Here at the EnableIP headquarters, we don’t spend much time debating the potential savings of software-defined (SD) WAN solutions. We’ve seen time and time again how much companies can save by integrating managed SD-WAN solutions.
However, since money is always on everyone’s mind, we wanted to take a closer look at where exactly the potential for savings lies.
First, we need to make clear where we stand on broadband vs. dedicated connections.
We’re squarely in the camp that most mid-markets and enterprise businesses still require a dedicated connection to adequately run their applications.
The biggest reason for this is that much of the country, especially near our Texas HQ, isn’t going to have two broadband providers available at a single location. Second, the SLAs (service level agreements) for broadband are worthless and there’s a higher probability that there’s shared infrastructure between two broadband providers going into a facility.
You aren’t likely going to find two diverse broadband connections in one facility on a regular basis, unless it’s an office building in a major metro.
By using packet level inspection, SD-WAN is as close to perfect as you can get. However, if you have a less desirable circuit and all of the traffic is going over the other circuit, you really haven’t gained much with two — especially if both circuits go down at the same time.
We do expect to see broadband continue to evolve and there will likely be a day when two broadband connections will be widely available; however, for the most part, we aren’t there yet.
Now, what about the money?
Essentially, you have four components to consider when it comes to SD-WAN expense:
Most top-of-the-line SD-WAN providers proud of their equipment because it can do a few things quite well, such as a firewall, router terminating multiple circuits, VPN (virtual private network) device, etc. If you’re building a highly available network, you’ll need two of these devices mirroring one another. And even with two devices, you’re likely saving money on hardware and configuration in the end.
We estimate this savings is somewhere around the 30%-40% range. So if it generally costs you $10,000 to deploy a connection at a new site, with SD-WAN you’re looking at something more like $6,000-$7,000.
Next, you have the circuits. If you’re moving from MPLS (Multiprotocol Label Switching) to a dedicated internet connection with a broadband back-up, the savings comes from having the freedom to choose the last mile provider that has the least cost for a dedicated connection. Here is where money can be saved, especially in those ILEC (incumbent local exchange carrier) locations where MPLS might have a loop cost well-above $1,000. With the ILEC for a dedicated connection, you’ll halve that number at the very least.
The downside is you’ll have more relationships to manage, but there’s also value-added resellers — like us — who can provide a single contact and a higher level of service and support to simplify the process.
There are certainly cost savings when it comes to circuits. But due to the nature of SD-WAN, you’ll also have to give some of that up to the service.
As far as both internal and external costs, SD-WAN is hands-down the clear winner over traditional MPLS and broadband back-ups. With SD-WAN, the time spent to configure at the carrier-level is reduced, as is the time to configure equipment, test and install, and manage ongoing tasks.
The simplicity of management is, in our opinion, one of the most intangible components to hard dollar savings achieved by moving to SD-WAN. It’s also probably the most compelling part of the solution.
Based on our experience, we estimate that deploying an SD-WAN infrastructure takes half or maybe even a third of the time that it takes to deploy a traditional network.
Just how big of impact in cost savings does that have?
Let’s do the math:
If it took 10 hours to deploy a traditional network before, but now it’s down to 4 or 5 hours, that’s real time and money that can be spend elsewhere where it’s really needed.
There’s also a significant savings with SD-WAN because it doesn’t require a full-time network admin. Once the policies are made, it truly is a set-it-and-forget-it solution. This could be the cost of a full-time engineer, unless they still have a place in the enterprise. Conservatively, we estimate that 10 hours a month can be saved here — likely much more depending on the current complexity of your existing network.
So you’re about to give some of that money back, because most of the big guys in this space realized they were leaving money on the table if they didn’t have an on-going MRC (monthly recurring charge) for support, additional services, free upgrades, etc. Most of them also want fees paid up-front, more like a software model than a service model.
But here at EnableIP, we can offer a lease and make this an ongoing service fee if that’s what the customer wants. Either way, there’s another $200-500 per month when amortized over the term of a circuit’s life that will be required for the software related to the SD-WAN service.
In summary, you can save bigtime in the hardware on a one-time level. In addition, you can cut costs on the circuit side, moving from MPLS to multiple internet provider or value-added reseller model with broadband back-up. There’s also a human capital savings component and some of this is given back on the SD-WAN monthly service, but certainly not all of it.
For the sake of calculating a number on a 100Mb dedicated connection with 100Mb broadband back-up, we estimate that you can expect the following saving:
|SD-WAN hardware vs Traditional Hardware||$0||$3,500|
|SD-WAN service fees||-$350|
One final note:
This savings estimate is for a single branch location. We’ve spread the human capital component across 20 sites for this example. There may be independent variables that will skew this estimate slightly, but hopefully this gives you a better idea of how you can access the potential for value related to SD-WAN.
We invite you to try out our free online downtime calculator to estimate your annual savings.