Since our last insight on SD-WAN strategy for telecom providers, many top tier service providers have launched SD-WAN products and are positioning their offers in the marketplace to grow sales across business customers for new use cases and regions. In this insight, we describe how to focus sales efforts to identify potential early and high value adopters of SD-WAN.

Authors: Sidhant Jalan and SooIn Yoon

Services providers have responded to growing demand by launching SD-WAN

 Over the last year, many service providers launched SD-WAN products to enter a transforming enterprise networking market and a potentially $6B business by 2020. In just the last 6 months, we’ve noted deployments by players such as Sprint, AT&T, and Windstream, validating SD-WAN as relevant for service providers. SD-WAN presents a unique opportunity for providers to expand their customer base beyond their regional footprint and offers business a lower-cost connectivity option.

(For more background on SD-WAN, read our previous insight: "SD-WAN: Why Telcos Should Have a Strategy")

As seen in Figure 1, almost 50% of enterprise businesses have expressed interest in migrating their existing network connections to an SD-WAN alternative within the next few years. Now that service providers have launched their SD-WAN offer, the next area of focus is figuring out who they should sell to in the market.

 Enterprise SD-WAN Adoption.jpg

SD-WAN is not relevant for all businesses yet – sales efforts need to be targeted to the right leads

While the SD-WAN opportunity is large and growing, only a narrow set of businesses will be true adopters of SD-WAN in the near-term. In order to identify these businesses, service providers will need to determine the key demand drivers that make SD-WAN relevant for businesses. In addition, sales efforts need to be targeted as service providers do not want to cannibalize their own MPLS business by inappropriately selling to existing customers who are not suited to migrate to SD-WAN in the near-term. Some unique businesses characteristics and other metrics to consider include:

  • Office Distribution: How dispersed are the company’s office locations?
  • Employee Distribution: How dispersed are its employees?
  • Service Provider Homogeneity: Does the company purchase most of its network services from one provider or multiple providers?
  • Industry Type: Are there specific requirements for network services given this company’s line of business?
  • Cost Sensitivity: How sensitive is this company to connectivity costs?
  • Average IT Budget: Does this company have the budget or plan to invest in transforming their current network connections?
  • Cannibalization Risk: Is there risk of cannibalizing existing business?
  • Existence of SD-WAN Use Cases: Does SD-WAN make sense for this company?

As seen in Figure 2, less than 10% of midsize companies have offices in 10+ states and more than 50% of employees outside HQ. Given that businesses with dispersed locations and employees will have a greater interest in SD-WAN, sales efforts initially focused on these prospective customers may lead to better conversion rates. Inaccurate sales targeting, on the other hand, can result in poor market penetration, high sales costs, and cannibalization of existing MPLS business.

Office and Employee Distribution - SD-WAN.jpg

A data-driven approach that looks at a number of relevant business characteristics and analyzes demand drivers to generate insights will improve sales targeting strategy and minimize risk. Analyses can help providers identify new and existing customers that would most benefit from SD-WAN and develop a sales list that balances revenue growth and minimizes cannibalization. As business buyers evaluate a suite of innovative telecom service offerings, how well service providers target customers with their SD-WAN offer may well define the future leaders in this growing market. 

How Cartesian Can Help

Successful SD-WAN sales initiatives will need to focus on high potential customers in order to maximize conversion rates in the short-term. Cartesian has the expertise to provide sales and marketing analytics support to help service providers grow their SD-WAN business. Areas of support include:

  • Customer profile development to outline types of customers that will be SD-WAN early adopters
  • Sales lead prioritization to identify top prospective customers based on key demand drivers
  • Customer intel development on prioritized customers to inform and improve sales process
  • Go-to-market strategy to minimize cannibalization of MPLS revenue

Sources:

  1. IDC: U.S. Enterprise Communications Survey, December 2015
  2. Dun & Bradstreet