cogent has decided not to use twisted pair, coax or fixed wireless for last mile access, there’s a large portion of the corporate market that it isn’t now able to address.  But that might change with SD-WANs gaining popularity.

“What SD-WAN does is expands the market by allowing customers to bring their own bandwidth from locations that we are unwilling to purchase those sub optimal (non fiber based) tail circuits.”

Schaeffer said “the MPLS market is predicated on bandwidth costing 15 times as much per megabit as DIA  (Dedicated Internet Access) bandwidth and that’s unsustainable.  The U.S. MPLS addressable market, now worth $45 billion annually, will collapse to a $3 billion market (Schaeffer didn’t say when that would happen).”  When that happens, Cogent believes their business will expand.

“We benefit two ways: our addressable market got a third bigger and we got a second reason for a customer to buy services from Cogent,” Schaeffer said. “That’s why we feel so confident about our corporate business continuing to perform even though our footprint expansion has continued to slow down.”

Author’s Note:  It’s not clear how that will happen as Schaeffer didn’t say Cogent would offer SD-WANs.

Cogent’s Network:

Cogent’s network stretches over 199 markets throughout 41 countries in North America, Europe and Asia, with over 57,400 route miles of long-haul fiber and more than 31,070 miles of metropolitan fiber serving over 720 metropolitan rings.

Our end-to-end optical transport network consists of IP-over-WDM fiber links running up to 1200 Gbps intercity capacity and 320 Gbps on metropolitan rings, located in Cogent’s major markets throughout North America, Europe and Asia.

On the IP layer, Cogent’s Tier 1, IPv6 and MPLS enabled network has direct IP connectivity to more than 6,075 AS (Autonomous System) networks around the world with over 162.4 Tbps internetworking capacity.

Being a facilities-based carrier, Cogent takes advantage of full end-to-end control over its transport and routing technology to provide reliable and scalable service.

Image result for pic of Cogent communications network

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Separately, a survey from the SIP School asked this question:

What are the main reasons for you to deploy or investigate SD WAN solutions?

Answers from survey respondents:

  • Better Use of Existing Links – 158
  • Cost Savings – 148
  • Improved WAN Performance – 114
  • Failover – 95
  • Security – 87
  • Intelligent Routing – 83
  • Analytics & Visibility – 50

https://www.thesipschool.com/files/The-SIP-Survey-2017.pdf?utm_source=Mailshots%20etc.&utm_campaign=SIPSurvey2017 page 26

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References:

https://www.fiercetelecom.com/telecom/cogent-s-ceo-multi-location-sd-wan-services-will-replace-mpls

https://www.veracast.com/webcasts/citigroup/tmt2018/69111247817.cfm?0.0889053993034

https://www.fiercetelecom.com/telecom/cogent-says-its-ethernet-vpls-service-provides-simpler-pricing-better-customer-experience

 

 

Gartner Analysis & Predictions: Enterprise Network Infrastructure and Services

by Bjarne Munch | To Chee Eng | Greg Young | Danellie Young | Vivek Bhalla | Andrew Lerner |Danilo Ciscato of Gartner Group

Overview:

This new Gartner Group report is on the key impacts of digital business, cloud and orchestration strategies. In particular, IT leaders must continue to focus on meeting enterprise needs for expanded WAN connectivity, application performance and improved network agility, without compromising performance.

Key Findings:

  • As enterprises increasingly rely on the internet for WAN connectivity, they are challenged by the unpredictable nature of internet services.
  • Enterprises seeking more agile WAN services continue to be blocked by network service providers’ terms and conditions.
  • Enterprises seeking more agile network solutions continue to be hampered by manual processes and cultural resistance.
  • Enterprise’s moving applications to public cloud services frequently struggle with application performance issues.

Recommendations:

IT leaders responsible for infrastructure agility should:

  • Reduce the business impact of internet downtime by deploying redundant WAN connectivity such as hybrid WAN for business-critical activities.
  • Improve WAN service agility by negotiating total contractual spend instead of monthly or annual spend.
  • Improve agility of internal network solutions by introducing automation of all operations using a step-wise approach.
  • Ensure the performance of cloud-based applications by using carriers’ cloud connect services instead of unpredictable internet services.
  • Improve alignment between business objectives and network solutions by selectively deploying intent-based network solutions.

