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Flexible SD-WAN Consumption Model

A Simple, Secure, Cost-effective Way to Purchase and Use SD-WAN

By Bob Laliberte, Principal Analyst; and Leah Matuson, Research Analyst
APRIL 2022

Modern Environments are Highly Distributed and Dynamic

Today, applications are distributed virtually everywhere—from data centers to multiple public clouds and edge locations. Public cloud adoption has become ubiquitous. In fact, ESG research shows that 95% of organizations currently use public cloud services (i.e., SaaS and IaaS). In addition, organizations continue to increase the number of business applications that reside in the public cloud over the next 36 months (see Figure 1). Many of these applications are becoming more bandwidth intensive.
Figure 1. Public Cloud Adoption Has Become Ubiquitous

Does your organization currently use public cloud services (SaaS, IaaS)? (Percent of respondents, N=706)

Of all the business applications used by your organization, approximately what percentage is currently public cloud-resident? How do you expect this to change – if at all – over the next 36 months? (Percent of respondents, N=706)

Source: ESG, a division of TechTarget, Inc.

Workers are also distributed and have clearly embraced hybrid work—some days working remotely and other days working in a physical office. According to ESG research, organizations say that 63% of their employees currently work in a hybrid or remote manner, and they expect that percentage to remain virtually the same (62%) over the next 24 months (assuming all COVID-related work-from-home governmental mandates are lifted) (see Figure 2). Additionally, organizations report there will be an increase in the number of remote offices over the next two years.
Figure 2. The Trend Toward Increased Hybrid Work

To the best of your knowledge, what is the current breakdown of how your employees work and what do you expect that percentage to be in 24 months, under the assumption that all COVID-related work-from-home government mandates are lifted? (Mean, N=613)

Source: ESG, a division of TechTarget, Inc.

With varying numbers of workers seeking to connect to the applications they need to perform their jobs, it can be extremely challenging for IT—especially since IT doesn’t know where these employees will be connecting from on any given day and for how long. With the fast pace of business today, and a global pandemic, situations arise that are beyond an employee’s control, which can dictate the ebb and flow of where they physically perform their work. But despite these constant challenges, organizations must still ensure that their workers can easily and securely access the appropriate distributed applications—regardless of their location—and with sufficient bandwidth to enable a consistent and positive user experience. Hence, to meet these ongoing needs, organizations have deployed SD-WAN.

Nearly Three-quarters of Organizations Expect to Support at Least 25 Remote Office or Branch Office (ROBO) Locations in the Next 24 Months.

Legacy SD-WAN Solutions Provide Certain Benefits, But Have Limitations

SD-WAN has provided enterprises with a large number of benefits, including application-based intelligent traffic steering and prioritization, direct internet access (DIA), improved digital experiences, integrated security, centralized management, and visibility of an organization’s end-to-end environment. But that’s not all—SD-WAN technologies can be instrumental in enabling a remote workforce and providing the ability at remote sites to deploy multiple links to increase network bandwidth and provide a tertiary cellular backup—all while helping to reduce monthly bandwidth costs.
However, SD-WAN delivery models are dated, with most purchased as either CapEx, a subscription from a vendor/VAR, or as managed services from a number of different sources. According to ESG research, organizations are procuring or planning to procure their SD-WAN solutions today through a variety of channel preferences (see Figure 3).
Figure 3. Organizations Plan to Procure SD-WAN Solutions Through a Mix of Channel Preferences

How does your organization plan to procure most of its SD-WAN solutions today? (Percent of respondents, N=454)

Source: ESG, a division of TechTarget, Inc.

Organizations pay for fixed amounts of bandwidth, which is typically determined by the network provider or arrived at as an IT guestimate (rather than real usage based on the amount of bandwidth that a similar branch requires [MPLS, broadband, and cellular])—and the SD-WAN device is then sized accordingly.
Although legacy SD-WAN solutions limit bandwidth based on the branch hardware appliance, this can lead an organization to implement cheaper or low-end branch appliances based on its immediate bandwidth needs. Unfortunately, when the demand for bandwidth increases, the organization is forced to upgrade all of its branches’ hardware appliances. Not surprisingly, this process is extremely time consuming and costly.
Conversely, what happens when an organization purchases high-end appliances and doesn’t use all of its capacity? In most cases, the organization still must pay for any unused capacity. Worse still, unused capacity is unavailable, making it virtually impossible to quickly shift bandwidth to new or existing locations that require it.
This system is wholly inflexible since capacity is not a pooled resource. Instead, capacity is based on an organization’s sites (i.e., IT must physically move the hardware to the site(s) requiring more bandwidth). Consequently, organizations must find a viable, new solution that enables them to efficiently optimize their current SD-WAN investments.

