The WAN optimization market is expected to grow from $1,047.1 million in 2020 to $1,446.2 million by 2025, at a Compound Annual Growth Rate (CAGR) of 6.7% during the forecast period of 2020-2025, according to ResearchAndMarkets.
Most cloud-based applications need good bandwidth and low latency for effective utilization. In large-scale WAN deployments, latency, bandwidth constraints, and packet losses are inevitable.
WAN optimization enables enterprises and service providers to save money and reduce costs with reduced bandwidth requirements and increased user efficiency by alleviating the effects of latency and distance between branch offices, data centers, and cloud.
Customer experience is a critical and important factor in this application era. Digital transformation fails to produce the desired business impact, unless application performance is protected and delivered optimally to all users.
The important challenge of IT teams of every organization is to dynamically orchestrate the performance and user experience of every application in real-time, irrespective of the size, location, and complexity of network environments, which can be solved with the help of WAN optimization solutions.
Banking, finance, and insurance to hold highest market share
Based on verticals, the banking, financial services, and insurance (BFSI) segment of the WAN optimization market is projected to hold the highest market share during the forecast period. The BFSI vertical is adopting innovative technologies, primarily due to changes in the centralized and computerized process in this vertical.
The vertical includes commercial banks, non-banking financial organizations, and insurance companies. It is witnessing the rapid growth of new technologies related to financial security and data due to the confidential nature of the data that needs to be always secured.
Online banking, mobile banking, and electronic payments are growing at a rapid pace as banks evolve from a traditional payment processing and enquiry-based business to digital banking. The volume, geographical reach, and accessibility of retail environments are vital.
The quick adoption of WAN optimization is expected in the financial services vertical due to the need to connect all the remote branches of companies to a core banking system, which is not possible without Application Delivery Controller (ADC).
With the introduction of WAN optimization-as-a-service, financial services institutions are able to do cost-savings as the services get billed on the basis of their usage. Financial firms do not have to invest in new hardware and software.
The flexibility of cloud-based operating models also enables financial institutions to experience shorter development cycles for new products.
Large enterprises segment to record a higher market share in 2020
Large enterprises are organizations with the employee strength of more than 1,000 employees and annual revenue higher than one billion. These organizations need the expertise of IT staff to manage specific applications and IT infrastructure due to the large amount of data they generate.
They always focus on the adoption of those industry solutions that can help them in increasing their operational efficiency. WAN optimization solutions help large enterprises motivate and encourage employees by offering enhanced user experience.
They also assist large enterprises in increasing client base with the help of innovative and exciting gamified techniques. Enterprises are expected to continue to adopt on-premises and cloud-based WAN optimization solutions at a faster pace.
Cloud segment to hold a higher market share
The cloud deployment model is gaining traction in the market due to its several advantages, such as cost-savings for additional hardware and software, and scalability, over the on-premises deployment model.
In the cloud deployment method, vendors such as Aryaka Networks offers WAN optimization as a cloud-based service. One of the other important advantages of WAN optimization-as-a-service is that enterprises can customize solutions according to their requirements, whenever new applications are installed.
This cloud-based service provides benefits, such as reduced licensing costs, ability to cut out unnecessary IT staff, focus on maintenance, and flexibility in expansion of businesses. However, for cloud deployment enterprises need to analyze the benefits of their existing set up as well as those that a cloud-based service can give them.
North America to record the highest market share in 2020
The North American region is a receptive market toward the adoption of WAN optimization solutions. The region is witnessing huge demands for SD-WAN solutions due to the rising demand for the next-generation 5G network.
Enterprises in the region are shifting to managed SD-WAN services due to the rapidly changing technological landscape. Telecom providers in North America are providing services for both accelerating and monitoring application performance by integrating different toolsets.
Major North American WAN optimization vendors are developing new technologies, which are making the WAN optimization process much efficient and cost-effective. North America mainly consists of the US and Canada.
In terms of market size, the US is expected to hold a larger market size in the region. The US is witnessing heavy investments in the broadband infrastructure in the country and is contributing to the growth of the WAN optimization market in the region.
Application performance, impacted by network complexity at the edge and in the cloud, is the key enterprise concern this year for organizations implementing SD-WAN, according to Aryaka.
The study surveyed over one thousand global IT and network practitioners at companies across all verticals, headquartered in NA, APAC and EMEA. The survey asked respondents about their networking and performance challenges, priorities and their plans for 2020 and beyond.
“Modern applications are being distributed across on premises data centers, multiple public clouds (IaaS & SaaS) and edge locations. This is creating more complexity and greater dependency on the network to ensure optimal application performance as confirmed by the Aryaka report,” said Bob Laliberte, Sr. Analyst and Practice Director at ESG.
“Organizations need WAN solutions that deliver performance, flexibility and simplicity to overcome that complexity. This is driving interest in managed SD-WAN offerings that combine application optimization and secure connectivity, to any location, from any location, including access and support for remote workers.”
