CloudGenix: Application-Centric SD-WAN

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1 Vendor Profile CloudGenix: Application-Centric SD-WAN Ksenia Efimova IDC OPINION The software-defined WAN (SD-WAN) market has started to mature as companies begin to understand the advantages of SD-WAN and how it can help the overall business: ensuring consistent application performance, allowing more flexible deployment models for applications, being able to apply business intent via WAN policy, and reducing total cost of ownership. Vendors have shifted their marketing approach from educating potential clients about the advantages of SD-WAN and capturing early adopters to the broader IT audience, many of which have deployed their SD-WAN offerings at scale. As the market has matured, vendors have enhanced their strategies to become more inclusive by adding capabilities such as network orchestration, security, network manageability, and analytics. The market is also moving toward more customizable solutions. In such a highly competitive environment, CloudGenix stands out with its application-centric approach to SD-WAN and AppFabric developer ecosystem. CloudGenix has been in the SD-WAN market for only five years, but it has already become a disruptor in the market and has been able to outmaneuver the traditional giants of the networking industry. Whether the company will be able to sustain the same growth despite the fast-changing market will depend on how swiftly it adapts to change, builds the right relations with partners that could provide international reach, and communicates its competitive advantage. IN THIS VENDOR PROFILE This IDC Vendor Profile examines U.S.-based company CloudGenix, whose AppFabric SD-WAN solution enables polices to control and govern application delivery across a hybrid WAN. IDC examines the company's solution and strategy as well as discusses possible challenges in its future development. SITUATION OVERVIEW According to the latest IDC SD-WAN forecast, the SD-WAN market in EMEA (covering infrastructure, managed services, and consulting and integration) was worth $241 million in This represents 174% growth from Technologies and categories such as Internet of Things (IoT), mobility, cloud, software as a service (SaaS), and Big Data continue to drive network transformation. Companies are finding themselves between Scylla and Charybdis there is a need for more capacity and performance, but budgets are not growing to meet increasing network demands. This means organizations will increasingly need WAN solutions that can help them balance fast-growing requirements, better performance, and flat budgets. Hybrid network architectures, cloud connectivity, and network virtualization have become key building blocks to deliver the flexibility, manageability, scalability, and cost effectiveness that enterprises will demand from their WANs. In fact, the recent IDC EMEA Enterprise Communication Survey found that the number of companies that have installed SD-WAN solutions increased from 21% in 2016 to 37% in Midsize organizations (companies with employees) were the most active in SD-WAN implementation and deployments. Implementation in this segment grew from 20% in 2016 to 40% in October 2018, IDC #EMEA

2 Software-defined WAN has emerged as one of the hottest topics in the WAN space. A wide range of market players including typical networking hardware vendors, service providers, and myriad startups have introduced their SD-WAN offerings, and the market is considered as fairly mature. Company Overview CloudGenix was established in 2013, in San Jose, California, and led by CEO Kumar Ramachandran, who previously held leadership roles in product management and marketing for the branch routing and WAN optimization businesses of Cisco. It currently has over 100 employees, with a strong contingent of engineers and architects focusing on building and enhancing its platform. In 2017, IDC named CloudGenix as an innovator in SD-WAN for good reason. Most SD-WAN solutions look solely at network conditions such as bandwidth, latency, jitter, and packet loss when making traffic-handling decisions. While CloudGenix considers these metrics, it concentrates its efforts on application performance and health as well as user experience. Policies for performance, security, and compliance are defined and built using the application as its central anchor. Policy is enforced to make sure that the WAN can provide the desired service-level agreement (SLA) to the user, and the cloud-delivered portal shows dashboards and analytics over what is happening with the network and applications. These dashboards are understandable to IT personnel and non-it decision makers (such as CIOs and other executives), and they are highly customizable. Another differentiating characteristic of CloudGenix solution is the AppFabric developer ecosystem. This platform enables developers within the organization to automate the configuration, provisioning, management, and monitoring of branch networks with many programming languages. Therefore, companies can reduce costs, decrease the reaction time to network incidents, and automate their infrastructure. Company Strategy CloudGenix focuses mostly on large enterprises, but it has also gained traction among smaller distributed enterprises. In 2017, its primary distribution was through channel partners, but throughout 2017 and early 2018, it established partnerships with global systems integrators and managed service providers to begin bringing its SD-WAN solution to EMEA. CloudGenix considers itself a software company. Its appliances are only a delivery mechanism for its software, so clients can deploy either their hardware appliance running the CloudGenix software or leverage a virtual form factor if they have virtual infrastructure. CloudGenix offers two purchasing models: one with upfront capital purchase and acquisition of the hardware and ongoing subscription, and the second being an ongoing subscription with hardware pricing integrated (operational expenditure only). A subscription is required, so the cost is based on the amount of bandwidth that is provisioned in each location. CloudGenix understands the complexity of enterprise networks and does not insist on one-time full replacement of WAN infrastructure. On the contrary, CloudGenix offers gradual replacement of the existing infrastructure and adoption of SD-WAN in a timely manner appropriate for the client. CloudGenix is working with channel partners, systems integrators, managed service providers, and value-added resellers. According to CloudGenix, system integrators have the broadest view into customer operations, therefore they are in the best position to understand customer needs, existing infrastructure, and how to best to deploy solutions. CloudGenix has partnered with Wipro on both the systems integrator side and for the creation of a global managed service. CloudGenix expects to use a consistent strategy in EMEA. It has not disclosed plans on which countries will be pursued first, but in general, countries with strong telecommunications provider presence (the U.K., France, the Nordics, Germany) are regarded as priority markets IDC #EMEA

