Large enterprises are moving offices off the corporate WAN and onto less expensive broadband, and at least one — General Electric — expects to cut networking costs by millions of dollars.
The switch from pricey dedicated links to internet circuits from local cable and telephone companies is still at an early stage, but the initial results are promising.
General Electric, for example, tested the reliability of broadband and found it of sufficient quality to move forward with plans to take more than 600 offices off the corporate network. The global manufacturer expects the switch to reduce costs by $20 million next year, GE CIO Jim Fowler told The Wall Street Journal last week.
“We’re finding that the local providers are providing a service that’s close to equal the quality of having a dedicated network circuit,” Fowler said.
Upping broadband use
GE is building what’s known as a hybrid WAN, a networking approach that divides traffic across multiple connection types. For its offices, GE is tapping broadband to avoid the expense of backhauling traffic to a data center before sending it to the internet.
That approach, which requires the use of dedicated circuits, such as MPLS, is expensive, particularly as companies increase their use of online business applications, such as Oracle, Salesforce and Workday.
Capital One is also moving quickly to develop a hybrid WAN through the use of SD-WAN, an emerging technology that places control over traffic distribution in centralized software.
Because SD-WAN is relatively new, deployments have been limited to avoid significant disruptions if the technology fails. “They [companies] want to make sure it can do everything they need in internet-only modes before contemplating ditching their current backbone,” said John Burke, an analyst at Nemertes Research, based in Mokena, Ill.
Big companies pushing SD-WAN benefits at scale
But for corporations like Capital One, deploying the technology at scale could encourage other companies to move faster in light of the potential cost reductions.
So far, the bank, based in McLean, Va., has 75 branches on SD-WAN. Capital One uses MPLS as a backup, with two broadband internet connections at each location. In time, the bank plans to reduce its use of MPLS further. At executives’ homes, for example, it is replacing dedicated links with broadband.
“We’re really looking to expand [SD-WAN benefits],” Jason Abfalter, technology director at Capital One, told attendees last week at the ONUG Conference in New York. “Retail [branches] was really the starting point … there’s so much more we’re finding that this can do for us.”
However, having multiple broadband connections at each site to raise reliability to an acceptable level can be a problem. “The biggest challenge that comes with that is getting all into one bill and one source,” said Chris DeHoust, system engineering manager at SD-WAN vendor Silver Peak.
Most businesses do not want to take on the accounting headaches that come with juggling bills from multiple internet service providers, experts have said.
Nevertheless, less dependence on the corporate network is likely to accelerate, given the potential savings. But that doesn’t mean companies are writing the epitaph of the private WAN.
“I would say that enterprise reliance on MPLS as the de facto WAN connectivity platform is waning,” said Gartner analyst Andrew Lerner. “However, there are large areas of the globe where MPLS is the only option to get stable connectivity.”