Direct Interconnection capacity between businesses for private data exchange is forecasted to grow ten times faster than traditional MPLS networks, according to the recently released “Global Interconnection Index” market study, published by Equinix. Driving this Interconnection proliferation is the fact that enterprises are now directly connecting to each other and service providers every day to exchange data traffic, create new business ecosystems and scale digital business. In fact, the state of an organization’s “Interconnection maturity” can be key to scaling its digital platform and growing as a digital business.
The Global Interconnection Index provides insights into the trends driving the massive need for Interconnection created by digital transformation and projects how Interconnection is increasingly growing in response to those trends worldwide.
Reinventing enterprise IT
The trends driving enterprise Interconnections worldwide include:
- Digital Technology Use, which forces the need to support real-time interactions requiring more Interconnection Bandwidth. According to Accenture’s “Digital Density Index,” digital technology use is projected to add $1.36 trillion in additional economic output in the world’s top 10 economies by 2020.
- Urbanization, which is transforming global demographics and creating a proximity need for digital services concentrated across metro centers globally. More than two billion people are expected to migrate to major cites by 2035, creating as many as 50 major urban metro hubs requiring dense Interconnection fabrics, according to “Connectography” by Parag Khanna.
- Data Sovereignty, which requires maintaining data locally while being used globally. More than 18 major countries globally block the transfer of data related to accounting, tax and financial information according to the Information Technology and Innovation Foundation’s “Cross Border Data Flow Report.”
- Cybersecurity Risk, which expands Interconnection consumption as firms increasingly shift to private data traffic exchange to bypass the public Internet and mitigate against digital threats. As per Gartner’s August 30, 2016 “Special Report: Cybersecurity at the Speed of Digital Business,” by 2020, an estimated 60% of digital businesses will suffer major service failures as breaches permeate across physical and digital platforms.
- Global Trade of Digitally Deliverable Services, which ushers in a new era of dynamic business processes and demand for Interconnection. Global digital workflows require a global mesh of Interconnected metros to fulfill demand. According to McKinsey’s “Digital Globalization” report, trade in digitally deliverable services now comprises 50% of total services exports globally, with an expected 9x increase by 2020.
Enterprises feel the impact of these trends as they strive to drive global collaboration and data exchange between businesses and geographic regions. If you don’t have a strong understanding of where your organization’s Interconnection maturity stands, you could fail to scale as a digital business.
What’s your Interconnection maturity?
In this climate of increasing digitization, if you are not scaling your Interconnection capabilities to digitalize your business, you are likely falling behind your competitors. So how do you know where you stand in a global Interconnection maturity model? The Global Interconnection Index helps you understand your company’s Interconnection maturity by assessing your current Interconnection Bandwidth consumption and projecting your future requirements.
It defines Interconnection Bandwidth as 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. The Global Interconnection Index predicts that by 2020, an estimated 5,000 terabits per second (Tbps) of installed direct, private Interconnection Bandwidth capacity could be provisioned by enterprises and service providers, a fourfold increase from 2016, with double-digit growth across all industries and use cases.
By looking at the Global Interconnection Index’s firmographic profiling of Interconnection Bandwidth consumption trends (see the diagram below), you can gain insight into enterprise Interconnection adoption across three dimensions — company size (employees and revenue), geographical presence and use of distributed IT services.
For example, it shows that requirements for greater Interconnection Bandwidth capacity are driven by:
- Users: Companies that are larger in revenue and size require a greater number of Interconnections for their users.
- Locations: Businesses that are focused on broadening their physical geographic presence need to increase the number of Interconnections used in dispersed locations.
- Services: Organizations that extensively employ various distributed IT services need to provide more Interconnections to service partners (e.g., SaaS) and users.
By identifying how your company aligns across these three Interconnection-driving dimensions, you can gauge what your Interconnection Bandwidth capacity requirements are today and project how you will need to scale your Interconnection capabilities to grow and expand your company as a digital business.
Remember that your Interconnection Bandwidth capacity alone is not enough to determine where you stand in terms of Interconnection maturity. It is a quantitative metric, not a qualitative one. To better understand your Interconnection maturity position, you also need to weigh your Interconnection capabilities against: 1) The problems you are trying to solve, 2) The purpose for the Interconnections and 3) The value they provide to your business and users as illustrated in the diagram below. The diagram below demonstrates how Interconnection maturity plays out as businesses scale.
For example, if you’re a manufacturing company and your goal is to enhance your North American supply chain partners’ experience when they interconnect with your enterprise resource planning (ERP) system, then you can solve for high latency by shortening the distance between those users and your ERP services via a single Interconnection or an Interconnection Node.
On the other hand, what if your company wants to expand its current supply chain globally to open new markets and will ultimately need to collaborate with many more partners and customers worldwide? In this case, you may want to migrate your ERP systems to the cloud to deliver greater scalability and integration at a local country level while adjacently deploying critical security and data services to your ERP service to satisfy compliance requirements. This is a case that may require you to move up through the Interconnection maturity model into a cluster or an ecosystem of Interconnection Nodes that enable you to deploy new capabilities and monetize new business opportunities faster.
Interconnection scales digital business
By leveraging the Global Interconnection Index, you can gain deeper insight into the vital role that scaling your Interconnection capabilities can play in digitizing your enterprise’s operations, products and services for an improved competitive position, enriched customer experience and expanded distribution footprint. You can scale your Interconnection to enable greater digital collaboration and engagement with your employees, partners and customers. And you can innovate new digital capabilities that will spark the growth and expansion of your digital business globally.
To start mapping out your way toward greater Interconnection scalability, read the Global Interconnection Index market study.
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