March 31, 2017
By Craig Schlagbaum, Guest Blogger
As the IT channel prepares for massive change, solution providers should pay special attention to one of the most significant drivers of that transformation: SD-WAN. Software-defined wide area networks will connect corporate offices with branch offices and data centers over vast geographic distances–without the problems of affordability, manageability and deployment usually associated with traditional hardware-based networks and with far greater efficiency.
SD-WAN replaces expensive, complex router-based networks with software-driven controls and simpler hardware for improved flexibility, scalability and reliability. As vendors in the next two years rush to introduce SD-WAN solutions, we’re going to see an explosion in this market space. IDC predicts SD-WAN is growing at a 90 percent compound annual growth rate (CAGR), to $6 billion in 2020. Just two years ago, it was a $225 million market.
There is no question that SD-WAN is poised to disrupt the networking market. For the IT channel, this impending change creates huge services revenue opportunities. The question I posed in a previous blog about change for the channel is, “How many of you are ready for this opportunity?” Because new opportunities don’t arrive without a whole new set of challenges to accompany them.
With SD-WAN, businesses will use private MPLS connections combined with the public Internet to join their multiple sites together. Network management will be easier because SD-WAN is controlled from a central location with visibility into the entire infrastructure.
As SD-WAN is implemented, the channel will face some challenges, including linking solutions together from multiple vendors. Moreover, customers will grapple with when to use SD-WAN connectivity as a complement to existing MPLS networks and when to replace those legacy connections entirely. In many cases, this transition will take some time.
Channel players will feel significant pressure to learn SD-WAN so they can help customers adopt technology that will essentially change how networking is done. Among the most pressured will be traditional IT channel partners that have relied on hardware sales predominately in order to make a living.
As the hardware becomes simplified, replacing the more complex routers that require on-site deployment by an IT partner, vendors will simply ship a plug-and-play box that end customers can turn on by themselves automatically. This is what cable companies already do with cable boxes and WiFi routers. Many of us have upgraded our home solutions numerous times in this same capacity.
End user clients won’t need the IT channel to deploy or run their hardware as they did in the past. But they will need qualified service providers to monitor and manage their software-defined networks for them. The channel, however, can still sell all these recurring revenue solutions and earn commission, without running the hardware-based model of break/fix and support and still earning significant income.
New Channel Species
MSPs and cloud service providers have experience with monitoring and automation, and with running a business based on recurring revenue. These are skills they can apply to the SD-WAN opportunity, but there still will be a learning curve. Traditional network integrators who grew up around hardware networks will also face a learning curve. Unless they have launched a managed services or cloud practice, they will need learn how to operate in a recurring revenue environment.
Telecom agents and Master Agents, already experienced in subscription-based services, may have a leg up on their data-side counterparts in this area. Certainly they will benefit from their relationships with the cable and telecom carriers that have the reach and technology to deliver SD-WAN connectivity. Because of their experience with MPLS, they will quickly see the attraction of SD-WAN for its scalability and cost-effectiveness. It’s likely that some of them will merge or partner with IT channel players to address this new market demand.
We also will probably see the emergence of a new channel species with a business model designed specifically around the SD-WAN opportunity. This happened in the MSP space. Although many VARs transitioned some or all of their business to managed services, many new companies were formed in order to deliver a new set of skills required by the market.
As I advised in my last column, channel companies should assess their capabilities and readiness for these coming changes or they will be caught by surprise. It’s true that vendors, too, have to adjust their outlook and partner support infrastructure in order to accommodate new developments such as SD-WAN. But if you’re a channel player, don’t delay. Start getting prepared today so you’re ready for the opportunity. It is about to meet you on your doorstep!
Craig Schlagbaum is Vice President of Indirect Channels at Comcast Business.
Guest blogs such as this one are published monthly and are part of Talkin’ Cloud’s annual platinum sponsorship.
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