Tony Bishop is Vice President of Global Vertical Strategy and Marketing for Equinix.
Companies no longer have an option: they must become digital to stay competitive. In fact, according to Gartner, “forty-two percent of CEOs say 'digital first' or 'digital to the core' is now their company's digital business posture.” Increasingly, consumers will shift to e-commerce over traditional retail, while all industries will rely more on data to stay competitive.
What differentiates a digital business from one that is not? To become a digital business, enterprises must undergo a rapid digital transformation to keep pace in a world where they will work with more users, in more locations than ever before. The only way to meet these new demands is by fully capitalizing on the scale offered by the cloud.
This is not just a shift that large companies will have to make. In the past, companies transitioned to the webscale infrastructure of Google, Facebook and Amazon, due to the massive increase of traffic these companies received to their websites. Now, it is clear that companies will need to optimize the route of this traffic through interconnection – the public Internet will simply not be the most efficient, secure or reliable way to conduct business in the future.
It is therefore immediately incumbent on any company with a digital business, or aspirations toward creating one, to implement an interconnection strategy that allows them to connect directly, securely and at very high speed with their partners.
Crafting an Interconnection Strategy
Interconnection is crucial to the future of cloud-based businesses due to the limitations of the public Internet. Public connections simply do not have the bandwidth capacity or reliability to maximize the benefits of the cloud. In fact, the demand for interconnection is set to explode. According to the Global Interconnection Index, Volume 2, Interconnection Bandwidth is expected to grow to 8,200+ Terabits (Tbps) by 2021, which is a dramatic increase over the previous year’s projection of 5,000 Tbps by 2020. This represents a five-year compound annual growth rate (CAGR) of 48 percent, almost double the expected 26 percent CAGR of global IP Traffic.
Interconnection bandwidth is defined as the private exchange of data by enterprises or counterparties. There are three main causes that are driving this growth:
Digital technology use: As digital usage increases, companies will need greater interconnection bandwidth to meet their needs. There will be more people using digital technology in the future. Each user will connect with a greater variety of devices, from laptops to phones to tablets, consuming even more bandwidth as application sophistication increases.
Cybersecurity risks: It is clear that cybersecurity threats are rapidly expanding in today’s day and age. Every week seems to bring a new breaking story about a data breach at a company with millions, if not billions, of records of user data exposed. No company is immune and ensuring a safe network is a task that requires constant vigilance. These threats can undermine consumer trust in the business, as well as essentially debilitating companies from being able to operate successfully. The public Internet offers no refuge from these dangers. Companies will need to bypass the public Internet and instead turn to secure, private connections to mitigate these attacks.
Global trade of digitally deliverable services: More and more, people are using digital services for every facet of their lives – ride-sharing for transportation, meal delivery for food, digital rentals for vacations, and online shopping for just about everything else. In fact, Gartner estimates that the digital commerce platform market will continue to grow, with a forecast compound annual growth rate of over 15 percent from 2017 through 2022, which includes revenue from SaaS, licenses and maintenance. Worldwide spending on digital commerce platform software in 2017 was approximately $6.1 billion in constant currency, a 15 percent year-over-year increase. Private connections are vital to ensuring the integrity of these services is maintained.
As a result of these factors, enterprises will increasingly rely on interconnection bandwidth to ensure they can successfully transition to a digital business by relying on the private Internet.
Enterprises will want to avoid the unpredictable performance of the public Internet, and be able to directly connect to network providers, financial service providers and cloud and IT providers. These connections will allow their businesses to perform in the ways in which they were designed.
That’s why for business-to-business transactions, the future lies heavily in direct connection rather than doing business over the public Internet. Interconnection is the only way for companies to stay agile and competitive, and undergo the type of transformation necessary to become a full-fledged digital business. The cost of inaction is too high to risk: without direct connections, digital channels cannot scale nor perform well because expectations for excellent performance cannot be achieved.
Opinions expressed in the article above do not necessarily reflect the opinions of Data Center Knowledge and Informa.
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