What Overlay Networks are being sold for today.

Overlay Networks are being sold as the solution to scaling issues, be it VLAN, routes, MAC tables or other network limitations.  Overlay Networks are built by using tunneling protocols such as GRE or IPinIP.  The main customers for overlay solutions are those with older equipment that has not been refreshed in the past five or more years.  By moving to an overlay customers can bypass the troublesome low scale equipment.

Overlay Network can be done on both LAN and WAN networks.

Some solutions are focused on the LAN (Midokura, Nicira), The WAN (MPLS, mVPNs) or both (LISP).

Midokura uses their own proprietary technology to build an overlay network that creates a full mesh of tunnels between the edge devices and the hosts on the LAN.  Nicira NVP uses Open vSwitch and creates thousands of small virtual networks connecting edge devices to tenants (one or more hosts owned by the same customer).  Both Midokura and Nicira are helping to solve scale issues on the LAN such as MAC address table size and the number of VLANs available.

LISP separates the location (physical network location/rloc) from the id (host ip/eid) by encapsulating traffic for the eid in the ip space of the rloc.  This simple solution allows you to move the host around without having to change the routing within your or other networks.  This can be done on a local level on your LAN or MAN or on a global level across the WAN.

Overlay Networks sound good, but have some negative aspects.

Overlay Networks do not solve all network scale issues and can cause some issues especially with already congested underlay network links.  By putting all traffic to/from a host in the same tunnel, you lose granularity.  The traffic becomes one big flow instead of a lot of smaller flows.  Current balancing solutions in place will no longer work.

What this all means is that Network Operators need more tools and have more complexity to deal with, not less.  There needs to be a cohesive view of both the Underlay and Overlay networks along with tools to manage them.  Riverbed’s Cascade and NetScout are two that are big in this space.  Both allow for visibility into VxLAN and other tunnel protocols.  This in turn provides network operators with knowledge of what traffic is crossing their networks and the ability to deal with it.

The important takeaway is that Network Operators are still important, Overlay’s solve some issues but they are not a replacement for a properly designed network.