Review of the key financial benefits of Software-Defined WAN. Enterprises are seeking to understand the financial benefits of SD-WAN as this new technology continues to grow. Dan Conde, industry analyst at ESG Research, has spent several months researching how SD-WAN is modernizing wide area networks while delivering substantial cost savings. Join Dan Conde in this webinar to gain a better understanding of the key elements of SD-WAN that deliver performance, simplicity, and optimal access to on-premise applications and cloud services. Dan will examine the components of SD-WAN and provide a review of the key financial benefits, basic cost savings and the hidden operational benefits that SD-WAN brings to businesses.

1. Enterprise Strategy Group | Getting to the bigger truth.™
© 2016 by The Enterprise Strategy Group, Inc.
Dan Conde, Analyst
SD-WAN
Economics 101
PREPARED BY ESG FOR

2. What you’ll get out of today’s webinar
• Gain a better understanding of the key elements of SD-
WAN that deliver performance, simplicity, and optimal
access to on-premise applications and cloud services.
• Examine the components of SD-WAN and provide a
review of the key financial benefits, basic cost savings
and the hidden operational benefits that SD-WAN
brings to businesses.

3. About ESG
• ESG is an IT analyst, research, and strategy company.
• Our firm was founded in 1999 with headquarters in Milford, MA / an analyst and client relations presence in
Silicon Valley, CA.
• ESG conducts research with and for IT vendors, IT professionals, business professionals, and channel partners.
• We maintain ongoing analyst coverage in cloud computing, networking, storage, data protection, cybersecurity,
data management and analytics, application development and deployment, enterprise mobility, and channels.
• Capabilities include: Analyst services, market research, technical performance testing, economic validation,
consulting, and custom content.

4. Situation in past with Wide Area
Networks
• Networks are designed to access
the data center
• Networks were based on MPLS,
leased lines
• Apps were delivered from the
data center only, and little access
to internet

5. What is changing
• Access to the internet is more
prevalent
• Network are available from more
sources: broadband, LTE in
addition to MPLS, DSL

6. Challenges
ESG Research shows these are the
top branch office challenges:
• Slow speeds
• Cost of WAN bandwidth
• Too much data to move on WAN

7. • Simplify the network
• Reduce operational expenses
• Reduce bandwidth costs
A new approach can help
What can a modern WAN do for you?

8. Reduce telecom costs
32% of organizations say that cost
of bandwidth has been a challenge
Most bandwidth use at the branch
will continue to increase with
video, VoIP and other media
How does one cap spending while
addressing new needs?

9. Simplify the network
What can I eliminate? I have a
variety of equipment at the branch
and at the data center (head end)
• Routers?
• Layer 7 firewalls?
• WAN Optimizers?
• VPN devices?

10. Reduce Operational Expenses
• ICOM Budget – installation,
configuration, operation and
management
• Each truck roll is expensive -
Troubleshooting and
provisioning often requires
in-person visit

11. Who can benefit?
• Enterprises can benefit
• Service providers can benefit
Enterprises simplify their WAN
infrastructure
Service providers can create multi-
tenant WANs

12. Five VeloCloud Customer Case Studies
• ESG developed the TCO whitepaper based on 5
VeloCloud customer case studies
• 4 Enterprise customers and 1 service provider
• Analysis included CAPEX and OPEX costs savings

13. Details of the benefits
Let’s drill down into the benefits with an example.
Being ready for future
workloads
Providing better service

14. Device Consolidation
Branch costs can exceed $340,000
plus support costs
Instead, purchase a single device,
and use virtualized services.
Fewer devices – less to worry
about

15. • Take the right path depending
on the traffic
• VoIP traffic takes a low-latency
path
• YouTube traffic takes a high
bandwidth but less reliable path
Dynamic multi-path

16. • Performance, configuration
and status are critical
• One view to provide
awareness and appropriate
control
Visibility into WAN

17. • Troubleshooting previously
required a truck roll
• Centralized cloud network
architecture means
VeloCloud worries about
the network control and
management plane
Troubleshooting - simplified

18. How to get there: A story of a 250 branch deployment
Let’s see how savings in three areas can help with this
hypothetical company

19. Today
• 1 MPLS port – but running out of capacity
• I pay $600 for one 3 Mbps port
• Cost per Mbps - $200

20. Keep with the status quo – buy more MPLS
Pay for more MPLS network ports – 2x $600
No savings from modern methods
Total bandwidth- $1,200
At least your per Mbps costs stay the same
and is predictable - $200

21. Use old MPLS, add broadband
Keep one MPLS port - $600 / month
Don’t add any new MPLS ports
Add a new broadband (cable) - $75 / month
VeloCloud subscription - < $100/month
Total bandwidth: $675 for 23 Mbps and
$29/Mbps

22. Remove MPLS, use dual broadband
Dual broadband link – from two providers -
$150 total
VeloCloud subscription - $50/month
Total bandwidth: $150 for 40 Mbps and
$3.75/Mbps

23. Infrastructure and Ease of Installation, Mgmt Savings –
Illustrative example
Infrastructure
(average cost per branch)
Legacy VeloCloud Notes
Headend cost per branch* $160 0 Datacenter Headend with high
availability
Branch devices cost $900 0 Router, router module,
Firewall, VPN, WPC, Mgmt
Operational
Per branch
Legacy VeloCloud
Network Management
license and support
$1080 0
Support cost $300 0
MPLS connector cost* $120 0
*does not include branch truck rolls and associated savings

24. $0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
Current With VeloCloud
WAN Costs for a 250 branch deployment
Bandwidth Operating Expenses (ICOM) Network Infrastructure
3x Total Cost of Ownership Savings with SD-WAN
3x

25. Summary
There are several paths to adoption
Choose your schedule, contracts, future needs
It is not a wholesale change – gradual adoption
is possible

26. Changing from CapEx to OpEx affects the budgeting
structure.
Make the costs variable and not follow an up-front
investment that’s depreciated.
Accounting benefits

27. Questions?