Strategic Planning Assumptions:

Within the next five years, there will be a major internet outage that impacts more than 100 million users for longer than 24 hours.

  • By 2021, 25% of enterprise telecom contracts will evolve to allow for greater flexibility such as canceling services or introducing new services within the contract period, up from less than 5% today.
  • By 2021, productized network automation (NA) tools will be utilized by 55% of organizations, up from less than 15% today.
  • By YE20, more than 30% of organizations will connect to cloud providers using alternatives to the public internet, which is a major increase from 5% in 3Q17.
  • By 2020, more than 1,000 large enterprises will use intent-based networking systems in production, up from less than 15 today.

Analysis:

Gartner Group has five predictions that represent fundamental changes that are emerging in key network domains, from internal networking to cloud services and WAN services.

two key aspects that the majority of Gartner clients struggle with:

  1. The increased interest in utilizing the internet for WAN connectivity continues to raise concerns about the performance of public internet services and performance of applications deployed in public cloud services. We discuss the risk that enterprises encounter due to the unpredictable nature of the internet, and we discuss how an enterprise can use MPLS to connect directly to public cloud services instead of using the internet.
  2. Enterprises continue to need new business solutions deployed faster, but remain hampered by the inability of network solutions and network services to respond fast enough and rectify performance issues fast enough. We discuss three options to improve network operations as well as network services.
Figure 1. Five Predicts to Create a Better Enterprise Network

Enlarge Image

Source: Gartner (December 2017)

Strategic Planning Assumptions

Strategic Planning Assumption: Within the next five years, there will be a major internet outage that impacts more than 100 million users for longer than 24 hours.

Analysis by: Andrew Lerner, Greg Young

Key Findings:

  • We are increasingly seeing organizations use the internet as a WAN, and estimate that approximately 20% of Gartner clients in many geographic regions have at least some critical branch locations entirely connected via the internet.
  • Most IT teams don’t have a detailed understanding of the multitude of applications and services that are being used on the public internet and/or their criticality. This is because of years of line of business (LOB)-centric buying and the proliferation of SaaS.
  • While the internet is highly resilient, there are specific infrastructure and technology hot spots that, if compromised, could threaten the internet as a whole or large portions of it. This could be the result of natural disasters, man-made accidents or intentional acts.
  • Natural disasters and man-made acts that could impact large portions of the internet include earthquakes, solar flares, electronic pulses, meteors, tsunamis, hurricanes, major cable cuts and network operator errors.
  • Intentional acts include hacktivism, terrorism toward critical infrastructure, and/or coordinated distributed denial of service (DDoS) attacks, attacks against carrier- and ISP-specific components, and protocols (e.g., SS7).

While the probability of each of these events individually is small, the likelihood that at least some of them will occur over an extended period of time is actually surprisingly high. For example, even if there is only a 1% chance that any of the 11 examples identified above results in an outage within a year, there is a statistical likelihood of over 45% that at least one of them will occur over a five-year period. Further, to date, there have been indications that the internet is vulnerable to sizable outages:

  • In 2008, millions of users and large portions of the Middle East and India were impacted by a cable cut. 1
  • In 2016, a large DDOS attack resulted in many large e-commerce sites going down, including Twitter, Netflix, Reddit and CNN. 2
  • In 2015, Telekom Malaysia created a routing problem that rendered much of the Level 3 network unavailable. 3
  • It has been widely reported that 70% of all internet traffic goes thru Northern Virginia 4 and, while this might be an overstated, there’s no doubt that there are several major chokepoints in the internet infrastructure.

Market Implications:

At a minimum, an extended and widespread internet outage would cause dramatic revenue loss for enterprises, and could even create life-threating situations depending on what business the organizations is in. Initially, many organizations often brush this off by saying, “Well there’s not much we can do about it anyway” or “If there is a large internet outage due to a natural disaster, then personal safety is the priority and the enterprise connectivity is the least of our concerns.” However, there are very specific and actionable items that infrastructure and operations (I&O) leaders should take to mitigate the impact of a large outage.

Strategic Planning Assumption: By 2021, 25% of enterprise telecom contracts will evolve to allow for greater flexibility such as canceling services or introducing new services within the contract period, up from less than 5% today.

