VARs To Get Aggressive With WAN Optimization In 2008

Solution providers will invest heavily in WAN optimization tools in 2008, building off of the success they achieved with the technologies this year.

WAN optimization has become a hot technology, especially with the massive increase in the number of mobile, remote and branch office workers at many companies and their need for consistent access to the network and its applications. VARs said they'll see greater demand for WAN optimization next year as their customers adapt to adding more remote offices into the mix while trying to accommodate the growing number of mission critical applications that have to traverse the WAN.

Jeff Wolach, vice president and CTO of Sinnott Wolach Technology Group, a Palm Beach Gardens, Fla.-based solution provider, said he's going to be more aggressive with WAN optimization next year. Sinnott Wolach Technology Group is a Packeteer partner.

"We're going to be spending more money on marketing around WAN optimization," he said, adding he'll be educating and training internal staff and bulking up on the consulting side for his clients. "We put a lot more money aside for marketing and events to create more awareness in this space next year."

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And Wolach recommended other partners and resellers also start gearing up for WAN optimization to hit hard next year with the buzz the technology is creating.

"Our company, and probably a lot like ours, should start ramping themselves up from a marketing, education and consulting standpoint," he said.

Wolach estimated WAN optimization made up about 10 percent of revenue for 2007. In 2008, he said he expects it to triple, making up about 30 percent of Sinnott Wolach's business.

Wolach's expectations fall in line with the growing trend, highlighted in a recent Forrester Research survey that found 48 percent of respondents already have WAN optimization or acceleration tools in place, and 40 percent of respondents said WAN optimization is "absolutely a strategic component to today's distributed and mobile environments."

The survey also found that 81 percent of organizations have branch offices, with more than 30 percent indicating they support more than 100 branch locations. Additionally, 40 percent of the respondents to Forrester's survey said their organizations would be more decentralized three years from now. The survey also found less than 30 percent of employees work at corporate headquarters, meaning employees require network access from branches, home and other external work sites.

"Users and applications are being pulled further apart," according to the survey. "On one end you have virtualization and consolidation efforts that are centralizing applications and data into fewer locations; on the other, you have users that are becoming increasingly distributed across work sites."

The growth of distributed work sites, Wolach said, has him investigating new partnerships in the WAN optimization space. While he is currently partnered with Cupertino, Calif.-based Packeteer, he said he wants to round out his offerings to ensure he can sell solutions catered specifically to his clients' needs. Wolach stressed, however, that any future partnerships won't be competitive, but will help him sell to a growing market with varying needs and help Sinnott Wolach dig deeper into the space.

NEXT: VARs Expect Boom

Atrion Networking, a Warwick, R.I.-based solution provider, is also expecting WAN optimization to boom, president and CEO Tim Hebert said.

"We're definitely seeing this space grow," he said, adding he carries optimization solutions from Packeteer and San Jose, Calif-based Cisco Systems. By the end of fiscal year 2008, Hebert said Atrion will have done about $2 million in WAN optimization hardware, a figure that doesn't include services and maintenance. That's up from fiscal year 2007, during which WAN optimization pulled in about $1.5 million for Atrion.

And it's only going to get better, Hebert said. Fiscal year 2009 will see a 35 percent to 40 percent growth in WAN optimization sales, accounting for 12 percent to 15 percent of Atrion's overall business, a jump from 10 percent today.

Hayes Drumwright is CEO of Trace|3, an Irvine, Calif.-based solution provider that partners with San Francisco-based Riverbed Technology. Drumwright said that while WAN optimization tools don't have a high average selling price, their sale helps get VARs into new accounts they may not have hit otherwise. That said, Drumwright said he expects the average sell price to increase next year.

Drumwright said WAN optimization is "hands down" the fastest growing technology he offers by units shipped. He said his WAN optimization business grew 350 percent from 2006 to 2007 and he expects it to grow another 200 percent from 2007 to 2008, a figure he admitted is conservative.

Drumwright said the growth of WAN optimization is due in part to his customers wanting to stave off costly WAN upgrades and cut down on their application latency, especially when dealing with remote and branch offices. Further fueling the growth is the quick ROI for WAN optimization solutions, he said. In many cases, ROI can be achieved in three to four months. If WAN optimization is deployed instead of a costly WAN upgrade, Drumwright said ROI can be reduced to 60 days or less.

"It speeds everything up, reduces the complexity and massively simplifies the environment," Drumwright said. "This is a paradigm shifting technology. It completely changes the way people are going to work."

By 2010, Drumwright estimated WAN optimization will make up roughly $35 million to $40 million of his business. That's a massive jump from the $7 million it did this year and the $20 million Drumwright expects in 2008.

"WAN optimization is the most important part of my business, no question," he said. "It is definitely gaining on everything else. You have to look at the new accounts you can get. That's the most important part. You have an entry point into anyone with this."