Understanding Overlay and Underlay Networks

The foundation of SD-WAN lies in its use of overlay and underlay networks, two complementary components that work together to deliver connectivity.
What is an Underlay Network?
An underlay network refers to the physical connections that form the backbone of a WAN. These include traditional WAN technologies such as MPLS, broadband or 4G/5G. The underlay is responsible for transporting data across locations and provides the raw infrastructure over which the overlay operates.
Key features of an underlay network include:
- Physical infrastructure like routers, switches, and cables.
- The use of routing practices to manage data flow.
- A focus on stability, reliability, and connectivity.
What is an Overlay Network?
An overlay network operates on top of the underlay and uses network virtualisation to create logical connections independent of the physical layer. The overlay manages data flows intelligently to capture and route traffic.
Key benefits of an overlay network include:
- Centralised control and management.
- Dynamic routing for optimised traffic flow.
- Enhanced security through encryption.
Together, the underlay ensures stable connectivity, while the overlay adds intelligence and flexibility, forming the backbone of an SD-WAN architecture.
WAN Overlay vs. Underlay in SD-WAN
The distinction between WAN overlay and underlay networks is critical to understanding the power of SD-WAN. Traditional WANs often rely solely on underlay networks, which can lead to inefficiencies and limited adaptability. In contrast, SD-WAN combines both layers to create a more agile and optimised solution.
Underlay Network: Provides the foundation for data transport. It focuses on maintaining connectivity and physical infrastructure reliability.
Overlay Network: Adds a virtual layer that intelligently routes traffic, improving performance and security.
Key Features of SD-WAN Solutions
Centralised Management
SD-WAN allows businesses to manage their networks from a single dashboard, streamlining operations and reducing complexity.
Load Balancing
With intelligent load balancing, SD-WAN can dynamically distribute traffic across multiple connections, ensuring optimal performance and avoiding congestion.
Improved Network Performance
SD-WAN improves overall network performance by prioritising critical applications and routing traffic through the most efficient paths.
Enhanced Security
Encryption within the SD-WAN overlay network protect data from external threats, ensuring secure connectivity across the WAN.
Scalability
SD-WAN is ideal for businesses with multiple locations or a hybrid of on-premises and cloud-based applications. Its virtualised nature allows easy scaling as requirements grow.
Cost Efficiency
By using broadband and other cost-effective WAN technologies, SD-WAN reduces reliance on expensive circuits, lowering overall network costs.
Choosing the Right SD-WAN Solution

When selecting an SD-WAN solution, it’s essential to consider factors like scalability, compatibility with existing physical infrastructure, and the ability to integrate with cloud services.
Performance Networks specialises in delivering tailored SD-WAN solutions that integrate with your network infrastructure, enhancing performance, network security, and reliability.
The Future of WAN Networks with SD-WAN
As businesses will only continue to embrace cloud services, remote work, and data-driven applications, the demand for efficient and secure WAN networks will continue to grow. SD-WAN bridges the gap between traditional physical infrastructure and modern network virtualisation, offering a solution combining both worlds.
SD-WAN transforms WAN networks into flexible, scalable, and high-performing infrastructures by using the power of overlay and underlay networks. Whether looking to improve network performance, enhance security, or reduce costs, SD-WAN is the ideal solution for modern businesses.
Ready to revolutionise your network? Explore how Performance Networks can help you implement a tailored SD-WAN solution to meet your unique needs. Contact us today!