Analysis by: Danellie Young

Key Findings:

  • Enterprise telecom contracts are typically fixed in both term duration and for the services required for procurement.
  • Most larger revenue contracts ($1 million annually) require the enterprise to agree to minimum revenue commitments on an annual basis.
  • Major WAN decisions are made by 31% to 47% of enterprises each year, including equipment refresh or carrier renegotiations (assuming the refresh cycle on routers is six years, and the average enterprise WAN service contract is three years).
  • A large majority of enterprises are struggling with the cost, performance and flexibility of their traditional WAN contracts, further exacerbated by the proliferation of public cloud applications.

Market Implications:

Enterprise telecom contracts remain rigid and fixed, with specified services required to ensure compliance. Typically such contracts penalize customers when services are disconnected midterm. Enterprise telecom contracts are typically negotiated on 36-month cycles, based on either full-term or revenue commitments. Revenue commitments are set based on monthly spend, annual spend or total contract spending. Upon meeting the contract’s revenue commitment, the enterprise can then renegotiate or consider alternative services or providers since their financial obligation has been met. Terminating contracts early for convenience will typically levy penalties on the enterprise. These penalties range from 100% of the monthly recurring charges (MRCs) to a percentage of the MRCs to a declining portion through the remainder of the term (i.e., 100% in the first 12 months, 75% in months 13 to 24 and 50% through the end of the term).

Currently, contracts are split between term and revenue commit contracts, whereby most of the revenue commitments are made on an annualized basis. Alternatively, a small number (5%) are offered or negotiated with total contract values tied to them. Total contract revenue commitments enable the enterprise to meet the obligation earlier in their contract and provide the opportunity to negotiate new lower rates and a new contract, and to solicit competitive proposals before the full 36-month cycle terminates.

In addition to traditional voice and data services, many networking vendors now offer SD-WAN functionality products, while carriers and managed service providers (MSPs) are beginning to launch and roll out managed SD-WAN services as an alternative to managed routers. Contract flexibility will be needed to allow the enterprise the flexibility to migrate to new solutions, without financial risk or paying early termination fees on services. Thus, while we anticipate rapid adoption of SD-WAN and virtualized customer premises equipment (vCPE) solutions in the enterprise, SD-WAN by itself will not improve contractual conditions.

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Gartner Group: SD-WAN Survey Yields Surprises

by Danellie Young | Ted Corbett | Lisa Pierce

Introduction:

A Gartner-conducted software-defined (SD)-WAN survey has identified the key drivers for SD-WAN adoption and preferences for managed services from non-carrier providers. Despite its relative immaturity, the perceived benefits create incentives for IT leaders responsible for networking to leap into SD-WAN pilots now.

Editor’s Notes:

  1.  Please refer to our report on IHS-Markit analysis of the SD-WAN market. Cisco and VMware are the top two vendors due to recent acquisitions of Viptela and Velocloud respectively. Cisco also bought Meraki which provides a SD-WAN solution as well as business WiFi networks.
  2. According survey data from Nemertes Research, enterprises are not discarding their MPLS networks as they deploy SD-WANs. “Fully 78% of organizations deploying SD-WAN have no plan to completely drop MPLS from their WAN,” Nemertes John Burke reports. “However, most intend to reduce and restrict their use of it (MPLS), if not immediately then over the next few years.”
  3. “Although it brings a lot of benefits to the table, SD-WAN still uses the public Internet to connect your sites,” points out Network World contributor Mike C. Smith. “And once your packets hit the public Internet, you will not be able to guarantee low levels of packet loss, latency and jitter: the killers of real-time applications.”

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Key Findings of Gartner Survey:

  • Enterprise clients cite increased network availability, reliability and reduced WAN costs resulting from less-expensive transport as the top benefits of software-defined WAN.
  • Enterprise clients are concerned about the large number of SD-WAN vendors and anticipate market consolidation, making some early choices risky.
  • A lack of familiarity with the technology, the instability of the vendors, and skepticism about performance and reliability are the most common concerns when deploying SD-WAN.
  • Nearly two-thirds of the organizations we surveyed prefer buying managed SD-WAN, demonstrating a preference for presales and postsales support. A preference for type of managed service provider does not align with legacy carrier MSP adoption rates.

