Banking on SD-WAN: How much will you really save?

Most answers to the question "Why should I bother upgrading to an SD-WAN solution?" likely start with – or at least quickly proceed to – the potential for considerable cost savings. This angle makes sense. After all, MPLS bandwidth is expensive, and simple back-of-the-envelope math on the savings that using SD-WAN to replace MPLS with high bandwidth, inexpensive Internet links can yield will often show some eye-popping results. Projected cost reductions of 80 percent or more are commonly trotted out in marketing materials and white papers.

However, these calculations are frequently based on unrealistic assumptions, like assuming that an enterprise will all-at-once simply rip and replace its entire MPLS infrastructure with commodity Internet links, something that's not always a viable option. The questions of whether SD-WAN can produce substantial savings and where those savings are most likely to materialize instead require closer scrutiny of the details of the SD-WAN deployment.

SD-WAN cost considerations under a microscope

Going back to our opening point, the choice between MPLS and other modes of network transport is still crucial in determining the final savings of an SD-WAN implementation. MPLS can cost 100x more per megabit than broadband, so ditching it will cut expenditures considerably in some cases.

Gartner has put together a rundown of different transitional scenarios for SD-WAN and their respective associated net cost reductions or increases. For example, going from single-line MPLS at 2 Mbps to consumer internet plus LTE backup at 10 Mbps resulted in some of the greatest savings per Mbps observed in the study.

There are some caveats. This example involves only a small site with low business priority. In contrast, a large site with medium priority transitioning from singular MPLS at 20 Mbps to an SD-WAN with MPLS plus internet, both at 20 Mbps, would cut its costs considerably (by almost half), but still by less than the first example. The specific transport options in question, the site's size, its access design and its priority will all affect total costs, meaning that savings vary considerably from case to case.

Beyond MPLS vs Internet calculus

It's easy to get deep in the weeds by making slight adjustments in assumptions that produce very different outcomes. Those calculations are important, but traditional circuit elimination is only one piece in the SD-WAN cost-savings puzzle. In fact, Gartner itself rates it as only a 3 (and circuit reduction just a 2) on a 1-5 scale of SD-WAN savings potential, with 5 representing the most potential.
So what rates even higher, or at a similar level? Improvements in network and application performance troubleshooting, simpler WAN configuration and management, and increased branch agility were all seen as comparable or better opportunities for cost reduction.

In other words, any assessment of SD-WAN savings should go beyond the estimated hard WAN cost savings in changing the access design from MPLS to Internet, or even from Internet alone to LTE-enhanced backup. Decision-makers also have to account for the "soft" savings they will gain from more streamlined management and quicker issue resolution, not to mention more predictable application performance with fewer bottlenecks and outages. Hard WAN spend cost savings of 40% or more, even 80% if and when MPLS is ultimately completely replaced, are indeed possible, but even without eliminating MPLS, substantial hard and soft savings are possible from a failsafe SD_WAN solution, while increasing available WAN bandwidth and improving network reliability and application performance predictability.

An SD-WAN solution from Talari Networks can fit your specific network and application environment, and produce the economic and technical benefits you expect. Learn more by requesting a demo or downloading the free eBook below.

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