Enterprises are converting portions of their MPLS VPNs to public internet access: dedicated and broadband internet access is replacing MPLS VPN ports. Business spend on broadband and dedicated internet services is increasing. Meanwhile, Omdia expects nearly 40% of enterprise MPLS revenue to be reallocated to other budget priorities over the next five years. Below we list the six market trends that are leading enterprise MPLS into decline.
#1 From office to home office workers.
Among large multinational corporations (i.e., present in five or more countries), COVID caused remote workers to skyrocket from 16% of the workforce to roughly half of workers. Enterprises have creative ideas to bring some employees back to offices safely. But remote workers have forced enterprise IT to adopt user applications that work with home broadband as the lowest common denominator. As COVID eventually tapers, fewer offices and on-site workers will remain. This affects the number and size of MPLS ports to work offices.
#2 From data center to cloud workloads.
The average multinational corporation has already ported about one-third of its applications workloads to public/hybrid cloud, led by major enterprise software such as resource planning, supply chain/logistics and customer management. Another 25% of applications workloads have shifted to SaaS, led by unified communications and accounting/human resources. Less than one-quarter of conventional applications are not yet cloud-enabled, and roadmaps are in place to shift over most remaining workloads. Many cloud-enabled applications, particularly SaaS, deliver an acceptable user experience over the public internet without the consistent performance of MPLS.
#3 From routers to SD-WAN.
SD-WAN cannot overcome poor-quality networks. But SD-WAN separation of applications overlay from network underlay can let enterprises mix connections to test and swap out among networking options. The legacy design of a pair of identical MPLS circuits from two diverse providers to every location is still the gold standard. With SD-WAN an enterprise may swap out MPLS ports for internet service at locations of its choice, and at its own pace. Network administrators can approach port swaps as carefully or aggressively as the business demands. Ultimately, costlier ports such as MPLS remain in place only where they are required.
#4 From best-effort to performance-optimized internet.
The traditional solution to best-effort network performance issues is to throw bandwidth at the problem. This does not always work. Some service providers, using network design and optimization techniques, offer global premium business internet with basic traffic guarantees for latency and packet delivery. These guarantees can be enough for an enterprise no longer to need a global MPLS backbone for most applications traffic.
#5 From security concern to preferred model.
MPLS separate from public networks was considered a safe option for maintaining integrity around a network perimeter. But organizations operate their internet access side by side with private WAN. Enterprises also have in-person and remotely connected workforces, connect a sea of personal and corporate compute devices, and have critical third-party interconnection points. This perimeter-less network needed a new type of security model spanning all communications and devices. A new zero-trust model puts the focus on applications and devices and makes the private MPLS network perimeter less relevant.
#6 Flexibility and cost per bit.
Finally, Internet services are universally available and fast to provision. With a few exceptions, the cost and provisioning interval to extend internet access to a new location is substantially less than for MPLS. Enterprises can choose among ISPs and preferred methods of access. They can work through a partner to manage ISPs.
One by one, enterprises’ reasons to keep MPLS VPN services everywhere are evaporating. Public internet alternatives are more flexible, less costly per bit, can be adequately optimized, secured, and can be swapped in for MPLS at enterprises’ discretion. The work-office and data-center model that reinforced the private WAN has given way to remote work and cloud-hosted applications. MPLS VPN does not go away, but enterprises will limit use to where it is needed.
The conversion of sites from MPLS-only, to hybrid MPLS/internet, to all-internet is happening rapidly. In early 2020, MNCs estimated about 60% of their sites were connected via MPLS/dual-MPLS only, 15% were hybrid MPLS/internet VPN, and 25% were connected by internet only. About two years later, enterprises have flipped. Internet-only sites are the largest segment, and MPLS/dual-MPLS only locations have shrunk to 21% of sites.
This aligns with Omdia’s one-on-one interviews of enterprise executives’ perspectives. A few years ago, organizations historically tied to MPLS had started exploring migrating select ports to internet. At the time, they generally clustered around an 80/20 rule (maintain 80% of the MPLS network, migrate 20% to public internet). Today, the situation has flipped with enterprise executives. Plans now call for operating 80% of the corporate network on public internet, keeping just 20% of MPLS ports to the company’s data centers, major locations, and key interconnect points. The internet options have also become more varied and widely available: dedicated and broadband fiber-based services, and 4G/emerging 5G are among the range of internet access options that executives are exploring.
Based on Omdia’s executive interviews, internet migration is not always easy or pain-free. Large enterprise MNCs tap partners to help in the move from MPLS to global internet, and in the shift from conventional routers to SD-WAN. Partner managed network services providers can help to choose the best-suited platform for the requirement, assess the proper configuration for the network underlay and applications overlay, and provide ongoing support with a global internet fabric that has both many ISPs and many devices under management. An expert partner in network migration can ease the shift from MPLS, minimizing risk while helping enterprises realize the benefits of moving to a global internet fabric.
*Where Omdia references multinational corporations (MNCs) in its survey research, results represent organizations doing business in five or more countries.
Omdia is a leading research and advisory group focused on the technology industry. With clients operating in over 120 countries, Omdia provides market-critical data, analysis, advice and custom consulting.More articles by Omdia