Recommendations:

To maximize new SD-WAN opportunities, infrastructure and operations leaders planning new networking architectures should:

  • Include SD-WAN solutions on their shortlists if they’re aggressively migrating apps to the public cloud, building hybrid WANs, refreshing branch WAN equipment and/or renegotiating a managed network service contract.
  • Include a diverse range of management solutions related to SD-WAN considerations; don’t just look at carrier offers to determine the best option available to meet enterprise requirements.
  • Compare each vendor’s current features and roadmaps with enterprise requirements to develop a shortlist, and use pilots and customer references to confirm providers’ ability to deliver on the most desirable features and functionality.
  • Focus pilots on specific, critical success factors and negotiate contract terms and conditions to support service configuration changes, fast site roll-out and granular application reporting.
  • Negotiate flexible WAN or managed WAN services contract clauses to support evolution to SD-WAN when appropriate.

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Gartner has forecast SD-WAN to grow at a 59% compound annual growth rate (CAGR) through 2021 to become a $1.3 billion market (see Figure 1 and “Forecast: SD-WAN and Its Impact on Traditional Router and MPLS Services Revenue, Worldwide, 2016-2020”). Simultaneously, the overall branch office router market is forecast to decline at a −6.3% CAGR and the legacy router segment will suffer a −28.1% CAGR through 2020.

SD-WAN equipment and services dramatically simplify the complexity associated with the management and configuration of WANs. They provide branch-office connectivity in a simplified and cost-effective manner, compared with traditional routers. These solutions enable traffic to be distributed across multiple WAN connections in an efficient and dynamic fashion, based on performance and/or application-based policies.

The survey data highlights that most of the respondent organizations are in the early stages of their SD-WAN projects. To qualify, respondents must be involved in choosing, implementing and/or managing network services and equipment for their company’s sites, while their primary role in the organization is IT-focused or IT-business-focused. We intentionally searched for companies that plan to use or are using SD-WAN. Of those surveyed, 93% plan to use SD-WAN within two years or are piloting and deploying now, with approximately 73% in pilot or deployment mode. These results do not reflect actual market adoption rates, because Gartner estimates that between 1% and 5% of enterprises have deployed SD-WAN. Although the results differ numerically, the qualitative feedback is compelling.

Related to specific number of sites, the responses are shown in Figure below:

Enlarge Image

Respondents using SD-WAN; n = 21 (small sample size; results are indicative).  Totals may not add up to 100%, due to rounding.

Source: Gartner Group (November 2017)

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SD-WAN Concerns

Enterprises cite their lack of deep technology familiarity as a key barrier to using SD-WAN. In fact, of those who plan for SD-WAN, nearly 50% have concerns about their lack of technical familiarity, followed by concerns over the stability of vendors and concerns about performance and reliability. 

Editor’s Note: Surprisingly, enterprises don’t seem to be concerned with the lack of SD-WAN standards which dictates a single vendor solution/lock-in.

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With more than 30 SD WAN vendors in the market and consolidation accelerating, this doesn’t come as a surprise.

Other key findings include:

  • Vendor stability is a major concern. Among the 51% of respondents who selected performance and reliability as key drivers (n = 44), nearly half (45%) had concerns about the stability of the vendors.
  • Many among the 50% who see agility as a key driver (n = 36) expressed concern about their lack of familiarity with the technology.
  • Among organizations with fewer than 1,000 employees (n = 53), the most common concern is lack of familiarity with the technology (51%). Organizations with 1,000 to 9,999 employees (n = 38) find the ROI of the investment to be most common challenge (50%).
  • Among the EMEA respondents (n = 48), half were most concerned about the stability of the vendors, followed closely by concerns about proven performance and reliability.

To purchase the complete Gartner SD-WAN report go to: 

https://www.gartner.com/doc/3829464/survey-analysis-early-findings-yield

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References:

https://www.sdxcentral.com/sd-wan/definitions/software-defined-sdn-wan/

https://blogs.gartner.com/andrew-lerner/2017/06/03/sd-wan-is-going-mainstream/

 Technology Insight for Software-Defined WAN [SD-WAN]

IHS-Markit: 15% Drop in Global Optical Network Equipment Sales; Cisco and VMware are SD-WAN market leaders

http://sd-wan.cloudgenix.com/Q217GartnerTechInsightforSD-WANSearch_registration.html

http://blog.ntt-sdwan.com/post/102ekiu/sd-wan-momentum-five-trends-to-look-out-for-in-2018

https://www.networkworld.com/article/3236492/techology-business/mpls-sd-wan-not-an-eitheror-scenario.html

Broadband Forum’s vBG network spec targeted at SD-WANs; led by ONUG

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