Scaling Interconnection in a Radically New World

Sara Baack
Scaling Interconnection in a Radically New World

digital businessDigital disruption has thrown us all into an exciting period of accelerated innovation, one in which new opportunities are created as employees, supply chain partners, customers and other stakeholders eliminate historical boundaries and distance to share information and do new things with it.

In listening to our customers that I visit across the world, it’s clear that to thrive in a digital revolution, companies across industries are having to move their business models and their supporting IT architectures from siloed and centralized to increasingly distributed and dependent on direct, real-time engagements with more users, partners and service providers.

These changes are helping companies to access more accurate insight from customer and product data and, ultimately, compete with greater productivity and agility. And firms on the leading edge of digital transformation know that leveraging Interconnection – direct, private data exchange between businesses – is a key ingredient in their success.

The Industry’s First Interconnection Insight

To better understand the critical role interconnection is playing in the global economy and its future trajectory, we have published the “Global Interconnection Index,” a new market study that provides the industry’s first, annual global baseline to track, measure and forecast the growth of Interconnection.

The Global Interconnection Index forecasts Interconnection Bandwidth, a measure of the total capacity provisioned to privately and directly exchange traffic with a diverse set of counterparties and providers at distributed IT exchange points. We can now project where Interconnection can have the greatest impact on global digital business and understand in which industries it could grow the most and the fastest.

The Interconnection Bandwidth Boom

The Global Interconnection Index arms business leaders with critical knowledge about Interconnection, and the data necessary to evaluate and benchmark their own Interconnection maturity against similarly situated companies. It delivers multi-dimensional projections of Interconnection Bandwidth capacity by region, industry, company adoption and business use case. Ultimately, this research should help organizations investigate Interconnection as a needed core design principle of their own digital business IT infrastructures.

Notable projections from the Global Interconnection Index include:

Private Interconnection is estimated to significantly outpace traditional forms of traffic exchange
Interconnection Bandwidth capacity is estimated to grow 45% CAGR to reach over 5,000 Tbps by 2020, and could dwarf global IP traffic (i.e., consumer and business fixed internet, managed IP and mobile data) in both growth (24%) and volume (855 Tbps).[1] While we are accustomed to measuring global information exchange in terms of internet use, private data exchange between businesses is forecasted to eclipse public internet traffic as the digital economy grows.

Interconnection in all regions is projected to grow strongly, led by Latin America
Latin America is forecasted to be the fastest-growing region at 62% annually by 2020. At Equinix, we’re already seeing this demand for Interconnection coming to fruition in our newest data center in São Paulo (SP3). SP3 has become a much-needed Interconnection hub for approximately 1,000 companies, including Latin America’s largest financial exchanges, 270 cloud and IT services companies, and more than 70 telecommunications providers, including links to new intercontinental submarine cable systems.

Banking and Insurance is estimated to be the most interconnected industry
With 61% annual growth by 2020, it’s estimated that Interconnection Bandwidth capacity in the banking and insurance industry could exceed any other major industry. We’ve seen this industry being bombarded with evolving regulatory and compliance challenges, a rapidly changing digital currency environment, and increasing demand for consumer-centric, self-service web-based and mobile applications. To stay competitive, these companies must harness the flexibility and agility of proximate, direct Interconnection to deliver fast and secure, real-time transactions.

An example of this is FreedomPay, a digital commerce point-of-sale solution provider using Interconnection at Equinix to more efficiently interconnect to its merchant customers, digital payment business partners, and network and cloud service providers. That boosted FreedomPay’s network bandwidth performance by 10x, enabling it to accelerate customer onboarding, increase market reach and expand its access to digital payment business and cloud ecosystems.

Cloud Interconnection is projected to be the fastest growing enterprise use case
Private cloud connectivity is expected to be by far the fastest-growing Interconnection use case among enterprises, with a whopping projected CAGR of 160% by 2020. Private, direct and high performance access to multiple clouds achieved with Interconnection helps companies power complex digital business value chains and scale IT resources and application services on a more cost-effective usage model.

We’ve seen this phenomenon in action with our customer Ontario Systems, a revenue recovery software and solutions provider. The company delivers its VoIP customer contact management platform from an interconnected multicloud infrastructure. Leveraging proximate, single-digit latency Interconnection among multiple cloud providers at Equinix enabled Ontario Systems to improve its efficiency and call quality, and reduce customer networking costs by up to 50%.

A Vital Tool

Without Interconnection, we believe companies may struggle to gain the scale, agility, security and quality of service they need to successfully conduct digital business. But with the right Interconnection strategy in place, even the boldest business ambitions can be a reality.

Check out the Global Interconnection Index market study today to uncover data-driven insights with the power to accelerate your organization’s digital future.

[1] Cisco, “Visual Networking Index: Forecast and Methodology, 2016-2021,” June 7, 2017.

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