No matter what your business is, digital transformation is changing everything. By 2022, IDC predicts that over 60% of global GDP will be driven by digitally-enhanced offerings, operations and relationships, many of which are the result of the collaborations within and across ecosystems.
Established industry ecosystems, such as the internet, web, electronic trading, and content and digital media (CDM) are evolving. New ecosystems in blockchain, Internet of Things (IoT), transportation and cybersecurity are emerging. Is your company’s IT infrastructure evolving in ways that enable you to realize the greatest value from these vibrant ecosystems? Or is the inability to effectively interconnect and interact with partners and customers impacting your ability to collaborate in real-time and gain access to the people, data and services you require to succeed as a digital business?
How ecosystems have evolved and emerged
At Equinix, we’ve been instrumental in helping companies shift to a digital- ready IT infrastructure by providing direct and secure, private interconnection on our global vendor-neutral platform. From there, industry ecosystems emerged, such as network, internet service and cloud providers. Those ecosystems created gravity to attract digital-ready CDM providers, who wanted to place their services closer to population centers to localize them for a better user experience. Digital-ready financial services and trading firms also needed a more effective way to exchange high traffic volumes with the lowest possible latency by putting their systems proximate to employees, partners and customers. Once businesses build a digital-ready infrastructure, then the digital ecosystem follows. Whoever gets there first, gets the most mind and market share.
The second annual volume of the Global Interconnection Index (the GXI), a market study published by Equinix, tracks and measures the shift to digital business via the global Interconnection Bandwidth growth between businesses and organizations. Interconnection Bandwidth reflects the total capacity provisioned to privately and directly exchange traffic, with a diverse set of counterparties and providers, at distributed IT exchange points inside carrier-neutral colocation data centers. The GXI predicts that private traffic exchange between service provider ecosystems and enterprises is anticipated to grow 3x between 2107 and 2021, as service providers continue to utilize IT traffic exchanges as being core to their digital business models.
Companies’ private Interconnection to network providers is anticipated to grow at a 42% compound annual growth rate (CAGR) by 2021. Networks are where SD-WAN and overlay providers play. While connecting to network providers is the most mature use of installed Interconnection Bandwidth capacity at 66% of the mix, the remaining 34% is enterprises directly connecting to other service providers ꟷ bypassing the networks. Interconnection to these ecosystems is rapidly growing as businesses directly connect with cloud, financial services and content providers, as well as their own supply chain partners. Cloud and IT providers, a more emerging ecosystem, is growing rapidly at 98% CAGR.
Interconnection Bandwidth Growth by Counterparty
The shift to the digital edge and the creation of a global interconnection fabric.
Today, enterprises from every industry all over the world are building out their digital edge at Equinix by placing their IT infrastructures where commerce, population centers and digital ecosystems meet. By collaborating within and across these digital ecosystems, companies will not only gain competitive advantage, but also be able to develop and deliver new digital services to their customers.
This is all possible on Platform Equinix® where its global footprint extends across 200 IT traffic exchange points at Equinix International Exchange™ (IBX®) data centers around the world, across 52 metros in 24 countries on 5 continents. On this globally distributed platform, our customers can tap into the Equinix Cloud Exchange Fabric™ (ECX Fabric™) and interconnect to counterparties and ecosystems of network, SaaS and cloud service providers (CSPs) locally within the same metro through software-defined networking (SDN). Businesses can also interconnect over ECX Fabric across global metros. This means that anyone on the ECX Fabric can dynamically interconnect (via APIs) with anyone else on the platform anywhere in the world in under 5 mins via an instant direct and secure, private IT exchange.
Common use cases for digital transformation
In our experience with our more than 9,800 customers worldwide, we’ve found that a majority of businesses are rapidly adopting an Interconnection Oriented Architecture™ (IOA™) to more effectively and efficiently interconnect people, locations, clouds, data and things at the digital edge. Our custom-built analytics function is infused with the intelligence gained from over 5 billion customer records and purchased data from outside providers. This helped us quickly pinpoint common trends across the companies who were already using IOA to solve for latency issues when connecting to service providers and deploying IT closer to users. One thing we saw across the board was that almost all companies were transforming by trying to distribute IT services. We also identified other common attributes as shown in the firmographic and technographic graphic below.
From all of that data, we’ve identified four classes of use cases that provide a roadmap and maturity model for digital transformation on Platform Equinix:
- Network Optimization to shorten the distance between users and services applications. Place strategic IT traffic exchange points (hubs) near population density (employees, partners, customers) for single-digit latency (< 2 ms), with a 40% reduction in circuit costs. Leverage network ecosystems and network aggregation for greatest choice, redundancy and lowest cost.
- Hybrid Multicloud to connect and segment traffic between multiple clouds and private infrastructure. At the exchange points, physically and virtually interconnect and integrate clouds and cloud services. Leverage cloud ecosystems for the greatest choice (the best cloud for the best job) and to develop business continuity (BC) and disaster recovery (DR) environments.
- Distributed Security to deploy and interconnect security controls at points of digital engagement, either inside or outside your on-premises perimeter. Expand the hubs with security components and security ecosystem connectivity. Leverage security ecosystems to place the right security controls where they are needed, locally, regionally or globally.
- Distributed Data to deploy and interconnect data analytics in proximity to users. Grow hubs to support data exchanges, real-time analytics and compliance hosting to meet industry and government regulations. Leverage data and analytics ecosystems, along with artificial intelligence and machine learning to get the greatest value from your data.
Over time, as these use cases unfold within our customer base, we see a common deployment model form as shown below:
Customers usually have a global presence in almost all of the primary metro locations in each geographic region U.S., Europe, Asia-Pacific and Latin America. They’ve interconnected and integrated with a dozen NSPs, CSPs and partners with 30+ connections across a global mesh of tailored hubs for their specific application, data and security requirements.
This configuration is now their distributed core and the traffic has shifted to all of the IT exchange points. They control the flow of traffic between everyone and everything, in every place. They can dynamically interconnect and integrate a new counterparty or service into their traffic flows with the required control needed, at scale. They can set up the redundancy required for mission-critical applications and data in reliable hybrid multicloud BC/DR environments.
Architecting a digital-ready infrastructure
By leveraging an IOA strategy on a global interconnection and data center platform, such as Platform Equinix, your critical infrastructure is in place, but everything else can change to meet your growing digital business demands.
For more information, come see my session on “Equinix: Architecting a Digital-Ready Infrastructure,” at the Gartner IT Infrastructure, Operations & Cloud Strategies Conference 2018 on December 3 at 1:15 – 2:00 PM. Or you can visit our IOA Knowledge Base to access business and digital ecosystem playbooks and blueprints to help map out your digital transformation journey.
Read more about how to map your digital transformation journey by reading the Global Interconnection Index.