“The global digital economy will be made up of digital ecosystems…
…accounting for more than $60 trillion by 2025″
– McKinsey
“Data exchange volume between ecosystem companies at the edge is increasing…
…an estimated 80 zettabytes by 2022″
– IDC
“Private interconnection between businesses is required for greater performance and security…
…driving interconnection bandwidth to be over 13 times the volume of global internet traffic”
– The Global Interconnection Index
All these market findings are representative of a seismic shift in all industries around the world: Businesses are moving their computing from centralized data centers to a hybrid infrastructure at the edge, creating, consuming and exchanging data faster and in more distributed locations than ever before. As a result, IDC predicts that more than 50% of enterprise-generated data will be created and processed outside the data center or cloud by 2022.[i]
This move is exponentially increasing the need for interconnection between businesses to privately exchange data in digital ecosystems at the edge. A recent independent APCO Insight survey of 2,485 IT decision-makers across diverse enterprises in the Americas, EMEA and Asia-Pacific showed that almost half (45%) of global IT decision-makers believe interconnection is key to business survival. And 48% of total IT decision-makers agree that interconnection is a key facilitator of digital transformation. [ii]
To help accelerate the growth of digital business and equip organizations to fully realize the power of interconnection, we publish the annual Global Interconnection Index (GXI), a report that measures and forecasts the growth of global private interconnection bandwidth required to support companies driving digital business. The third volume of the GXI demonstrates that as the digitization of the global economy increases, so does installed interconnection bandwidth capacity worldwide, which is expected to reach 13,300+ Tbps by 2022.[iii] This represents an estimated 51% compound annual growth rate (CAGR) worldwide — a 7% increase over the previous year’s projections.
In fact, interconnection is vastly outgrowing all other options because of its effectiveness in reducing latency, increasing security and lowering costs. By 2022, interconnection bandwidth growth is estimated to double the peak of global internet traffic and reach more than 13 times the volume. That translates into 53 zettabytes (ZB) annually or the equivalent of processing 10 billion emails with attachments in one minute!
Interconnection: Driving digital business advantage
The GXI Vol. 3 delivers insights that drive digital business advantage by tracking, measuring and forecasting growth in interconnection bandwidth. The report analyzes the adoption profile of thousands of carrier-neutral colocation data center providers and participants globally. With more than 4,000 implementations examined in four regions (North America, Latin America, Europe and Asia-Pacific), the GXI provides valuable insights into how leading companies in 11 major industries optimize their IT infrastructure to build business value at the digital edge. By using interconnection bandwidth as the de facto unit of measure for global digital business growth and integration, you can make comparisons of digital business expansion across geographic regions, industries and ecosystem counterparties in relationship to your company’s own digital transformation.
The GXI also provides insights that illustrate some valuable lessons that we’ve learned after 20 years of working with nearly 10,000 enterprise and service providers. They are on the frontlines of digital disruption, grappling with the growing business demand to directly and securely exchange increasing amounts of data among multiple companies across different networks, regions and countries. From their real-world experiences, these companies have demonstrated that low-latency interconnection is quite simply the most cost-effective way to move volumes of data between businesses at the edge because:
- Distance is the biggest performance killer for digital applications—today’s latency-sensitive workloads require response times ranging from <60 to <20 milliseconds.
- Businesses need to remove the distance between users and IT systems and clouds to stay competitive and propel both application performance and user experience.
- The edge is an essential digital business driver—and leveraging private interconnection at strategic edge locations compounds its value.
The GXI also provides five pivotal steps, which, when combined, form an interconnection maturity model for your business to achieve a digital-ready state. This timely information can help you develop a game-changing digital business platform that maximizes your position at the digital edge so you can bring new value to your customers, employees and partners on a global scale.
And for the first time, Volume 3 of the GXI details the results of the analysis of the global interconnection and deployment patterns of 450 Equinix customers that could help you more efficiently and cost-effectively accelerate your company’s digital transformation.
