Ghassan Abdo
Research VP, WW Telecom , Virtualization & CDN
IDC MarketScape: Worldwide Managed SD-WAN 2020
Capabilities
Strategies
Participants
Contenders
Major Players
Leaders
IDC Opinion
This study utilizes the IDC MarketScape methodology to evaluate global communication service providers (SPs) offering managed SD-WAN.
The managed SD-WAN market is experiencing a market inflection, transitioning from the early adopter phase toward early majority. With this transition, managed SD-WAN providers are pivoting their efforts to deal with integration and deployment challenges as they are experiencing a strong uptake of managed SD-WAN by enterprises. They are adopting differentiation strategies that emphasize their ability to simplify the full life-cycle customer deployment experience instead of highlighting the technical benefits on SD-WAN technology and architecture.
Several of these providers have responded to the recent COVID-19 pandemic by extending SD-WAN to the remote worker leveraging VPN connectivity and SD-WAN gateways. This is commendable and underscores the resilience of the SD-WAN architecture to deal with unforeseen circumstances. Industries that have been directly impacted by COVID-19 such as hospitality and retail may experience a slowdown of SD-WAN uptake, but we believe the general long-term trend is very positive.
This study captures some key takeaways that are beneficial to all ecosystem players, technology providers, service providers, and enterprises.
The key takeaways from this IDC MarketScape include:
- There is a pivot by managed SD-WAN providers to underscore their ability to simplify the enterprise full life-cycle deployment journey instead of the prior focus on the technical merits of SD-WAN.
- There is a move to expand end-to-end reporting at the application level and provide an integrated overlay/underlay view.
- Several global providers are extending software-defined capabilities to the LAN to extend their reach deeper into the enterprise branch.
- Most providers are expanding their global footprint to capture net-new opportunities and defend installed base.
- Most providers have a relatively mature multivendor portfolio, although they continue to evaluate new vendors mostly to address segment gaps.
- Security is gaining stronger traction, especially a wider set of security offers to cover vulnerabilities at the CPE, application, and cloud connectivity layers, among others.
- Despite some progress, most providers lack a cohesive marketing and branding of their managed SD-WAN.
- Interoperability remains a challenge, especially across vendor VNFs and certainly spanning carrier boundaries.
- Orchestration continues to be challenged because of lack of standards and varying APIs underlying the multivendor solutions.
- The SMB segment continues to be underserved despite efforts to provide standardized and easy-to-deploy solutions.
- The top market segments that have deployed managed SD-WAN are manufacturing, retail, and financial services.
- AI/ML has potential to increase efficiency of the deployment journey and provide a richer and actionable customer reporting. Few global providers have the deep bench to take advantage of this technology.
Advice for Technology Buyers
SD-WAN is emerging as a strategic imperative for enterprises as they pursue their DX journey. Managed SD-WAN becomes a compelling choice as it complements the technical benefits of the SD-WAN architecture with a commercial framework that provides full life-cycle advantages. The choice of managed SD-WAN provider is critical to ensure a successful deployment journey and a future road map that incorporates service innovation and shift to edge services and leverages AI/ML to deliver a compelling customer experience (CX). Technology buyers can benefit by taking into account the following considerations in their evaluation of managed SD-WAN providers:
- The ability of the managed SD-WAN provider to de-risk the deployment journey through automation spanning the planning, proof of concept (POC), design, configuration, and deployment phases
- The depth of industry knowledge and pretested configurations that are relevant to certain industry segments such as retail, financial, health, and manufacturing
- The flexibility and adaptability of commercial models to incorporate uniform service-level agreements (SLAs), cloud consumption models, pricing transparency and predictability, and flexible support models
- The depth and real-time aspects of end-to-end performance management including underlay, overlay, and application layer
- The extent of innovation agenda to include the buyer as a co-innovation partner
- The maturity of the orchestration layer to manage multivendor solutions, simplify configuration management, and strive toward self-management
- The availability of multilayer security solutions that mitigate attacks and guard against intrusion and malicious actors
- The global reach of the managed SD-WAN provider to ensure coverage in target geographies
Featured Vendor Profile: NTT
This section briefly explains IDC’s key observations resulting in a vendor’s position in the IDC MarketScape. While every vendor is evaluated against each of the criteria outlined in the Appendix, the description here provides a summary of each vendor’s strengths and challenges.
