The Economics of WAN Optimization’s Shift From Appliances to the Cloud

A few years ago, industry insiders began noticing and talking about the trend of cloud-based WAN optimization. Turns out, it was starting to take market share from the appliance market. Here we are heading into a new year and the factors prompting a move away from appliances and into the cloud remain relevant. Businesses continue to shift from WAN optimization appliances to cloud-based solutions, attributing much of this shift to economics (1).

For example, not only is the pricing accessible to small and mid-sized companies, cloud-based services eliminate the need for purchasing hardware. From a cost standpoint, it is far more attractive than WAN appliances. For example, you could pay as little as $500 per month for an Aryaka plan compared to $2,500 to $10,000 or more for a WAN appliance plus MPLS or some other form of transport. It’s hard to argue with those price differences.

How much do you know about the economic advantages of WAN optimization as a service? Here’s a quick true or false quiz for you:

1. It requires an appliance in order to be effective.

  • True
  • False

2. The virtual appliances are cheap.

  • True
  • False

3. You just need a one-time investment when buying the appliance.

  • True
  • False

Answers:

1. FALSE. It does NOT require an appliance. Though you may have needed an appliance ten years ago, it’s no longer the case today as numerous alternatives exist. Rather than relying on a piece of hardware and incurring a capital expense, it can now be delivered as a cloud-based service and billed as an operating expense. Not only can it deliver private MPLS-like connectivity at a much lower cost, it does not require long deployment times or expensive contracts.

2. FALSE. The virtual appliances are cheap – at first glance. Though the initial purchase price of virtual appliances may be low, cost savings are often gobbled up by management costs. Remember, it’s not just the appliance, it’s also the resources used to manage that appliance. Someone needs to configure it, manage it, and troubleshoot it. With it, the service provider handles all of the above and more as part of the service. There’s no need to hire IT personnel to manage it.

3. FALSE. The appliances RARELY require just a one-time investment. When you consider that WAN appliances usually come with a 3- to 5-year product cycle and an end-of-life/end-of-support soon thereafter, that one-time investment must be repeated every three to five years. If you need additional bandwidth, you must upgrade the WAN appliance. Not only that, the appliances come with expensive, recurring maintenance and management expenses.

Other factors beyond the cost advantages of cloud-based WAN optimization versus WAN appliances have come into play. For example, it brings both flexibility and faster deployment times to the mix. From a flexibility standpoint, it is typically offered on a month-to-month basis, allowing for greater scalability (2). The service can grow or contract as the business’s needs change. Fast deployment times bring with them their own economic advantage: The sooner the network is optimized, the sooner productivity improvements can take place.

When it comes to the costs, the clear winner is WAN Optimization as a Service. The trend away from hardware-based appliances to cloud-based WAN optimization continues, and a lot of that has to do with the cost advantages.

Leave a Reply