UK telecom incumbent BT Group is pitching a new SDN-based service to business customers as a "key stepping stone" in the transition to full SDN and NFV capabilities.

Based on Cisco Systems Inc. (Nasdaq: CSCO)'s IWAN technology, the service falls under the BT Connect portfolio of network services and has already secured its first customer in the shape of Walgreens Boots Alliance.

The company intends to use what BT Group plc (NYSE: BT; London: BTA) is branding Connect Intelligence IWAN in the UK and some 20 other countries, according to BT's statement.

The operator claims the SDN-based service will allow Walgreens Boots Alliance and other customers to benefit from better network performance, and give them insight into the performance of their applications, without having to spend more on bandwidth.

The specific features include VPN capabilities that will let organizations reduce costs by interconnecting remote sites over an array of network options, including MPLS VPNs, private and public Internet and mobile technologies.

BT says that applications can be routed over the optimum path in the hybrid network based on an assessment of real-time network performance.

The service is also designed to generate analytics and reports so that customers can better understand network and applications performance.

BT and Cisco have been marketing the new service to enterprise customers globally since December and say that "new and innovative pricing models… will become available later this year."

"A couple of years ago, there wasn't a lot of interest in application performance management and WAN optimization -- they were services that only a handful of large enterprise customers could afford," says Caroline Chappell, a principal analyst at Heavy Reading , in noting the significance of BT's move. "Now with the explosion of interest in SD-WAN, which provides less expensive managed connectivity options than MPLS, and greater market awareness of the potential of SDN, the time seems right to make a richer set of services available to a broader market."

BT is apparently working on developing a self-service capability that would let customers control their SD-WAN through BT's My Account portal.

Colt Technology Services Group Ltd has developed a similar functionality as part of its SDN-based data center offering, which allows customers to reserve ports through a web portal and modify bandwidth in real time, according to Mirko Voltolini, Colt's vice president of technology and architecture. (See Colt Launches SDN-Based Data Center Offer.)

BT's partnership with Cisco comes several months after Verizon Communications Inc. (NYSE: VZ) launched its own SD-WAN service based on the equipment vendor's Intelligent IWAN platform. (See Verizon, Cisco Launch Smarter WAN.)

Want to know more about the emerging SDN market? Check out our dedicated SDN content channel here on Light Reading.

While BT appears to be the first European operator to announce an Intelligent IWAN tie-up with Cisco, a number of other European operators are also launching or preparing to introduce VPN services that take advantage of SDN and NFV technologies.

Germany's Deutsche Telekom AG (NYSE: DT) has been running a pilot of VPN services based on its all-IP, pan-European network in the markets of Croatia, Hungary and Slovakia and seems likely to provide an update on the trials at the forthcoming Mobile World Congress -- if not sooner. (See Deutsche Telekom Turns On Pan-European IP.)

Last year, Vodafone Group plc (NYSE: VOD) unveiled plans to launch a single VPN service across a number of global markets in the near future, replacing many of its country-specific VPN services in the process. (See Vodafone Calls for End to Five Nines.)

Joe Stradling, a research director at Current Analysis , said that offering Cisco IWAN globally would give BT "a head start over its rivals."

"It will help our customers all over the world deal much more effectively with ever increasing bandwidth and traffic optimization demands, allowing customers to network like never before," said Keith Langridge, the vice president of network services for BT Global Services, in a company statement.

The market for SD-WAN technology has been attracting growing interest from investors and technology giants in the last few months.

Earlier this year, Cisco became one of several companies that participated in a $27 million funding round for VeloCloud Networks Inc. , an SD-WAN startup that serves customers including Deutsche Telekom, NTT Data Corp. and Vonage Holdings Corp. (NYSE: VG). (See Cisco Joins $27M Round for SD-WAN Startup VeloCloud.)

— Iain Morris, , News Editor, Light Reading