What’s Driving the Rapid Growth of Interconnection?

What’s Driving the Rapid Growth of Interconnection?

Our newly released market study, the Global Interconnection Index (the GXI) Volume 2, offers some striking projections that illustrate how essential Interconnection is becoming to digital business.

For instance, the GXI predicts that by 2021, global installed Interconnection Bandwidth capacity will be 8,200+ Terabits per second (Tbps), which can move 33 Zettabytes of data annually – 10X greater than the volume of data going over the internet. That’s a remarkable stat, and it begs further explanation. Luckily, the GXI offers that, as well.

The GXI describes five long-developing macro, technology and regulatory trends that are converging to drive the demand for Interconnection – the direct and private data exchange between businesses. That Interconnection demand, in turn, is fueling the growth of Interconnection Bandwidth, the total capacity provisioned to privately and directly exchange traffic with a diverse set of participants at distributed IT exchange points.

As these foundational trends accelerate, the complexity and risk they create is increasing, and businesses need to securely and efficiently integrate the physical and digital worlds to deal with it all. Interconnection is key to doing that, and that’s why it will only become more crucial to conduct digital business in any industry in major markets around the world.

Here’s a look at the five trends highlighted in the GXI:

Trend #1: Digital Business

Digital business transformation is becoming a global phenomenon. According to IDC, by 2021 at least 50% of global GDP will be digitized by 2021, and growth in every industry will be driven by digitally enhanced offerings, operations and relationships. IDC says this development is, or should be, triggering a “ticking clock” in the head of every CEO, prompting them to move as quickly as possible along their digital transformation journeys.

Interconnection becomes a key building block for digital business along that journey because real-time interactions between people, things, locations, clouds and data are critical in a digital age. Interconnection makes that happen quickly, securely and with the lowest possible latency.

Trend #2: Urbanization

The global population is concentrating in cities, and Interconnection is needed as digital businesses are forced to change their service delivery models to accommodate this shift.

Today, about 55% of the world’s population lives in urban areas, and that will increase to 68% by 2050, according to the United Nations. A separate study by the U.S. National Intelligence Council estimates 65 million people are being added to the world’s urban population each year. With so many people so close together, digital services must be increasingly concentrated and close to users, so companies can deliver the connectivity their users expect. Interconnection brings applications, data, content and networking into proximity in these densely populated areas. It allows companies to deliver on their service promises, even as demand keeps growing.

Trend #3: Cybersecurity

The amazing benefits of a more closely connected world also come with concerns that this level of connectivity makes businesses more vulnerable. In fact, a large-scale cybersecurity breach is one of the most serious risks facing the world today. In the meantime, successful attacks are taking a toll – EY projects the global cost of cybersecurity breaches will reach $6 trillion by 2021.

As attackers become more sophisticated and adept at avoiding detection, companies need to strengthen their defenses, even as they increase their vulnerability by distributing their data across a variety of sources and users. To do that, businesses need their security controls to be distributed, as well. They can do it via Interconnection out at the edge where most traffic exchange is happening. The direct, private nature of Interconnection also increases data protection and lowers the risk of being compromised.

Trend #4: Data Compliance

The digital economy may be global, but more countries are requiring that the data at the heart of the digital economy stay local. No fewer than 18 countries block the transfer of data related to accounting, tax and financial information.

But remaining compliant is about more than following the rules. In a Thompson Reuters survey, 69% of respondents said successful compliance efforts can drive up business efficiency and effectiveness by enabling greater focus on value-added activities. The need to address compliance drives Interconnection because Interconnection enables companies to link their data storage, analytics and clouds in the same business region. That data can stay local, and still do the job a global company needs it to do.

Trend #5: Business Ecosystems

No company can go it alone in a digital age. In fact, the trend is the opposite. Gartner says that by 2021, the number of organizations using a mix of intermediaries will more than double, and that active engagement by these organizations with industries in ecosystems outside their native industry will nearly triple. Why? Today, digital trade flows are creating global business and data processes that involve an increasing variety of customers, partners and employees. Interconnection securely and efficiently connects all the players in all these business ecosystems, as those ecosystems expand in depth and number.

Here to stay

Trends in industries like fashion and music are here and gone, but the trends driving Interconnection demand are enduring and reflect fundamental changes in the way business is done in the digital age. Interconnection is about security, scale and performance in a rapidly evolving digital world. It’s about the future, and every digital business needs to understand it.

The GXI report not only explores the trends driving Interconnection, it investigates growth in Interconnection Bandwidth by category, including region, industry and ecosystem. It offers insights that can drive digital business advantage.

Please check out Volume 2 of the Global Interconnection Index.

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