3 Currently, CloudGenix is pursuing international companies that have headquarters in the U.S., but it also plans to expand its market coverage in the future. It has a follow-the-sun global support in addition to hardware depots in 32 countries worldwide to make sure clients have access to all needed hardware for successful SD-WAN network rollout and replacement for failed devices. In the next 9 to 12 months, CloudGenix has plans to start targeting companies with headquarters outside of U.S. more aggressively. CloudGenix is hiring aggressively to meet growing market demands and fulfill the growing strategy. FUTURE OUTLOOK The SD-WAN market is expected to grow with a CAGR of 58% over the next five years as adoption among organizations across the region accelerates. With the pace of SD-WAN deployments dictated by the renewal cycle of legacy hardware, IDC expects many organizations to initially take a cautious approach, gradually rolling out sites and/or starting with more limited feature sets to test and learn about the solutions, use cases, and benefits, as well as address specific near-term concerns. These deployments will be extended over time. The gradual replacement approach that CloudGenix offers will be handy to win the market. Digital transformation, growth of multicloud environments, and network virtualization will keep pushing the proliferation of SD-WAN solutions. Appliance-based network infrastructure is moving toward a fully software-defined network. With that, the role of network security, analytics, and management solutions increases and gives possibilities to vendors to differentiate in such a quickly changing market. In IDC's opinion, the CloudGenix AppFabric developer ecosystem is an example of a competitive advantage that will help CloudGenix to stand out from the crowd of other solutions that are already available or just now appearing in the market. Market is maturing forcing companies to search for alliances, partnerships, mergers and acquisitions. This was especially the case in 2017, when Cisco acquired Viptela and VMware acquired VeloCloud and IDC expects this trend to continue. Whether it will affect CloudGenix is hard to say, but as of now, CloudGenix is eager to develop and grow as a separate entity. ESSENTIAL GUIDANCE Advice for CloudGenix CloudGenix is a start-up in the SD-WAN market, but this does not mean the company is a novice in the market in terms of execution or technology. But to be successful, IDC suggests paying attention to the following: EMEA market in general and Western Europe in particular are very interested in adopting SD- WAN solutions. The market attracts not only typical network hardware players, but also service providers and myriad start-ups. CloudGenix should plan its international development accordingly and clearly articulate its competitive advantage to stand out from the crowd. Due to the fast-growing nature of the SD-WAN market and plans of CloudGenix to enter the worldwide market in general and the EMEA market in particular, CloudGenix should clearly plan the needed workforce and overall strategy to avoid facing problems connected with not being able to meet the market needs in a timely manner. IDC predicts that by 2021, the managed service part of SD-WAN offering will have the biggest share in the SD-WAN market, and communication service providers (CSPs) will be the main players in this segment as they will be addressing their WAN clients' customer base. Thus, CloudGenix should think about establishing strong relations with them to target EMEA market IDC #EMEA

4 Implementation of SD-WAN and connection of branch offices directly through the internet and not multiprotocol label switching (MPLS) leads to higher risks of ransomware, viruses, and other malware. To avoid complexity in the selected SD-WAN solution, companies will likely to choose vendors provide full end-to-end solutions encompassing both SD-WAN and security. As such, CloudGenix should emphasize the security features of its SD-WAN solution and integration with security vendor cloud offerings to align its capabilities. LEARN MORE Related Research European Enterprise Communications Survey, 2018: Attitudes Toward SD-WAN (IDC #EMEA , July 2018) EMEA SD-WAN Forecast (IDC #EMEA , July 2018) IDC Innovators: SD-WAN, 2017 (IDC #US , May 2017) 2018 IDC #EMEA

5 About IDC International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make factbased decisions on technology purchases and business strategy. More than 1,100 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries worldwide. For 50 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. IDC CEMA Male namesti Prague 1, Czech Republic idc-community.com Copyright Notice This IDC research document was published as part of an IDC continuous intelligence service, providing written research, analyst interactions, telebriefings, and conferences. Visit to learn more about IDC subscription and consulting services. To view a list of IDC offices worldwide, visit Please contact the IDC Hotline at , ext (or ) or sales@idc.com for information on applying the price of this document toward the purchase of an IDC service or for information on additional copies or web rights. Copyright 2018 IDC. Reproduction is forbidden unless authorized. All rights reserved.