Market Insight

RESEARCH NOTE - WAN Spending by Businesses to Grow More Than 20 Percent Annually, Survey Shows

March 08, 2017

Matthias Machowinski Matthias Machowinski Directing Analyst, Enterprise Networks and Video

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Following is information and insight from IHS Markit about our 2016 Wide Area Networking (WAN) Strategies North American Enterprise Survey.

Highlights

  • Enterprises participating in IHS Markit’s wide area network (WAN) survey expect their WAN expenditures to rise by more than 20 percent annually—exceeding $1 million per year beginning in 2017
  • Better security and more capacity are the top changes respondent enterprises plan to make to their WANs over the next year
  • Interest in software-defined wide area networking (SD-WAN) is reaching critical mass, with four out of five respondents having plans for SD-WAN over the next 4 years

Our Analysis

As companies embrace digital transformation, the WAN is becoming a strategic component of technology infrastructure, enabling commerce and communication between employees, customers and partners. This, combined with changing application delivery architectures and requirements, is driving a renewed focus on WAN security and performance.

Our survey reveals that there’s no end in sight to traffic growth—respondents expect their bandwidth needs to grow around 30 percent annually, with data centers having the highest capacity needs (1.7 Gbps per site) and growth (40 percent per year). Consequently, enterprises plan for major increases in their WAN spending by more than 20 percent annually—to well over $1 million in 2017, reflecting the significant demands placed on their WANs.

Top WAN changes and traffic drivers; growing bandwidth needs

The top changes respondents plan to make to their WANs over the next year are increasing capacity and improving security. New application requirements and changes in IT architectures are driving significant growth in WAN traffic, necessitating upgrades to deliver adequate WAN performance. At the same time, hacking has evolved into a multi-billion dollar industry, requiring a constant focus on security to ensure that hackers don’t gain access to sensitive information.

Meanwhile, the leading drivers of WAN traffic are backup/storage and collaboration tools. Backup/storage allows companies to keep copies of critical information and recover quickly from failures, while collaboration tools have become an essential productivity tool for globally distributed teams.

SD-WAN reaches critical mass

The SD-WAN lab trials of 2016 are turning into production deployments in 2017 and 2018. Forty-two percent of respondents started SD-WAN lab trials in 2016—and in 2017, many are moving into production trials and onto live production networks.

WAN Survey Synopsis

For the 33-page WAN strategies survey, IHS Markit interviewed purchase-decision makers at 163 medium and large enterprises about their evolving requirements for wide area networks. The study takes an in-depth look at how companies are evolving their WANs in light of new requirements, including WAN growth expectations, growth drivers, plans for new types of connectivity and technologies, preferred suppliers, interest in SD-WAN and spending plans.

Geography
Global
Research by Market
Enterprise & IT Mobile & Telecom
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