Enterprise complexity at the edge and within the cloud are creating a challenging environment for IT organizations. IT managers identify complexity and slow performance of both on-prem and cloud-based applications as their biggest concerns.
Complexity (37 percent) replaces cost as the number one concern, followed by slow on-prem performance (32 percent) and slow access to cloud and SaaS apps (32 percent). Security (31 percent) and long deployment times (30 percent) are also in the top four.
With so many applications in use, many of which are cloud-based, IT is consumed by managing application performance and access to the cloud. And it’s only getting more complex, highlighting the need for a managed service for many organizations.
The biggest IT time consuming issues identified by respondents were remote and mobile (47 percent), application performance at the branch (43 percent) and accessing the cloud, which doubled from 20 percent in 2019 to 42 percent in 2020.
Challenges surrounding UCaaS
The survey showed that while network managers have high expectations as performance, UCaaS is still challenging to deploy globally, and, once again, complexity is the culprit.
Respondents identified set-up and management as the number one challenge for voice and video (48 percent in 2020; 27 percent in 2019), highlighting the need for managed solutions that hide the complexity. Lag/delay was a close second (43 percent in 2020; 30 percent in 2019), which illustrates network performance issues. This was followed by dropped calls (39 percent).
It’s all about the apps and where they’re connecting from
Most of the enterprises surveyed are leveraging over 10 SaaS applications (51 percent in 2020 versus 23 percent in 2019), which speaks to the criticality of cloud performance. In terms of where these SaaS apps are hosted, it’s a multi-cloud world, with AWS, Azure, Google, IBM, Oracle, and Alibaba Cloud all well represented.
What’s more, enterprises are continuing to increase the number of applications deployed. A growing number of companies are deploying 100+ applications: 59 percent in 2020 compared to 43 percent in 2019. Please refer to the report for more detailed, per-vertical data and year-on-year comparisons.
What’s being done to reduce complexity
To address increased complexity and the time spent managing the WAN, enterprises regardless of size are undergoing major initiatives that include automation, the cloud and newer areas of interest such as IoT, AI/ML and blockchain.
For broad IT initiatives, automation grew substantially to 41 percent of respondents in 2020 from only 31 percent in 2019, as did IoT (29 percent in 2020 from 18 percent in 2019), AI/ML (27 percent in 2020 from 12 percent in 2019), and blockchain (21 percent in 2020 from only five percent in 2019).
On the cloud front, regardless of company size, upgrades and management are important as well as a keen interest in 5G. This last initiative reflects the interest in 5G as a future primary connectivity option for SD-WAN.
Respondents identified cloud upgrades (37 percent) and management (38 percent) as top networking initiatives. A whopping 42 percent of respondents also named 5G as a top initiative for this year.
Barriers and expectations for today’s SD-WANs
Buyers are at various stages of their SD-WAN evaluation, but most are still gathering information or evaluating vendors. Forty-four percent of respondents are gathering information, 23 percent are evaluating SD-WAN vendors, 11 percent are building a business case, 13 percent are in the middle of deploying, six percent have deployed and assumed to be happy while only two percent are deployed, but not happy.
When evaluating SD-WAN, the top three potential barriers include application performance, knowledge gaps and complexity. Overall, cost seems less a consideration this year versus performance and complexity, with SD-WAN ROI better understood and valued than in previous years.
Beyond the barriers mentioned above, SD-WAN planners have certain expectations they’d like met. Respondents said, the cloud and WAN optimization are still key requirements to a successful SD-WAN solution, but NFV, support for remote workers and the desire for a managed service have grown substantially. Add in security, and all of these features illustrate the many moving parts critical to a successful SD-WAN deployment.
Their top SD-WAN features wish lists included expected responses such as security, cloud and WAN optimization, but also network functions virtualization (NFV), which more than doubled from 2019 (35 percent in 2020 from 13 percent in 2019) and support for remote employees, which also grew by over 50 percent (33 percent in 2020 from 21 percent in 2019). Organizations are increasingly expecting the mobile workforce to be included as part of the total SD-WAN solution.
The desire for a fully managed SD-WAN also increased to 37 percent in 2020 from 28 percent in 2019. This aligns with a growing acceptance for managed offerings, likely in response to the increasing complexities and challenges detailed earlier, with 87 percent of respondents saying they would consider a managed SD-WAN as compared to 59 percent in 2019.
“We are living in a complex multi-cloud and multi-SaaS application world. As global enterprises continue to innovate by embracing new technologies and migrating to the cloud, they also face new challenges, and the network is increasingly a strategic asset” said Shashi Kiran, CMO of Aryaka.
“Whether it’s an increasing number of global sites through expansion, poor performing cloud-based applications, increasing costs or the time it takes to manage multiple vendors, many organizations are at an inflection point: transform the WAN now or risk falling behind and losing out to competitors.”