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Expectations about SDN cost savings don't match reality

While most enterprises prepare for Opex and Capex increases during the initial stages of SDN deployment, many don't expect a continued delay in SDN savings, according to IHS Markit.

Software-defined networking is a long-term investment, but SDN cost savings might not be as speedy as enterprises expect.

SDN deployment requires investment on multiple fronts, including planning, production trials, IT staff training, equipment purchases, upgrades to existing equipment and software licenses, among other things. Most enterprises recognize the upfront costs of these investments and plan for an increase in both Opex and Capex during the first year of deployment.

But the expected timeline for SDN cost savings typically doesn't match reality after the second year of deployment, according to IHS Markit's recent "Data Center SDN Strategies North American Enterprise Survey." In its survey, IHS queried 100 North American enterprises actively evaluating or deploying SDN in 2018. The research firm found that 61% of enterprises that had deployed SDN saw Capex increase up to 20% in the second year, while many enterprises evaluating deployment instead anticipated Capex savings by that time.

While deployment costs vary for each organization, enterprises with older network equipment and network designs will face longer deployments -- and, subsequently, delays in savings -- IHS said. Enterprises that deployed SDN realized the process requires several years of continued investment, the firm added.

While Capex savings might not match expectations, most enterprises IHS surveyed had more realistic expectations regarding Opex reductions, aware that training, testing and certification for new processes and equipment could delay Opex savings. Among IHS respondents undergoing deployment, this delay in savings continued into the second year, in which 66% of respondents experienced another Opex increase, due to training and certification expenses.

Enterprises that deployed SDN realized the process requires several years of continued investment.

To IHS, all of these results highlight the need for enterprises to alter their expectations around SDN cost savings.

"Those evaluating SDN need to adjust their expectations that savings might not be felt immediately, but instead might happen over a longer period of time," said Josh Bancroft, senior analyst of cloud and data center research at IHS, in the report. As organizations gain familiarity with SDN capabilities, equipment and processes, then they will proceed to realize cost savings, IHS said.

The importance of production trials

With the delays in SDN cost savings and the amount of investment in equipment, staff and licenses, organizations can't afford to forgo preparation. During the deployment planning stage, enterprises need to first determine where SDN can provide the best value in the network.

Prepare for SDN deployment
Use these four steps to get ready for SDN deployment.

One way to determine SDN's value is with a production trial, which enterprises can use to test features and capabilities and get hands-on experience. As of the time of the survey, the majority of SDN-interested enterprises IHS surveyed were in production trials -- 38% of respondents said they would reach live SDN production by the end of 2019, while 74% said they would be in production trials.

While large organizations usually have dedicated departments and resources allocated for testing and production trials, smaller companies usually lack these resources, said Lee Doyle, principal analyst at Doyle Research.

"Those smaller companies tend to pilot SDN in small deployments and monitor the results, or they rely on a reseller or partner for their expertise and support," he said.

Cisco and VMware win the familiarity contest

Although the SDN market comprises a number of vendors, survey respondents indicated they were most familiar with Cisco and VMware, with Dell EMC following in third place.

Cisco and VMware rankings for SDN
Enterprises are most familiar with Cisco and VMware versions of SDN.

With such a crowded market, vendors -- in addition to third-party partners and resellers -- need to show customers their ability to help with training and support, IHS said. Also, as SDN has matured over the years, vendors have bolstered their SDN portfolios with additional capabilities to better appeal to customers. One such example is the move to integrate network analytics into the SDN environment, which improves application performance and security -- two top drivers of data center SDN deployment, IHS said.

Next Steps

Determine if it's time to consider SDN deployment

How SDN and network automation can play together

Learn how small businesses can use SDN

Explore some of the original promises of SDN technology

This was last published in May 2019

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