Transformation to a Consumption-based Model is Underway

With 95% of organizations using public cloud services for either SaaS- or IaaS-based applications, most are getting more comfortable with the idea of consumption-based pricing for IT infrastructure or software.
Based on ESG research, assuming the net costs are the same, more than half (54%) of survey respondents indicated that they are shifting to a consumption-based model for data center infrastructure. The three-year trend indicates a steady increase in this model, up from 42% in 2020, while traditional models continue to decline (see Figure 4). Essentially, this means that organizations prefer licensing models that provide the ability to only pay for capacity or capability as they use or consume it and are not locked into to paying for capacity or capabilities they are not using. It also implies that they can grow or shrink their licenses to align with current demand.

54% of survey respondents indicated that they are shifting to a consumption-based model for data center infrastructure.

Figure 4. Applying Cloud Consumption Model to Data Center Infrastructure Continues to Gain Momentum

Assuming the net-costs were the same, which of the following do you believe would be your organization's preferred payment model for on-premises data center infrastructure? (Percent of respondents)

Source: ESG, a division of TechTarget, Inc.

Given the dynamic nature of both modern application and hybrid work environments, it is difficult for organizations to successfully predict how much secure bandwidth they will require at each location and when they’ll need it.
A consumption-based model ensures that organizations are not paying for capacity they don’t need, while eliminating the classic step function increases that come with deploying new appliances at each site to accommodate spikes in demand or when deploying new locations.
As a result of this transformation, SD-WAN must extend beyond switching to a subscription-based or managed service model and offer true consumption-based pricing. By shifting to a consumption-based model, organizations have the flexibility to use their better-performing port-density supportive appliances and either expand or reduce their bandwidth subscription as needed.

Palo Alto Networks Offers Prisma SD-WAN Bandwidth Licensing On-demand

Palo Alto Networks has recognized the importance of this shift to consumption-based pricing and is now offering Prisma SD-WAN Bandwidth On-demand. This new, innovative offering enables organizations to purchase SD-WAN functionality based on the amount of bandwidth they are utilizing—right down to Mbps. It provides:
● Complete Bandwidth Visibility and Analytics Capabilities. The key to enabling this transition to bandwidth on-demand is Prisma SD-WAN’s visibility and analytics capabilities. Organizations can enjoy complete visibility into bandwidth utilization, enabling better, more efficient planning. In addition, all SD-WAN bandwidth is licensed as an aggregate pool. This is essential so that it can be distributed where and when it is needed to optimize cost and ensure consistent, positive user experiences.
For instance, if an organization finds it has a site that requires additional capacity on a given day, it can allocate additional SD-WAN bandwidth from a site that has the extra capacity or from the aggregate pool. With granular visibility, IT can easily schedule bandwidth reallocation for effective utilization.
● Seamless Upgrade of Bandwidth Tiers. For any net-new sites or sites that increase the number of users that require additional bandwidth, businesses can now seamlessly upgrade their bandwidth tiers. At the same time, if an organization has oversubscribed for bandwidth, it no longer needs to perform costly upgrades. Organizations can now simply reallocate bandwidth where it is needed.
● Burst Capacity Above Licensed Amount. To ensure optimized performance, this on-demand consumption model also enables organizations to burst capacity above licensed amounts—eliminating performance (and productivity) issues due to spikes in bandwidth demand.
● Constant Bandwidth Spike Tracking. With its analytics and bandwidth utilization visibility, Prisma SD-WAN has the capability to continuously track spikes. Since it can recognize constant spiking, Prisma SD-WAN can alert IT that it may be time to upgrade its subscription. At the same time, organizations gain the capability to fine-tune their business QoS policies to align with business intent.
● Pooled Bandwidth. The ability to pool bandwidth is critical for enterprises, channel partners, and managed service providers that need to reallocate SD-WAN services from one location to another. Pooling bandwidth enables them to align their expenses to their revenue and eliminate costly up-front investments. In addition, Palo Alto Networks claims it can reduce an organization’s bandwidth costs up to 45%.
● Secure Delivery. Palo Alto Networks enables customers who are building a complete SASE architecture to easily activate Prisma SD-WAN as a simple add-on module to Prisma Access to expedite their journey to SASE. The Prisma SD-WAN add-on to Prisma Access provides a frictionless migration to cloud-delivered and fully integrated networking and security for transforming branch offices.

The Bigger Truth

Highly dynamic and distributed application environments coupled with hybrid work models are becoming the norm. Consequently, organizations continue to increase the number of their edge and remote locations. This means that IT must have better visibility into their bandwidth consumption—while also being able to rapidly move resources where and when they are needed without additional cost.
Given this, the shift to consumption-based models are quickly gaining traction, with SD-WAN playing a key role in enabling these highly dynamic and distributed environments. Palo Alto Networks is now offering a new SD-WAN consumption model, Prisma SD-WAN Bandwidth On-demand, which enables organization to only pay for bandwidth they are using and reallocate SD-WAN capabilities where and when they are needed.
Palo Alto Networks Prisma SD-WAN continues to innovate and now delivers an industry first bandwidth on-demand consumption model for SD-WAN. This will enable organizations to optimize resources on a site-by-site basis and provide the flexibility to allocate, expand, or contract a pooled bandwidth subscription to ensure agility and minimize costs.

This ESG White Paper was commissioned by Palo Alto Networks and is distributed under license from TechTarget, Inc.

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