Are Software-Defined solutions an Emerging Threat or Opportunity for Channel Partners?
Cloud adoption is disrupting the IT world to its very foundations and forcing the channel to evolve from products to services, or risk being relegated to mere plumbers and pipe providers. With network upgrade cycles slowing and increasing financial uncertainties on the horizon, SD-WAN provides more sustainable economic benefits for customers, channel partners and MSPs. Emerging SD-WAN solutions are now poised for rapid market disruption, and at its core SD-WAN affects the way network products and services are sold and deployed. Channel partners need to revise their business models accordingly, which includes not only evaluating new software-defined solution architectures but also adapting their sales processes around this new paradigm.
“By the end of 2019, 30% of enterprises will have deployed SD-WAN technology in their branches, up from less than 1% today.”
– Gartner, Dec 2015
From a revenue perspective, SD-WAN represents a new architecture, relying less on legacy hardware. This will create downward pricing pressure for an industry that has benefitted from high hardware margins for decades, but with the right strategy it can also increase profits for channel partners.
- SD-WAN provides a monthly recurring stream versus the CapEx model of traditional WAN deployments. This provides a much more stable revenue stream, versus always trying to find your next “kill”.
- SD-WAN introduces new user interfaces, monitoring systems, and troubleshooting tools (such as QoE monitoring, Firewall Management, etc.) that become multiple entry points for new revenue generation.
- An SD-WAN solution that has a cloud-managed portal with multi-tenancy reduces deployment and operating expenses.
- End customers will need migration and implementation plans. These types of professional services provide an opportunity for additional revenue streams and differentiation.
Strategies to Maximize Your SD-WAN Sales
SD-WAN adoption is in its early stages, but is accelerating. In many cases, demand for SD-WAN is being driven by C-level executives who have been exposed to the mantra of “10X the speed, at ½ the cost”. SD-WAN is a hot buzzword in the industry, so customers are receptive to the proposition, but this is a double-edged sword for the channel. Initial enthusiasm is typically offset by protestations from network engineers who have crafted their legacy solutions, and are reluctant about becoming early SD-WAN adopters. Overcoming these objections will be the key ingredient in successful SD-WAN implementations.
Other common factors increasing SD-WAN anxiety are skepticism about the marketing hype, and the confusion in the industry about what SD-WAN really is. With multiple vendors offering a wide range of different implementations, it is critical for channel partners to select the right software-defined solution platform that delivers on both promises for customer value and user quality of experience. Another important factor to consider is that some SD-WAN vendors will sell direct to end-customers, and in doing so compete with their own channel. Part of the criteria in selecting an SD-WAN vendor/partner should be to find packaged solutions that are geared to the channel.
“IDC predicts… software defined WAN (SD-WAN) industry, worth a mere $225 million last year, to grow at more than 90% CAGR for the next five years to become a $6 billion industry by 2020.”
– Network World March 24, 2016
Early adoption allows channel partners to stake out their claim in the SD-WAN landscape before it becomes crowded. Channel partners should actively evaluate as many options as possible from different vendors, become de-facto experts and claim the early market victories.
The reality of SD-WAN is that it is both a huge threat and a tremendous opportunity for channel partners, so the time is now to embrace network virtualization. Those that start early and make SD-WAN a cornerstone of their strategy will get the biggest benefits from this emerging technology.
Look for a follow up blog post on how to select your SD-WAN vendor.