SD-WAN vs MPLS, or both?

Summary:

SD-WAN vs MPLs is a common comparison IT leaders make when choosing wide-area networking solutions. MPLS provides reliable, low-latency connectivity ideal for mission-critical applications, while SD-WAN offers lower costs, flexibility, and cloud readiness. Many enterprises adopt a hybrid model, using MPLS for critical workloads and SD-WAN for SaaS and branch traffic. The right choice depends on performance requirements, cost constraints, and cloud strategy.

One could say that today’s businesses need fast, secure, and reliable networks, but the reality is that this has always been true in the past and will always be true in the future. What is different at any given point in time, however, is the types and requirements of applications and services running over the network, and the technologies available to ensure maximum speed, security, and reliability.

From MPLS to SD-WAN: A brief history

IP networks, based on the TCP/IP protocol suite which emerged from US military and academic research in the 1970s, became the dominant protocol suite for the internet and saw widespread commercial adoption in the 1990s. Late in that decade, multi-protocol label switching (MPLS) was developed to improve the efficiency and performance of IP networks; by the early 2000s, MPLS had become the gold standard for enterprise wide-area networking (WAN). MPLS’ ability to maintain uptime and deliver consistent application performance enabled it to dominate enterprise WANs for the next two decades.

Starting in the 2010s, however, the use of cloud computing, and the SaaS applications it enabled, began to explode. This fundamentally different kind of infrastructure changed networking in ways that MPLS is not well-suited to support, leading to the development of SD-WAN. Today, MPLS continues to be used for mission-critical applications and, increasingly, together with SD-WAN as part of a hybrid network strategy. The decision many IT leaders are grappling with is how to approach SD-WAN vs MPLs—whether to replace one with the other or use both. To answer this question for your organization, it’s important to understand exactly what MPLS and SD-WAN are—their relative benefits and the differences between them—and then to evaluate your specific needs.

What is MPLS? 

Traditional IP routing uses IP addresses and requires every router along a packet’s path to perform complex lookups in large routing tables to determine where to send the packet next, which slows traffic. MPLS transformed this process by assigning short “labels” that indicate the path traffic should follow, which accelerated packet forwarding for improved performance and provided the ability to prioritize certain types of traffic, for example, latency-sensitive applications like voice or video.

As the ubiquitous “best-effort” public internet connection, broadband was the prevalent choice in the early 2000. MPLS offered an alternative, delivering many advantages, including:

• Performance and efficiency: Because routers only need to read the label, vs. perform the complex lookup, they can make forwarding decisions much faster, reducing latency.
• Traffic engineering: Network operators can define specific, predetermined paths for different kinds of network traffic, allowing organizations to utilize bandwidth more effectively.
• Quality of service (QoS): The labels include information about the class of service, enabling latency-sensitive applications, such as video or voice, to be prioritized over other traffic. This also allows network service providers to offer SLAs with specific performance guarantees for MPLS connections.
• Reliability: If a link or node fails on an MPLS network, traffic can be instantly redirected along a pre-defined backup path for rapid failover.
• Private network isolation: MPLS creates virtual, private network paths that are isolated from other customers’ traffic on the same physical infrastructure. This allows service providers to offer enterprise customers that have geographically dispersed locations with highly scalable VPN services for a private-network experience.
• Multi-protocol support: MPLS can carry any type of traffic—IP, Ethernet, and other protocols—over the same core network, making it flexible and versatile.

In today’s computing landscape, however, the calculus has changed. Within the current context—pervasive cloud computing, the shift from capex to opex models, increased complexity of network infrastructures, and changing expectations around manageability and control—MPLS has some disadvantages, including:

• High fixed costs: MPLS uses private, dedicated infrastructure which are expensive. This also means that increasing bandwidth and adding new sites requires long provisioning times—too long to support modern business agility expectations. Moreover, MPLS solutions often require proprietary hardware from a specific vendor, which can lead to vendor lock-in and potentially limits architectural options.
• Static configurations: The predefined paths of MPLS make it difficult to adapt to the fast scaling and real-time traffic changes that characterize the current networking environment.
• Limited redundancy and load-balancing: Modern solutions can leverage multiple internet connections simultaneously, offering more redundancy options than MPLS. Furthermore, MPLS does not have built-in capabilities to intelligently distribute traffic across multiple links.
• Limited application visibility: Traditional MPLS networks often lack the deep visibility into application performance and traffic patterns that modern solutions provide.
• Cloud incompatibilities: MPLS’s fixed, point-to-point architecture was not designed for cloud-based applications or data centers and requires traffic to be backhauled to a central location. This increases latency and is not optimized for large volumes of SaaS traffic.

Given all of these limitations, you might assume that MPLS is a legacy technology that’s on the way out. But MPLS is far from dead. In fact, a Market Research Analytics report estimates the MPLS market will grow at a 6.78% CAGR from 2025 to 2033, “driven by increasing demand for secure and reliable network connectivity across diverse sectors,” and “fueled primarily by the rising adoption of cloud computing and the expanding need for Software-Defined Networking (SDN) solutions.”

What is SD-WAN? 

