The legacy enterprise networking environment within enterprise data centers continues to transition away from proprietary platforms to more open standards-based solutions. Traditional hardware vendors will gradually embrace the trend, as their customers seek to lower networking costs and improve performance.
Software-defined networking (SDN) is approaching adoption by an early majority of enterprises and will compose nearly 40 percent of global enterprise network infrastructure revenue -- that's about $12.7 billion by 2020 -- according to the latest market study by Technology Business Research (TBR).
Vendor revenue displacement will be incremental during this time, as SDN solutions largely coexist with legacy networking technologies. However, the ongoing virtualization of network functions is already starting to disrupt the incumbent status-quo.
SDN Market Development Opportunities
"Today’s business environment is characterized by globally distributed pools of information and workers as well as the need for real-time responsiveness. Network managers face new security threats and increasingly demanding traffic requirements that traditional architectures struggle to address," said Krista Macomber, senior analyst at TBR.
Enterprises are beginning to deploy SDN technologies to effectively serve the modern workload ecosystem. Early adopters of SDN are already experiencing benefits, such as enhanced network monitoring and more agile IT service delivery, which is driving the transition from trial to production usage.
However, several key challenges remain, including demand for better internal change management, and the lack of a clearly defined set of business use cases. These issues must be overcome, before SDN architecture adoption reaches the broader enterprise networking mainstream.
Technological maturity -- as detailed by the Open Networking Foundation plans to merge with On.Lab -- could lay the foundation for further adoption, which TBR analysts expect to be accelerated by vendors.
"SDN promises to introduce much-needed agility into customer environments. However, for customers, getting there requires navigating a costly and complex path spanning not only technology but also business silos," Macomber said.
According to the TBR assessment, vendors sharing their early success stories should help to validate the usability benefits of SDN, as well as better align the IT organization with evolving line-of-business (LoB) leader digital transformation infrastructure needs.
Outlook for SDN Market Momentum
As SDN deployments broaden, it will likely become evident that one solution can't meet all client requirements. Many enterprises are deploying multiple SDN technologies to support core networking functions as well as adjacent, specific use cases such as micro-segmentation.
Consequently, the networking vendor landscape is becoming less combative, as embracing the market reality of increasing demand for open networking technologies seems unavoidable -- as an example, even the reluctant legacy networking vendors like Cisco and VMware are moving toward SDN acceptance.
TBR expects, with time, the market will consolidate among a smaller number of very large, multi-platform vendors that can accommodate customer demand for more holistic networking and broader data center solutions based upon open technology standards.