Looking at the Future with 20/20 Hindsight

2015

The Chinese philosopher, Confucius, is famous for his wisdom and insights. And, after 2,500 years, many of them are still as relevant as the day they were written.

One of my personal favourites is about making predictions. “Study the past, if you would divine the future,” the great sage said.

That’s good advice. And I am going to follow it myself, taking a look at the developments we’ve seen in the last 12 months to make an educated guess about what we might expect in the coming year.

Trend tracking

Let’s start by looking at the key technology and business trends that emerged in 2014 in the server technology and data center market. In my mind, the biggest has been the rise of cloud service providers (CSPs) coming into the Hong Kong market.

At Equinix Hong Kong specifically, the number of cloud customers we are supporting has grown by 15% year-over-year, as local and international CSPs choose to deploy in Equinix Hong Kong as their entry point into the Asia-Pacific market.

At the same time we’ve also seen more and more enterprises moving into the cloud, especially in the financial services, legal and insurance space. Industries, such as legal and insurance, that have traditionally been slow to adapt new technologies are now re-evaluating their IT infrastructure.

They are upgrading existing systems and moving to cloud-based technologies as a way to manage higher traffic volumes and reduce the cost of running old systems. Along with this, interest from enterprises in exploring hybrid and multi-cloud environments have risen exponentially this year as well.

Security, performance and scalability top the customer agenda

As always, customers are setting the agenda. At the top of their list is security, as Hong Kong companies are still weary of security in relation to cloud computing. It is followed quite closely, however, by another perennial business concern: performance. Concerns over the reliability and stability of using the public internet persist, which are contributing to concerns over performance.

Scalability is the third issue on the agenda, as Hong Kong customers are very interested in finding data center providers that can scale their services to meet rising demand. This is especially critical for organisations that are expanding outside of Hong Kong and need a global data center provider that can expand with them and actively support their growth into new markets.

All of these trends have been good news for Equinix. Our Cloud Exchange solution has been in demand since its launch in June 2014, as it acts as an antidote to the concerns that Hong Kong customers have expressed about using cloud computing over the public internet.

With Cloud Exchange, enterprises have seamless, on-demand and direct access to multiple clouds and multiple networks across the globe without using the public internet. What’s more, they can build sophisticated hybrid cloud solutions inside any Equinix facility, bypassing the open and crowded Internet with its unavoidable risks such as security, performance and traceability.

Going vertical

Looking at the last year from an industry perspective offers some interesting insight. We’ve seen a rise in demand from content and social media companies looking for data center services, as real-time bidding and real-time analytics is becoming more and more critical to their success.

By deploying in a data center like Equinix, businesses can connect to an ecosystem of ad-exchange partners and reduce average network latency down to sub-millisecond levels. This boosts bid speed and allows the processing large sets of data in real-time.

However, traditional industries, such as legal and insurance, have also been spending more on data center services during the last year as they start to re-evaluate their IT infrastructure. That’s perhaps not so surprising, considering the growth of the insurance market across the Asia-Pacific region. There is also a confluence of factors, such as electronic discovery, affecting the legal world. The net result is that many industries are reaching a tipping point when it comes to upgrading their old IT systems and deciding to deploy in data centers. Again, good news for Equinix.

Back to the future

To borrow from another famous Chinese saying, the last year has definitely been an interesting time. The question is, how will these developments shape the future?

I think all the signs suggest that enterprises investments in data centers and cloud computing technologies will rise in the coming year. For one thing, the growth of the internet of things and continued adoption of M2M technologies is accelerating and creating more and more data.

To extract value of this data requires sophisticated algorithms and considerable processing power to analyse and interpret it. Accordingly, I am convinced that we will see more and more companies turning to data centers to meet these needs, in turn driving up demand for data centre services dramatically in the coming year.

Enterprises are also looking to rapidly advance their cloud computing agendas, scale their businesses globally and, ultimately, speed-up their time to market. Those that have traditionally maintained their old IT systems will invest in advanced technologies, such as data centers, to meet new demands.

The bottom line is that following Confucius’ dictum and making a careful study of the past leads to an inescapable conclusion. In the very near future, cloud computing will cease to be a ‘nice to have’ for enterprises. Indeed, from 2015 onwards, it will be a ‘must-have’.