How SD-WAN Enables Digital Transformation

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By: R. Scott Raynovich

It's easy to dismiss digital transformation as a silly marketing buzzword designed to generate technology sales. But the fact is, digital transformation is real, with an already proven return on investment (ROI). Have networks have been slower to adapt? Many enterprise networks are still trapped in the legacy architectures of the past, which is a barrier to digital transformation initiatives (DTI).

Software-defined wide-area networking technology (SD-WAN), which delivers organizational agility and a secure, cloud-oriented architecture, is poised to enable the same level of digital transformation being delivered in other areas of IT.

Digital Transformation ROI

First, let’s look at some facts about digital transformation. How do we know it works? There are several studies showing proven ROI in digital transformation, although results vary by industry and company type. Consulting and business development organizations such as McKinsey and the World Economic Forum have released studies showing positive return on digital transformation initiatives (DTI).

McKinsey studies show 30 to 70 percent of all businesses, depending on size and positioning, are seeing an ROI on digital transformation, depending on the industry. McKinsey also believes that companies that are “competing digital” own a higher share of corporate profits -- 11 percent of these companies have cashflow growth that averages 25 percent or better, compared with only 2 percent of companies it deems as traditional incumbents, which aren’t digitally oriented.

Many CEOs of profit-oriented companies are aware of this and are shifting their IT organizations rapidly to enable DTI. A Gartner study indicates that 47 percent of CEOs are being challenged by the board of directors to make progress in digital, and 56 percent said their digital improvements have boosted profits.  

So what does it mean for the network? Networks are core to most businesses, so it only makes sense that the underlying network infrastructure should be built to enable DTI. SD-WAN is a technology particularly suited to DTI, because of several reasons. Let's look at some key technology trends and how SD-WAN can help facilitate their adoption.

The Move to the Cloud

One of the key trends facilitating DTI is the cloud. The cloud, whether public or private, is where much of the data and applications are being hosted, with universal accessibility. The move to the cloud is still early, with estimates that only 10 to 25 percent of applications are in the cloud but that the long-term target may be more than 50 percent. Whether it's a salesperson accessing a CRM system or a factory accessing sensor data, many DTI initiatives are enabled by applications in the cloud.

One of the reasons that network managers and other staff are looking at SD-WAN solutions is that unlike prior WAN networking architecture, SD-WAN architectures are oriented to the cloud. The legacy WAN was based on private networks connected to private datacenters, often networked using complicated proprietary networks or private lines. Increasingly, today's business and IT staff are looking to connect directly to the cloud.

SD-WAN architectures that are specifically oriented to the cloud, such as the Cato Networks’ Cato Cloud, are built to optimize how an organization is connecting the cloud. A cloud-oriented SD-WAN can intelligently and securely route data and applications to cloud applications, boosting productivity and lowering operating expenses (opex) at the same time.

Increased IT Agility & Automation

Another big technology trend driving DTI is business agility. In the digital world, service and business changes happen at a quick pace, whether it's the implementation of new applications for tracking customer service or the launch of new products and services.

An interesting executive study gives us a good roadmap to this success, whatever industry you serve as an IT professional in. The MIT Sloan Management Review recently conducted in-depth research with executives about how managers can use so-called digital transformation initiatives to improve their businesses. The research was based on interviews with 157 executives in 50 companies, typically with more than $1 billion in sales. 

The MIT Sloan study identified many areas of DTI that need to be addressed to deliver results. One of these was process digitization, which uses automation to enable companies to refocus people on more strategic tasks. Another area identified is worker enablement --  virtualizing tools for workers so they can be more productive and liberated from physical tasks or spaces.

SD-WAN provides both process digitization and worker enablement. Automated orchestration and WAN optimization free network managers from the painful manual task of configuring routers. These network efficiencies delivered by SD-WAN can free up valuable network staffing resources to focus on other tasks.

Conclusion: SD-WAN Facilitates Cloud-based Automation

SD-WAN is a next-generation networking technology that can help organizations streamline their networks in parallel with DTI. By taking the network to a cloud-based architecture with software-based orchestration, SD-WAN can help reduce the time and opex involved in delivering applications to workers, boosting productivity in line with the overall goals of DTI. 

This Tech Primer was Sponsored by Cato Networks