 A traditional WAN connects geographically dispersed locations with circuits. These physical hardware appliances, which must be manually configured, can run a variety of transport technologies, including MPLS (others are fiber optics, DSL, cable broadband, and satellite). A software-defined WAN—aka SD-WAN—enables you to manage the WAN devices via software overlay. You can intelligently route traffic over multiple connection types, simplifying management while increasing flexibility and centralizing control.

The benefits of SD-WAN include:

• Reduced costs: SD-WAN can leverage links, such as broadband and LTE/5G, that are less expensive than dedicated, private MPLS circuits.
• Increased security: SD-WAN integrates security capabilities directly into the network, provides end-to-end encryption, and supports SASE architectures.
• Streamlined cloud connectivity: SD-WAN connects directly to cloud services, eliminating the need to route cloud traffic through the corporate data center.
• Improved performance and reliability: SD-WAN uses multiple connections simultaneously, routing critical applications over the most efficient path for optimal performance. And its direct, secure cloud access reduces latency.  
• Higher bandwidth utilization: By simultaneously using multiple transport methods, SD-WAN increases overall bandwidth efficiency and capacity.
• Increased flexibility and agility: SD-WAN’s virtualized infrastructure makes it faster to deploy and easier to adapt to changes in demand.
• Simplified management: Network control is moved to a centralized platform, streamlining management, automating configurations such as zero-touch provisioning, and simplifying deployment.

Watch this video from an IT training expert for an introduction to SD-WAN:

SD-WAN vs MPLS: A Comparison 

So, is SD-WAN a replacement for MPLS, or is it a complement? The complex answer is that it can be both. While a head-to-head comparison between SD-WAN and MPLS can be useful at a very high level, it’s important to understand that it’s not a true apples-to-apples comparison.

Use the following comparison, not as a way to make a binary choice between the two, but to understand key factors to evaluate when considering whether to use MPLS, SD-WAN, or both.

In short, MPLS offers rock-solid WAN connectivity but is rigid and costly, while SD-WAN is flexible, cost-effective, and cloud friendly.

When does MPLS still make sense? 

MPLS is a good choice for mission-critical applications that require ultra-low latency and guaranteed uptime for real-time transactions—particularly in highly regulated industries. Examples include financial trading firms executing transactions, hospitals and healthcare systems transmitting large imaging files, manufacturing companies with industrial controllers that can’t tolerate jitter or packet loss, and global enterprises in regions where high-quality internet connectivity is unreliable.

When is SD-WAN the better choice?

There are a number of different use cases that favor SD-WAN:

• Cloud-first businesses using SaaS applications that benefit from direct internet performance.
• Businesses with dozens or hundreds of branch locations needing quick, cost-effective network deployments.
• Mid-sized companies who want enterprise-level performance without the high cost of MPLS circuits.
• Organizations with remote or hybrid workforces that need secure, flexible connectivity outside the office.
• Business looking for the additional services that SD-WAN typically includes, like next-generation firewalls (NGFW) or content filtering.

When is hybrid SD-WAN + MPLS the ideal approach?

Many enterprises are not replacing MPLS outright but optimizing it with SD-WAN. This hybrid strategy leverages MPLS were necessary, and supplements with SD-WAN for flexibility. For example:

• Financial firm uses MPLS for its mission-critical, latency-sensitive trading platform while routing collaboration and back-office applications (e.g., Microsoft Teams, Salesforce) via SD-WAN for cost savings.
• Law firm leverages MPLS for sensitive client data and uses SD-WAN for cloud-based research and productivity tools.
• Multinational corporation keeps MPLS for its mission-critical ERP system, but uses SD-WAN for branch internet access and SaaS traffic.
• Enterprise, as part of a digital transformation effort, phases out some of its MPLS circuits gradually while adopting SD-WAN for increased flexibility and cloud readiness.

How do managed services fit in with SD-WAN and MPLS?

While it’s possible to build your own MPLS network, it requires you deploy specific hardware, configure complex protocols, and manage routing tables and virtual routing and forwarding (VRF) instances. This is out of reach for all but the biggest, most sophisticated of enterprises—and not the best use of scarce talent and resources—so most organizations rely on service providers to manage their MPLS WAN for them.

Likewise, you can DIY SD-WAN, but this approach is best suited for very large enterprises with extensive in-house IT, cloud, and security expertise and the resources to handle the complex design, deployment, management, and ongoing maintenance of the hardware, software, and network infrastructure. This approach offers greater control and customization, but a managed SD-WAN solution can ultimately be more cost-effective and efficient for organizations that don’t have the necessary skills or large capital expenditure budgets.

BCM One offers both Managed WAN and Managed SD-WAN and can build a solution—including a hybrid MPLS plus SD-WAN network—to meet your organization’s specific needs. Michael Hawkins, Director of Solutions Engineering at BCM One, explains:

BCM One’s Managed Connectivity solutions blend MPLS, broadband, LTE/5G, satellite, and SD-WAN connections into one cohesive network that adapts to changing traffic and business needs. We design and operate every circuit, and we manage all of the vendors—so you can focus on growth.”

Contact us to learn more about BCM One’s Managed WAN and Managed SD-WAN services or to consult one of our managed connectivity experts for a personalized strategy.