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Interconnection: The Next-generation Data Center Business Model

CEO of DE-CIX International explains how data center operators can create competitive advantages through interconnection services.

10 Min Read
DE-CIX Interconnection Platform Patch panel

Ivo Ivanov - CEO DE-CIX International

Ivo Ivanov - CEO DE-CIX International (4)

Data center talk used to revolve purely around the physics of the site itself – the set-up and design, power, physical security, and uptime. But as they digitalize, data center customers – that is, enterprises – are developing a new set of demands. They want a solution for the digital transformation of their business processes and models. Specifically, they need to be able to control their connectivity to partners and customers.

According to recent market research, over 60% of enterprises with a workforce of more than 2500 consider a holistic approach to interconnection to be strategically important. Enterprises have concerns about the security and confidentiality of their critical data (50%) and want private connections to the cloud and other resources that bypass the public Internet (40%). Finally, for the new business models they are developing, enterprises need to exchange data with an increasing number of trusted partners (e.g., suppliers, retailers, digital content and cloud application providers, etc.) across multiple sectors and geographical regions. Therefore, interconnection is becoming paramount to their digitalization strategy.

What does this mean for a data center operator? It means you need to start writing your own interconnection story. The top infrastructure challenges of enterprise customers are a) to increase the performance and strengthen the security and resilience of their connectivity, b) to ensure their flexibility by avoiding vendor lock-in, c) to reduce the complexity of their connections to partners, and d) to increase their control of compliance within their ecosystem of partners. For these challenges, they need controllability of their infrastructures and data flows. They need a new interconnection model that brings them closer to their customers and partners and allows them to interconnect directly. To make this possible, data centers need to become more than simply a closet offering power, physical security, and uptime.

Related:Data Center World 2022: DE-CIX Brings Internet Exchange Platform to Phoenix

Data center talk, therefore, needs to accommodate a new set of KPIs: local access to a greater density and diversity of networks, greater geographical coverage of interconnection infrastructure, and a variety of scalable and customizable interconnection services to support enterprise digital transformation. No data center operator can hope to offer all of this on their own. Therefore, to effectively meet the demands of customers for seamless and efficient interconnection – across cities, countries, continents, and oceans, and regardless of location – and make their own facilities more attractive, data center operators need to be part of a healthy and vibrant interconnection ecosystem. Experience shows that the most effective way to achieve this is through the presence of an Internet Exchange (IX) in the data center. Whether this is home-grown or externally operated depends on the conditions in which the data center operates. Whatever the case, now is the time for data center operators to take decisive action. Below is a set of four action points for data center operators to achieve interconnection readiness.

Related:Equinix’s Jim Poole On New Interconnection Ecosystems, xScale, and More

Action point 1: Achieve network density through a virtual MMR

As the data center evolved, the Meet-Me Room (MMR) became one of its major value propositions. But today, connecting with other networks only present in one facility is no longer conducive to growth: When choosing a data center operator, enterprises are demanding network density – vastly more networks than a single data center operator can hope to accommodate alone. Data centers thus need to ensure that they are part of a wider ecosystem that does not solely revolve around their own customers. They can do this by joining an open and distributed Internet Exchange ecosystem – one that is data center and carrier neutral – where as many networks as possible meet. This increases the network density at the data center, with a flow-on effect for the latency and resilience of connections, creating a competitive advantage for the data center.

Let’s look at how this works in practice: DE-CIX, the largest operator of data center and carrier neutral IXs in the world, operates (among others) a distributed IX in New York, which is itself accessible from over a hundred different PoPs. Because the IX is neutral and distributed, the major data center operators in the market, as well as smaller, regional players, are all present on the interconnection fabric. This means that every single network that is present in a data center connected to the DE-CIX fabric in the NY/New Jersey/Long Island metro market can also reach any other network connected in any other location in the market. Moving on, DE-CIX also operates a distributed IX in Dallas, and interconnects these two markets. This brings together the bundled power of all of these DC operators to offer their respective customers the added value of much stronger network density. But it doesn’t stop there: All five DE-CIX North America locations (next to New York and Dallas, also Chicago, Richmond, and Phoenix) are interconnected, and they also connect across the Atlantic to the DE-CIX markets in Southern Europe, Central Europe, and beyond. So, a network connected in any one of the hundreds of PoPs in North America can access and peer/interconnect directly with over 2,100 local and global networks. In effect, a data center plugs itself and its customers into the largest data center and carrier neutral “virtual MMR” in the world – the metaverse of connectivity services.

Action point 2: Think beyond the physical cross-connect

In today’s world, it is also critical for DC operators to think beyond the physical cross-connect. Enterprises are demanding specialized interconnection services to support their transformation process, rather than being satisfied with a simple cross-connect. Data center customers are seeking direct, dedicated, and multi-homed access to their resources and applications sourced from a variety of clouds. They are also demanding customized private interconnection services with enhanced security and compliance features that support their zero-trust network strategy. They want access to DDoS protection and network security services. And beyond all of this, they also need simplicity in the booking and canceling of interconnection services and cloud connectivity, as well as the enablement of an interconnection fabric API that they can embed in their own systems.

