Is there room for both MPLS and SD-WAN?

Today’s enterprises are consuming far more bandwidth than ever before as their employees and customers stream video, download large files, conduct multimedia meetings, and perform other data-intensive activities. These enterprises need reliable and high-performance network connections to their branch offices, data centers, and public cloud applications. However, IT organizations providing these network functions face major challenges with respect to cost, performance, and complexity with current networking solutions. 

And with the digital transformation currently underway and no prospect of losing momentum, network must keep up. Legacy systems that were built for the technological demands of 10 years ago must be adapted, as at the time they were implemented no one could foretell how pervasive technology would be in our everyday lives.  

For enterprises, networks have traditionally been built on MPLS, which afforded them a private network in which to communicate and perform business functions easily and securely. But MPLS has its limitations, two of which is cost (high) and bandwidth (low). To get more of one (bandwidth), enterprises must give more of the other.  

Then SD-WAN was born, disrupting the marketplace and fueling that digital transformation, offering new options for those seeking to unchain themselves from MPLS’ limitations.  

But how will this MPLS/SD-WAN scenario continue to play out? Should those providers who have a lucrative MPLS business, a “cash cow” if you will, consider SD-WAN or will that cannibalize its MPLS business? If a provider adds SD-WAN to its portfolio, does that mean customers will flock to it and drop their MPLS network?   

The answer is no. MPLS is not going away any time soon and in choosing to adopt SD-WAN solely as a replacement for it is short-sighted and will be painful in the long-run.  

For instance, Research and Markets predicts that MPLS will continue to grow with a CAGR of 4.1% through 2021. Its install base is huge and widespread and even though SD-WAN is on the rise and unseating it as a greenfield option of choice, it will take some time for MPLS to have a CAGR decline. A 4% CAGR, while a significant absolute dollar amount, is not considered a high growth rate and MPLS will likely never see a better percentage growth number than that. How many product lines with that type of growth (and on a downward growth pattern) do we see continuing to be an area of investment? This is especially true when there’s a “star” product/solution with long-term legs emerging, such as SD-WAN. 

Another point to consider is that there will continue to be significant overlap in terms of the end customer being serviced by both MPLS and SD-WAN in a hybrid scenario. In an enterprise deployment, it would be normal to see MPLS deployed at the “core” offices/branches along with complementary SD-WAN, and then SD-WAN used exclusively to connect to the non-core branches.  

For those providers who bank on just the MPLS horse because a 4% CAGR remains enough to warrant it, are not going to be able to maintain a consistent or increasing market share of that 4% because they’ll lose out to competing providers that offer both MPLS and SD-WAN in their portfolio. In the race to acquire new customers or steal them from each other, a more varied portfolio offering will make the provider more attractive to its existing and potential customers. 

Further, providers will not give up their MPLS revenues (even if its growth rate declines) as MPLS still provides a steady income. A significant amount of dollars invested in the network infrastructure has been into the core MPLS, which has not reached its end of life.  

Does all this mean that it will be a two-horse race between MPLS and SD-WAN?  

VeloCloud believes that the decision must lie with the end customer, what is right for their network, and that they should not be forced to choose. SD-WAN is versatile, scalable, reliable, and is an amazing solution on its own or as a complement to MPLS.  

With regards to providers faced with the decision to add SD-WAN to its portfolio, the answer is a simple yes, do it, and do it quickly. Offer it to customers as a way to augment their existing network infrastructure and enable the digital transformation that is underway. There is not a “one size fits all” with networking, but adding the solution to a portfolio will quickly become necessary in order to remain competitive.  

To learn more about SD-WAN as a complement or alternative to MPLS, click here.   


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