As enterprises develop network strategies and technical roadmaps, one hot technology that will be on their radar is SD-WAN, a significant transformational solution in networking and a major change from the MPLS status quo that most enterprises have deployed.
As bullish as we are on SD-WAN, we recommend that any enterprise contemplating its adoption take a few preliminary steps to minimize the disruption and costs associated with transitioning from the legacy network.
Assess your current network
First, establish what your current network looks like and how it’s used. Complete an application assessment and do an endpoint analysis to determine whether you have a lot of small branches, big offices or a combination.
Managed service or in-house?
Second, consider what type of SD-WAN solution makes sense for your enterprise. Do you want a managed service or a DIY unmanaged solution? Take into account your geographic footprint. This will have an impact on which, and how many, last-mile bandwidth providers you’ll need to work with to implement the solution.
Review current WAN contracts
Third, before committing to an SD-WAN business case, it is important to identify your obligations to existing network service providers. You may run into problems or costs (such as early termination or shortfall charges from incumbent providers) with your planned transition to SD-WAN if you don’t fully evaluate what your commitments and potential liabilities are to your current providers.
It’s not uncommon for enterprises to rush into a migration to SD-WAN predicated on overly optimistic models of cost savings based on replacing most of their MPLS circuits with cheaper internet circuits. In many cases, they fail to realize that they can’t just rip out MPLS circuits with their current providers without incurring huge early termination charges.
It’s not enough to compare the monthly cost of MPLS with the monthly cost of Internet access; you need to also understand the contracts you have with your current MPLS service providers and determine whether you have individual term commitments on existing circuits. These individual term commitments can be for 12, 24 or even 36 months, and require a customer to pay termination charges as high as 100 percent of the monthly recurring charges for pulling them out early. In some cases, depending on how much leverage you had when you negotiated your contract, he commitment may be more because you have to repay waived installation and other charges. That can get expensive fast and blow up your overly optimistic model of cost savings.
Your legacy contract might also have an overall annual or term revenue commitment for all services, which you would still have to satisfy if your SD-WAN migration reduces your spend, forcing you to purchase additional services from that vendor to make up the difference or paying a shortfall charge. In addition, you may have other components in your existing deal that would prevent you from or penalize you for making a change without incurring significant costs. Some examples might include discounts, credits or waivers based on total spend for all services or for specific services, and disconnection-order requirements that could result in continued, overlapping billing for circuits you thought you had disconnected but that the provider rejects based on a technicality.
In short, it’s important to have a handle on your current obligations and factor them into your SD-WAN transition timing and cost models. And all this is true, even if you’re transitioning to an SD-WAN solution provided by a current service provider. Enterprises often rely too heavily on so called-technology transition clauses, which may exclude moves to a different service or technology with the same provider if the move decreases the provider’s revenue.
With an SD-WAN solution, you’ll likely need a lot fewer customer edge routers in your network, so it’s important to check your value-added reseller contracts to understand your payment obligations for equipment you no longer need. You’ll also want to ask your VAR if it has a relationship with your chosen SD-WAN solution provider, which could mitigate some of your costs.
Takeaway: Before committing to an SD-WAN solution, be sure to check your contractual obligations to your existing network service providers and value-added resellers. While your SD-WAN business case may show you need less MPLS network transport and don’t require expensive routers, you may still have revenue commitments tied to your legacy network and hardware that could offset some of the savings you were counting on.
(Kevin DiLallo and Laura McDonald are partners at Levine, Blaszak, Block & Boothby (LB3), a D.C. law firm, and Joe Schmidt is a Project Director at TechCaliber Consulting (TC2). The two firms help companies maximize the return on investment in information-communication technology.)
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