MPLS vs. SD-WAN: trends in enterprise connectivity

According to a study by TeleGeography, in 2024, 65% of U.S. companies had SD-WAN installed in some part of their network, and 51% had it in all or most of their locations. Other reports, such as the one by P&S Market Research, predict that the SD-WAN market will reach a value of $42 billion by 2030.

In an interconnected world, where operational efficiency and security are indispensable, SD-WAN solutions, such as those from SAIMA SYSTEMS, are gaining significant traction. This technological evolution is part of a global strategy aimed at meeting demands that MPLS (Multiprotocol Label Switching) cannot fulfill, such as cost optimization.

However, MPLS remains a key component of connectivity for many companies in managing critical traffic, such as financial applications, voice, and data center access.

With operations spread across different parts of the globe, large companies face logistical and financial challenges when it comes to connectivity. SD-WAN is increasingly being adopted by corporations for their connectivity needs, replacing MPLS.

Even so, many companies choose to keep MPLS for critical applications such as banking transactions. This way, they have a hybrid model tailored to specific functions. In practice, MPLS vs. SD-WAN is not a binary choice: hybrid models balance cost, performance, and SLAs.

In general, MPLS connections make it difficult to manage multiple locations due to:

• Their high cost
• Limited connection speeds
• Lack of flexibility to adapt to market changes

SD-WAN, on the other hand, allows companies to prioritize sensitive traffic —such as video conferencing— over less urgent traffic. This ensures a better user experience. Additionally, this technology uses low-cost commercial internet connections, which reduce costs.

When it comes to cybersecurity, companies are seeking comprehensive solutions to protect them from growing cyber threats. SD-WAN integrates advanced security features directly into the network, such as next-generation firewalls and network segmentation.

These features help protect data across an infrastructure that now includes remote work, multi-cloud environments, and SaaS (Software as a Service) applications. Visibility and centralized control add layers of protection to the organization. With these capabilities, the choice between MPLS and SD-WAN comes down to visibility, control, and unified policy.

• U.S.: this is the most advanced market in terms of SD-WAN adoption. The high penetration of cloud services and a culture of technological innovation have accelerated the transition. High demand has led U.S. companies to adopt SD-WAN. In 2023, according to data provider Vertical Systems, the number of SD-WAN-managed sites grew by 24%.

   

• Europe: the pace of adoption of software-defined networks is steady, though more moderate. While countries like the United Kingdom and Germany are at the forefront, other regions are moving more gradually. The most common trend is the coexistence of both technologies. SD-WAN is used for branch offices and cloud connectivity, while MPLS lines are retained for private circuits at headquarters.

   

• Latin America: In this region, the market is still developing. The adoption of SD-WAN is driven by the cost of MPLS lines. In areas with an international market presence, such as São Paulo, the high cost of MPLS is driving migration to SD-WAN. However, significant price differences between Latin American cities are slowing down this process.

   

• China: SD-WAN is growing rapidly in the country. The value of SD-WAN in Asia was $1.7 billion in 2024, according to Market Data Forecast. China holds a 35.6% market share on the continent. The country has a robust digital economy and is making significant investments in cloud infrastructure. The Chinese government promotes policies to develop 5G technology, which helps many of its companies incorporate SD-WAN into their connectivity.

Between 2000 and 2016, telecommunications operators based their business on the sale of expensive and inflexible dedicated MPLS lines. However, the rise of the cloud, remote work, and the need for greater bandwidth have forced these providers to offer tailored solutions. As a result, national and international operators now offer comprehensive services in collaboration with various SD-WAN companies.

Instead of offering connectivity based solely on SD-WAN, operators provide hybrid options that include MPLS. Hybrid networks have become one of the best alternatives for businesses. Rather than relying on a single type of connection, they combine different technologies to ensure there is always a path available for data transmission.

In fact, the key to this approach lies in the use of SD-WAN, as it automatically and efficiently chooses where to send the data. For example:

• MPLS lines are reserved for the most important tasks, such as mission-critical applications or data center databases.
• Broadband Internet is suitable for everyday tasks such as email, video conferencing, or cloud access.
• 4G/5G is useful as a backup for mobile users or for small offices that need rapid deployment.
• Satellite connections ensure coverage in remote locations where fiber or cable is unavailable.