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Global Enterprise Software-Defined Networking Upside

Technology Business Research (TBR) forecasts revenue of $12 billion in 2020 for the global enterprise software-defined networking (SDN) market, that's a CAGR of 70.2 percent from 2015 to 2020. Moreover, it's going to become a substantial portion of the overall enterprise networking infrastructure market, as it displaces legacy technologies.

Large enterprise organizations are in the early stages of SDN trials to reduce network bottlenecks. As the technological and business value of the SDN architecture is established, ongoing user adoption will expand over time.

Notably, vendors will need to help their customers evolve their internal organization silos to support digital business transformation projects and enable SDN to flourish.

Open Networking Systems Gain Momentum

"Adoption is still fairly small and concentrated," said Krista Macomber, senior analyst at TBR.

But 2016 will be a telling year as standards bodies, such as the Open Networking Foundation, mature and a growing number of success stories from trial deployments are cultivated. TBR believes that this will pave a path to accelerated customer adoption, increasingly at the expense of legacy technologies.

Challenges ensue for hardware-centric vendors, such as Cisco, as competitors are investing in creating ways to decouple software from hardware -- making white-box hardware increasingly feasible and challenging hardware-centric vendor revenue bases.

Strategic alliances abound as SDN vendors seek to quickly and cost-effectively deliver complete solutions to market. For example, SDN controller provider Big Switch Networks works closely with Dell to provide pre-integrated appliances.

TBR expects alliance activity to grow in complementary, strategic areas such as hyper-converged platforms and security.

Overcoming Market Development Challenges

Strategic SDN alliances will also enable vendors to expand revenue streams by addressing broader enterprise use cases. This climate of openness and co-innovation, which underscores customer desires for open, flexible networking solutions, will result in a diversified, competitive landscape.

Standards bodies lay the groundwork to overcome many existing customer pain points -- such as workload bottlenecks and lack of flexibility.

Barriers to entry, such as resistance to change and lack of knowledge about SDN,  still remain. However, according to the TBR assessment, vendors will need to overcome these obstacles to foster widespread adoption to further develop this evolving market.

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