Again, all this is not something that a single data center operator will be able to provision in isolation. Here, they will need to work with an interconnection partner that can deliver customized, low-latency, and secure interconnection services, integrated as part of a large ecosystem of thousands of networks, well distributed, as local as possible, and as global as required. For the data center operator, this brings new opportunities to package and sell interconnection/connectivity services on to their enterprise customers. 

Action point 3: Ensure the neutrality of your interconnection ecosystem

Further, enterprises want flexibility. Not only do they want access to a large ecosystem of networks, but they also want to know they can change providers according to their strategic and business needs. This means they need diversity in the ecosystem, not just size. Therefore, the neutrality of the interconnection ecosystem is central, as it is the only way an enterprise can be sure to avoid vendor and provider lock-in.

As such, the time really has come for data center operators to begin writing their own interconnection story and integrating the concept of an Internet Exchange into their business plan. What approach they should take to do this depends on their level of in-house knowledge, their location, and their business strategy.

Destination IX: How to write your interconnection story

Take the DIY road and create your own IX: A rewarding undertaking, but it requires consistent effort and specialist interconnection knowledge to grow the ecosystem to get the most out of it. The more your ecosystem grows, the more gravity it will generate, making it more attractive for further networks to join. However, developing that initial gravity can be challenging. Furthermore, if your platform is only available in your own facilities, it is a closed environment that does not offer the benefits of a broader interconnection ecosystem. Therefore, if you do choose to do it yourself, you should also make your platform open to other data centers.

Partner with an interconnection specialist: An interconnection specialist can offer the know-how and experience, but also a ready-made ecosystem, to enable an immediate offering for your DC customers. However, the choice of partner is crucial because, to get the most out of your interconnection ecosystem-building, you need a partner that is open and neutral.

If your data center is within the geographical proximity of an existing open and neutral IX, the best option would be to become an enabled site of that IX. Doing so embeds your DC within this ecosystem so that you can capitalize on its interconnection gravity. Depending on your partner, this allows you to enrich your portfolio with interconnection services, offering your customers and prospects access to a diverse ecosystem of network, content, cloud, and application providers, as well as interconnection services specifically designed for the needs of enterprises.

If, on the other hand, your DC is operating in a greenfield interconnection market, the alternative would be to work with an interconnection partner that offers Infrastructure-as-a-Service (IaaS) solutions. Along with the advantages of having seasoned experts build and operate your IX, you have an additional benefit if the operator allows your IX to be integrated within their own ecosystem. An example of such a set-up is DE-CIX as a Service (DaaS), a program that offers a professionally managed IX, built to the DC operator’s desired dimensions. The IX can be shipped to the DC doorstep as “DE-CIX in a Box”, based on DE-CIX’s award-winning technology and offering DE-CIX’s multi-service interconnection platform. The IX becomes part of the global DE-CIX ecosystem of over 2,100 networks that the data center’s customers can interconnect with. Therefore, anyone participating in the global DE-CIX ecosystem from a connected location becomes a virtual cross-connect away – massively increasing the richness and attractiveness of the DC’s growing ecosystem and providing local customers with an entirely different value proposition.

Action point 4: Fill the skills gap to be ready for the interconnected world of the future

Enterprises not only seek network density, flexibility, and a diversity of interconnection services, they also need expert interconnection support to create their set-up and be sure they are getting the best out of their connections. With the growing demand for interconnection services, a major problem faced by companies and data center operators alike is the scarcity of specialists. Software-defined networks (SDN), application programming interfaces (APIs), patch bots, and self-service portals are paving the way for interconnection automation so that, in future, it will become less mandatory for data centers to have the underlying network engineering expertise in-house to serve the needs of enterprise customers. In the meantime, however, there are not enough network engineers to go around. As a result, many data center operators are having problems staffing positions to support high-level knowledge of interconnection, even for their own needs.

Working with an interconnection partner offering consultancy services, or completely outsourcing the design, build, and management of local interconnection infrastructure is one way of overcoming this challenge in the short term. A further option in the mid-term is for the data center to train up their engineers in interconnection topics to enable them to operate and manage interconnection needs fully in-house. One possible solution to this is academic training and education. For instance, DE-CIX has set up a global Interconnection Academy, in cooperation with the Universitat Pompeu Fabra (UPF) in Barcelona, which will become available through further partner universities in different regions in the future, as well as being accessible virtually. Not only will engineering students at the cusp of their career be able to gain professional certification in interconnection topics, but also seasoned professionals can fine-tune their knowledge and become the interconnection knowledge-base for their data centers.

A solution to the challenges of digital transformation

In the face of increasing demands on data center interconnectivity, the only way forward is to join together with others. Whichever way a data center operator chooses to approach their interconnection story, when it comes to nurturing a diverse and healthy interconnection ecosystem, there needs to be recognition that openness – engaging with competitors – and neutrality enables a heightened value proposition for customers. And that working with a neutral specialist interconnection provider will offer a competitive advantage through increased network density and customized interconnection services to provide added value to data center facilities. There is strength in numbers that vastly surpasses what each of us can achieve in isolation. And this strength will help overcome the challenges of digital transformation.

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