WAN optimization as a managed service gains steam

Demand for WAN optimization as a managed service is growing in an enterprise market that has warmed to the technology over the last half decade, according to analysts. While WAN optimization may undercut demand for bandwidth, offering it as a service gives telecom providers a chance to reclaim more revenue while cleaning up their own carrier networks in the process.

WAN optimization technology employs multiple techniques including caching and compression to maximize efficiency in wide area networks, freeing up bandwidth and improving application performance. For example, if multiple employees at an office location need to download a PowerPoint presentation, that presentation can be cached at an office-based appliance when the first employee downloads it. Thereafter, everyone else in the office will get their copy from that local appliance rather than dragging redundant copies all the way from the data center, thus freeing up space on the WAN. And the performance of applications that require constant communication between the user and the data center can also be improved.

WAN optimization also frees up capacity on the service provider’s network. “It helps the service provider, and they’re able to [sell it] as a premium service they can charge more for,” said Matthias Machowinski, directing analyst for enterprise voice and data for Infonetics Research.

The technology is most appealing to large enterprises and multinationals in particular. But depending on WAN and application use, the technology could be useful to relatively smaller firms on a more regional basis – for example, engineering firms that regularly transmit large data files. And in fact, Gartner analysts have recently begun recommending WAN optimization to small and medium businesses, which so far haven't explored it much.

However, it may appear threatening at first to telecom service providers because it runs counter to the traditional dynamics of the bandwidth market.

“Many service providers have spent their whole existence selling more bandwidth,” said Alan Saldich, vice president of product marketing and alliances at Riverbed Technology, one of the leaders in the WAN optimization equipment space. “Whenever [customers] have a problem, [they say], ‘How ‘bout some more bandwidth?’ Customers have figured out that if they double the bandwidth from Florida to Sao Palo, nothing gets any better. You still can’t consolidate, you can’t move your servers from downtown San Francisco to North Dakota because the latency is so high that your app servers don’t work anymore.”