What We’ve Learned About Interconnection Over the Last Year

How the growth of Interconnection is forecasting the future of global digital business

Digital transformation is in constant motion. Last year, Equinix published the inaugural Global Interconnection Index (the GXI), the industry’s first annual analysis of global traffic exchange and projections of Interconnection growth, which showed that companies in all industries around the world require Interconnection to scale digital business. The second volume of the GXI demonstrates why and how the stakes are getting higher. The relevance of Interconnection, the private and direct exchange of data between businesses, is increasingly essential to any enterprise or service provider looking to strengthen and accelerate their digital strategy.

Here are five big things we’ve learned about Interconnection from the Global Interconnection Index Volume 2:

  1. Global Interconnection Is Outpacing Internet Growth by 10X

The GXI Vol. 2 forecasts that global installed Interconnection Bandwidth capacity will grow to 8,200+ Terabits per second (Tbps) by 2021. This is a five-fold increase, compared to last year’s GXI Interconnection Bandwidth forecast, with double-digit growth across all industries. To quantify the volume of data 8,200+ Tbps of Interconnection Bandwidth capacity can move, it is the equivalent of 33 Zettabytes (ZB) of data exchange per year – 10X more than the internet. To compete in a global digital economy, today’s companies need to enable real-time interactions by more strategically interconnecting the workflows across people, things, locations, clouds and data. The GXI tracks, measures and forecasts growth in Interconnection Bandwidth, which is the total capacity provisioned to privately and directly exchange traffic with a diverse set of participants at distributed IT exchange points. As the fuel for all these business-critical interactions, Interconnection Bandwidth is a powerful barometer for how companies are leveraging Interconnection to grow, scale and ultimately succeed as digital businesses.

What’s driving all this interconnection growth worldwide? Major macro, technology and regulatory forces are converging, creating unprecedented levels of complexity and risk, and changing how businesses, consumers and technologies interact. In addition, geo-specific trends have evolved from a year ago, making it easier in a number of regions for digital business to flourish, which drives up Interconnection Bandwidth.

  1. Interconnection is Critical to Build Digital Ecosystems

Interconnection helps enterprises build and strengthen their digital ecosystems by seamlessly integrating a wide range of service providers and business partners, including financial services and content providers and supply chain partners. By 2021, enterprises will use 84% of the Interconnection Bandwidth they consume to connect to network and cloud providers as more companies move to migrate their critical business workloads to the cloud and optimize their network topologies for digital business. In fact, direct Interconnection between enterprises and cloud and IT providers is expected to proliferate at a 98% CAGR, surpassing all other categories, as businesses leverage hybrid multicloud architectures for digital business scale and agility. As businesses look to effectively integrate an increasing mix of connected services across different access points globally, the use of Interconnection Bandwidth to support enterprise connectivity to network providers is expected to grow at a 42% CAGR.

Interconnection Bandwidth by Counterparty

  1. Traditional Enterprise Industry Sectors Are Leading in Interconnection Growth

Enterprises (53%) are estimated to surpass service providers (47%) as the largest consumers of Interconnection Bandwidth capacity by 2021 as they continue to ready their IT platforms for digital business. Interconnection is a key building block for these transformations. Contributing significantly to this trend is a 7X growth in Interconnection for companies in traditional business sectors like banking and insurance, manufacturing, energy and utility, retail, healthcare and government.

Service providers are further along in their Interconnection maturity because digital traffic flows are core to their business models. As a group, these businesses are predicted to experience 3X growth in sectors like telecommunications, cloud and IT services, and content and digital media industries.

Interconnection Bandwidth by Industry Type

  1. Region-Specific Trends Are Increasing Interconnection Presence

Micro trends are also driving Interconnection Bandwidth, but their growth impact varies by region. By 2021, the U.S. is expected to contribute the largest volume of Interconnection Bandwidth capacity (40%) globally, due to the strong presence of early digital business adopters and large multinationals. Data compliance is catalyzing robust growth in EMEA, making up an estimated 23% of the global Interconnection Bandwidth capacity, while rapid urbanization and a high number of digital content providers are driving strong Interconnection Bandwidth adoption (27%) in APAC. While emerging market dynamics and growing digital business deployments are making LATAM the fastest growing region (59% CAGR), they are expected to make up only 9% of the global Interconnection Bandwidth capacity by 2021.

Interconnection Bandwidth by Region

  1. Users, Locations and Distributed IT Services Are Escalating Interconnection Requirements
    As the number of users, locations and the use of distributed IT services increases, they drive up complexity and the requirement for Interconnection Bandwidth at local, regional and global levels. As businesses of all sizes, geographic distribution and distributed IT services scale up, there is a direct correlation to the growth of Interconnection Bandwidth. Traditional forms of connectivity cannot keep up with this level of complexity and scale, but private, direct Interconnection can.

Firmographics Profile Prioritizes Interconnection Bandwidth Requirement

These and other new insights from the Global Interconnection Index Vol. 2 give us fresh perspective on how companies in all industries around the world are deploying Interconnection Bandwidth and leveraging Interconnection to shape the future of global digital business.

In upcoming blogs, we’ll dive deeper into all the GXI report findings you need to know including:

  • The top five macro, technology and regulatory trends driving Interconnection growth
  • How you can tap into proven Interconnection use cases and maturity model to achieve a digital-ready infrastructure
  • How industry and ecosystem Interconnection adoption will accelerate the next era of the global digital economy

Check out Volume 2 of the Global Interconnection Index.

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