NTT is positioned in the Leaders category in the 2020 IDC MarketScape for managed SD-WAN vendor assessment.
NTT is one of the first global providers to offer SD-WAN services. NTT leverages its investment in cloud datacenters as well as global internet backbone as key differentiators to enable an “on-net” experience for end users. Its colocation centers and its global internet backbone facilitate access to cloud and SaaS providers.
Global expansion has been a key initiative at NTT. This includes expansion into EMEA, the United States, and Asia including India. NTT offers managed SD-WAN in 196 countries, mostly as fully managed solutions. This is enabled by tier 1 internet backbone and extensive local independent SP partners exceeding 1,000 local providers to cover its global footprint. NTT targets regional and global MNCs with coverage of SMBs in select geographies.
NTT offers customers the choice to enable virtualized network including SD-WAN and security services from the cloud or on the customer premises (vCPE or dedicated device) or in a hybrid deployment model.
It offers a choice for management by NTT or customer self-managed. NTT boasts an extensive vendor partnership comprising SD-WAN and CPE vendors including Cisco, Juniper, Fortinet, SilverPeak, Palo Alto, VeloCloud, Citrix, Versa, Riverbed, Dell, Arista, and Checkpoint.
Supporting the managed SD-WAN deployment is an extensive worldwide network of 2,500+ presales personnel and solution architects. These personnel participate in the full life cycle of design, build, and delivery. The deployment effort is augmented with templates, architected as a programming language, to simplify the solution deployment and ensure a successful outcome.
Customer support is of high focus for NTT. This includes improving processes to support customers, extensive APIs to track and monitor, advanced automation tools with AI and ML technology, and escalation within 15 minutes. This is part of NTT’s 2020 kaizen activities.
The enhanced network analytics with integrated security threat analytics, internally developed at NTT, aims to provide real-time visibility to traffic and security threats. It provides a real-time dashboard that is updated every 60 seconds with DVR replay functionality of network performance.
NTT is expanding its investment in new services that include:
- Fully integrated 5G connectivity option
- Zero-trust SD (software-defined) security
- Enhanced integration of overlay with underlay to guarantee traffic performance and improve visibility
- Use of containers to complement VNF hosting on the vCPE
- Extending software defined into the LAN, providing a fully managed WAN and LAN
Strengths
NTT has a long history of offering managed SD-WAN, which manifests itself in a large installed base. NTT brings key strengths with the scale of its tier 1 network, extensive investments in colocation and cloud datacenters, extensive partnership with last-mile providers, and a large presales and services organization.
NTT’s investments in areas related to simplifying the deployment life cycle, improving analytics and reporting, and enhancing service capabilities will drive better customer outcomes. Increased investments in enhanced security, expanding NFV functionality with containers, integrating 5G access, and extending software defined into the LAN are critical to maintaining a competitive position in this dynamic marketplace.
NTT is positioning itself longer term as a trusted network transformation partner. The tenets of this strategy include providing a full life cycle of managed services with flexibility in vendor and technology choices and augmented with enhanced security offering. In addition, NTT makes available network engineers in each country for onsite support.
Challenges
To maintain position in this dynamic market, NTT can benefit from the following:
- Create a marketing brand for its managed SD-WAN offer to improve brand awareness and equity.
- Expand co-innovation with start-ups to expand into new market opportunities.
- Consider partnerships with hyperscalers beyond direct connectivity to leverage their expanding ecosystem and market influence.
- Rationalize its multivendor portfolio to deal with complexity of managing diverse technology platforms.
- Continue to enhance use of AI and ML to drive automation and improved reporting.
