Most Fortune 5000 WANs are stuck in 2005 for two main reasons.

Craig Galbraith, Editorial Director

February 7, 2018

8 Slides


Matthew Toth

By Matthew Toth, CEO, C3 Technology Advisors

We’re hearing a lot about the resurgence in manufacturing — Bloomberg reports that U.S. factory production rose for a fourth straight month in December, capping the strongest quarter since 2010, and Federal Reserve data shows the sector primed for further advances.

Unfortunately, today’s Fortune 5000 global manufacturers are saddled with WANs that are not only ill-equipped to handle cloud workloads, they’re actively hindering the full productivity and value of employees and applications. The typical F5000 private wide area networking model is also expensive and overly complex.

Based upon more than a dozen interviews with F5000 global manufacturing companies, we see the typical wide area network looking like something like this:

  • Data centers on two to four continents, connected via 1G or 10G connections.

  • Internet breakout occurs at the data center per region, to reduce an organization’s security surface area.

  • Each continental WAN connects to its own data center, and each continental area (North America, APAC, Europe, sometimes China by itself) has its own MPLS WAN with a limited footprint of IP VPN-only sites.

  • Cisco routers are often managed by the MPLS providers.

  • Backup/secondary circuits are often provided by the same provider that delivers the primary circuits (a head scratcher).

The explanation is that years of acquisitions and divestitures have splintered the power structure. This is outside of manufacturing as well. As many partners will recall, the typical WAN of 20 years ago connected mainframes with clients primarily via point-to-point links that were extremely slow and expensive. Bandwidth couldn’t be shared at a network operator level.

Frame relay mostly replaced point-to-point as a less costly option that also enabled clients to mesh locations together using PVCs. Frame relay gave way to MPLS around 2005 thanks to its lower cost and ability to provide better prioritization of applications.

Then, for most large companies, time stopped. WANs were seemingly frozen in place.

Problem is, in 2005, the internet was still in its infancy, Office 365 hadn’t been invented, public cloud didn’t exist and virtualization hadn’t taken hold. Client data centers hosted 99 percent of enterprise applications.

MPLS was the perfect WAN technology for the time, but that time has passed.

Today’s enterprise network must support public cloud, private cloud, SaaS, Office 365, DevOps, remote users, cloud interconnects and legacy applications — and do so securely. MPLS is not up to that task.

The fact is, most F5000 WANs are stuck in 2005 for two main reasons.

First, network operators, including AT&T, BT and Verizon, didn’t innovate. Yes, incremental improvements were made to MPLS, but the core technology didn’t change much, because there’s no impetus to invest in R&D. The network operators’ landline divisions are, overall, a profitability drag on overall earnings.

For operators, wireless is significantly more profitable than wireline. So there’s little appetite to disrupt the market for MPLS, the highest-priced and highest-margin WAN product in the landline division. Would you further reduce profitability in an already financially weak sector of your company? Absolutely not. Operators are going to ride that MPLS gravy train until it’s disrupted, and then do their best to integrate that disruption into that legacy revenue to increase the life expectancy of MPLS.

Second, Cisco sales and engineers have, through an ecosystem of sales, support, certifications and training, continued to push MPLS. Cisco’s domination of UC and desire to provide a stable environment for its products meant a perpetual backing of MPLS. Many engineers to this day do not believe that any kind of QoS is available when an internet last mile is utilized, which is false.

So where does this leave F5000s?

Click through our gallery below for lessons on how to help customers make the move to SD-WAN — and why.

Matthew Toth is founder and CEO of C3 Technology Advisors.

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About the Author(s)

Craig Galbraith

Editorial Director, Channel Futures

Craig Galbraith is the editorial director for Channel Futures, joining the team in 2008. Before that, he spent more than 11 years as an anchor, reporter and managing editor in television newsrooms in North Dakota and Washington state. Craig is a proud Husky, having graduated from the University of Washington. He makes his home in the Phoenix area.

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