According to the second annual Global Interconnection Index (the GXI)[i], a market study published by Equinix, major macro, technology and regulatory trends are converging to drive the need for Interconnection – the direct and private traffic exchange between key business partners. These trends include:
- Digital Business
- Data Compliance
- Business Ecosystems
Nowhere are these trends more apparent than in the Business and Professional Services (BPS) sector. In fact, when asked what the top services challenges were in 2017, one respondent to Mavenlink/Research Now’s 2018 State of the Services Economy[ii] report responded, “everything.” According to the report, service firms are struggling with shrinking budgets, rising client expectations and new, leaner competitors. The percentage of surveyed executives who said that “the conditions to operate a service business are changing more quickly than ever” more than doubled from 21% in 2017 to 52% in 2018.
BPS firms have responded by contracting with on-demand, remote workforces and collaborating with business ecosystems to fill in their expertise gaps and help them cope with increasing client demands. With a rising tide of urbanization, many of these ecosystems can be found in and near major global urban centers. BPS firms are also leveraging emerging digital business tools such as automation, analytics, artificial intelligence and the cloud. These tools enable them to streamline, scale and accelerate manual processes and cope with the cybersecurity and compliance challenges these tools create.
All these trends benefit from Interconnection—as the GXI demonstrates. The GXI Volume 2 predicts that installed Interconnection Bandwidth capacity across all markets could reach 8,200+ terabits per second (Tbps) by 2021, a five-fold increase over five years. Interconnection Bandwidth is 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 centers.
Interconnection Bandwidth by Industry Type
According to the GXI report, Business and Professional Services Interconnection installed capacity is expected to grow at a five-year CAGR of 65%, totaling 410 Tbps in 2021, or 5% of total Interconnection capacity. Regionally, Europe (EU) leads with a five-year CAGR of 65%, totaling 142 Tbps in 2021. In fact, in Europe, BPS ranks fifth among all market sectors in Interconnection growth. The U.S. is close behind Europe with a 60% CAGR, totaling 141 Tbps in 2021. Then comes Asia Pacific with a 71% CAGR and a total of 104 Tbps in 2021, followed by Latin America, with an 82 % CAGR and a total of 24 Tbps in 2021.
The Success Formula: Technology, collaboration and cloud
Trends specific to the BPS industry back up these numbers and include:
- Collaboration and Business Ecosystems: The pressure is on today’s BPS firms from new, more nimble and leaner competitors, and rising customer expectations for greater business outcomes and project-based work, rather than traditional retainers. Nearly half of the Mavenlink/Research Now report’s respondents cited increased competition as the top business pressure in 2018, with “managing customer expectations” and “limited access to new technical skills required to deliver work today” coming in second and third. Clients also increasingly expect firms to deliver new services outside their core competencies. Services firms have responded by leveraging contractors and sub providers to gain agility and scope. Many are reaching globally for these capabilities, with 72% of respondents indicating that they work with employees in different countries and 99% saying that collaboration is critical to success.Interconnection at the digital edge, using strategically placed Interconnection hubs near urban centers, enables these firms to collaborate and link systems with partners directly and securely via high-performance and low-latency connections. For example, Equinix Cloud Exchange Fabric™ (ECX Fabric™) on Platform Equinix® provides physical and virtual access to ecosystems of global contractors, sub-providers, cloud providers and customers across global metros.
- Digital Business, Automation, AI and Data Analytics: Leveraging emerging digital business technologies for automation, efficiency and cost reduction has become critical for maintaining competitive position and coping with leaner budgets. Client relationship management, accounting tools and collaboration systems are most commonly implemented in Business and Professional Services, with professional services automation systems increasing in importance during the past year. High performers tend to tap business intelligence and data analytics as well. According to Consultants 500[iii], services firms, particularly those in medicine, accounting, legal and consulting, increasingly apply big data, artificial intelligence and machine learning to complex tasks, decisions and processes such as reading and analyzing huge volumes of medical and legal research. Access to real-time data can help these organizations shift from customer problem solving to preventive strategies and Interconnection is a key enabler of real-time data access and analysis.
- The Cloud: BPS firms have turned to the cloud to ramp up and scale their digital capabilities and more advanced functions swiftly and securely with minimal capital and ongoing management costs, while also supporting their clients’ cloud infrastructures (i.e. managed services). Globalization makes it attractive to leverage the global reach of major cloud players in every category, from Infrastructure providers such as AWS to SaaS and PaaS providers such as Salesforce, Microsoft, Google and IBM SoftLayer. Interconnection with cloud providers at the digital edge via advanced cloud Interconnection offerings such as ECX Fabric can help organizations stitch together hybrid and multi-clouds to deliver and support these capabilities to globally dispersed customers, employees, partners and contractors. ECX leverages software-defined Interconnection to connect enterprise infrastructure dynamically with thousands of cloud service providers and ecosystem partners through a single physical network port.
- Cybersecurity and Compliance: Data security and compliance have become major challenges as businesses go mobile, global and digital. Many BPS firms have direct access to clients’ systems in order to do their jobs or work with partners on their clients’ behalf, further increasing their risks. Direct, private Interconnection at the edge makes it easier to secure the data exchanged among systems and adhere to their client’s privacy policies and local compliance requirements.
It’s been a wild ride for Business and Professional Services providers and it isn’t going to end anytime soon. Players in this sector will have to leverage every possible advantage to stay competitive. For many, Interconnection will be critical for doing so quickly and effectively.
Download the Global Interconnection Index Volume 2 for more information on Interconnection trends by region, vertical markets and vital ecosystem partners. And to learn how to deploy IT infrastructures at the digital edge to expand your business and professional services market, read the Professional Services Digital Edge Playbook.
[iii] Consultants 500, The Future of the Professional Services Industry: An Age of Disruption, 2018