Methodology
IDC Marketscape Vendor Inclusion Criteria
This IDC MarketScape included service providers from all regions — Americas, EMEA, and Asia/Pacific — that met the following criteria:
- Global service providers and ability to serve global multinational corporations (MNCs)
- Service providers that have deployed managed SD-WAN globally and domestically
- Service providers demonstrating commitment to further development of managed SD-WAN services
- Service providers that are driving innovation in SD-WAN and NFV
Reading an IDC MarketScape Graph
For the purposes of this analysis, IDC divided potential key measures for success into two primary categories: capabilities and strategies.
Positioning on the y-axis reflects the vendor’s current capabilities and menu of services and how well aligned the vendor is to customer needs. The capabilities category focuses on the capabilities of the company and product today, here and now. Under this category, IDC analysts will look at how well a vendor is building/delivering capabilities that enable it to execute its chosen strategy in the market.
Positioning on the x-axis, or strategies axis, indicates how well the vendor’s future strategy aligns with what customers will require in three to five years. The strategies category focuses on high-level decisions and underlying assumptions about offerings, customer segments, and business and go-to-market plans for the next three to five years.
The size of the individual vendor markers in the IDC MarketScape represents the market share of each individual vendor within the specific market segment being assessed.
This document gives more weight to the strategies criteria versus the capabilities criteria using60:40. We believe that providing a higher weight to strategies criteria such as growth factors, differentiation elements, and innovation provide a better prediction of leadership in this market. SD-WAN is a dynamic market that will be more defined in the longer term by factors that drive growth and differentiation.
IDC MarketScape Methodology
IDC MarketScape criteria selection, weightings, and vendor scores represent well-researched IDC judgment about the market and specific vendors. IDC analysts tailor the range of standard characteristics by which vendors are measured through structured discussions, surveys, and interviews with market leaders, participants, and end users. Market weightings are based on user interviews, buyer surveys, and the input of IDC experts in each market. IDC analysts base individual vendor scores, and ultimately vendor positions on the IDC MarketScape, on detailed surveys and interviews with the vendors, publicly available information, and end-user experiences in an effort to provide an accurate and consistent assessment of each vendor’s characteristics, behavior, and capability.
Because of COVID-19–related business disruptions, IDC was not able to interview as many customer references as usual. These reference calls provide valuable insight into the enterprise deployment journey. Therefore, the conclusions derived from customer reference interviews are directional or anecdotal in nature and too small a data pool to represent a wider view of the market.
Market Definition
Since its inception in 2015, SD-WAN was viewed as a transformational technology that addresses the branch needs for cloud adoption, flexible service introduction, and dynamic bandwidth allocation. It is intended to provide a cost-effective solution for handling increased traffic demand at the edge. Communication service providers (SPs) adopted SD-WAN as a cornerstone use case for the evolution toward a software-defined and fully virtualized network architecture.
Global communication SPs initially offered network-based managed SD-WAN primarily based on Cisco IWAN. They later incorporated OTT solutions from start-ups, such as Viptela, VeloCloud, and Versa, in response to enterprise demand and to fend off against competition from these vendors.
2019 witnessed an acceleration of managed SD-WAN adoption and an increase in commercial deployments. Building on this momentum, IDC has forecast that managed SD-WAN will experience significant growth in the 2020–2024 forecast period, culminating in worldwide revenue around $10.4 billion in 2023. Communication service providers will grab the lion’s share of this managed SD-WAN market, reaching 80% market share.
Related Research
- Worldwide SD-WAN Managed Services Forecast, 2020–2024 (IDC #US45376220, May 2020)
- IDC Market Glance: Telecommunications, 2Q20 (IDC #US46254420, April 2020)
- CenturyLink 2020 Analyst Summit: Evolving CDN at the Edge (IDC #US46104620, March 2020)
- Edge Computing Alliances Gaining Momentum (IDC #lcUS46115420, March 2020)
IDC MarketScape: Worldwide Managed SD-WAN 2020 Vendor Assessment
In this IDC study, we present an assessment of 12 communication service providers that provide managed SD-WAN on a global basis. The assessment is based on the communication SP's current capabilities and future plans for delivering SD-WAN managed services. This is the second comprehensive analysis by IDC on this rapidly growing market and provides insights to enterprises deciding on the adoption of SD-WAN managed services for branch applications