Trends that are driving global digital transformation
In this digital age, major macro, technology and regulatory trends—such as digital business, urbanization, cybersecurity, data volumes and compliance—and business ecosystems have converged to form an unprecedented era of complexity and risk. The GXI looks at the analysis of interconnection bandwidth growth and the impact of these macro trends within various geographies. Depending on the region’s digital maturity, estimated interconnection bandwidth growth rates will vary. North America is projected to lead in global interconnection bandwidth by 2022 with 38% of the total market, followed by Europe with 22%. The fastest-growing regions in interconnection, Latin America and Asia-Pacific, are expected to increase from 8% to 11% (Latin America) and 25% to 29% (Asia-Pacific) over five years.
Regional Mix of Installed Interconnection Bandwidth Capacity
The GXI Vol. 3 provides an in-depth analysis of the interconnection deployment scenarios in the following regions:
On the digital business forefront, interconnections between consumers and producers increase
As the digitization of the global economy advances, the successful interaction and data exchange between digital consumers and digital producers depends upon it happening at the edge, where proximity closes the distance between them to ensure optimal performance. At the same time, the lines are blurring between consumers and producers, making standard vertical industry classifications secondary to any company’s primary role as a digital business. Enterprises that typically consumed digital services are now also producing digital products and monetizing them with new and existing customers across multiple industries. Take as an example, a company that traditionally consumed and analyzed satellite data on global weather but now also disseminates it as useful information to the travel, insurance and retail industries. That’s a digital business.
The GXI estimates that by 2022, digital consumers will make up the greatest share (56%) of interconnection bandwidth capacity. Digital consumers also have a projected 7x growth rate, which surpasses digital producers (4x).
Global Interconnection Bandwidth Consumption by Digital Consumers and Producers
By reading the GXI, you’ll see which industries have the highest growth rate by digital consumers and producers. You’ll also learn which five industries make up 72% of the total worldwide interconnection bandwidth mix.
Interconnection by ecosystem reveals the interconnections defining modern business
As industry participants become more digitized, the industry forms more digital ecosystems – with a wildly different mix of players. By studying interconnection deployment patterns between companies (enterprises and service providers) and ecosystem partners, we can learn a lot about how businesses are leveraging connectivity to realize greater value and seize new opportunities they could not capture on their own.
The GXI uncovers which types of businesses are connecting to one another. These interconnections to specific ecosystem partners also reveal an alignment with the five transformational steps all digital leaders must consistently take (sequentially or in tandem) to solve IT transformation challenges and reach a digital-ready state:
Step #1: Network Optimization:
Network Providers are the conduit for businesses to interact and exchange data traffic, which is why privately connecting to multiple carriers for greater network optimization is estimated to be the predominate use case (66% of the mix).
Step #2: Hybrid Multicloud:
Interconnecting to Cloud & IT Services across distributed locations and cloud regions is the fastest-growing use of interconnection bandwidth with enterprises (112% CAGR) and service providers (60% CAGR).
Step #3: Distributed Security:
As more businesses and consumer mobile devices connect to Financial Services Providers for digital payments at the edge, distributed security (10% of the mix) becomes paramount to keeping those transactions safe and compliant, and protects personal data.
Step #4 Distributed Data:
Content Providers make up 4% of interconnection bandwidth worldwide, as global consumers of online content and media expand in all geographies exponentially. Placing data at the edge, close to those users, mitigates the effects of distance and delivers the best user experience.
Step #5 Application Exchange:
Increasingly, Supply Chain Partners are harnessing interconnection hubs to share applications and privately exchange data with other digital businesses that are leveraging these services and processes. By 2022, they will make up 2% of the total interconnection mix, primarily from enterprises.
Interconnection Share by Ecosystem Partners
By understanding what’s behind the massive growth in private interconnection in industries and between enterprise and partner ecosystems around the world, you can better understand where and why private interconnection is growing so significantly. This knowledge can help you develop your private interconnection strategy and make investments to create digital-ready IT infrastructures.
Gain an edge advantage
The GXI Vol. 3 demonstrates why digital transformation requires a shift from a centralized IT services model to one that is geographically distributed and regionalized at the edge, and lays out five essential steps that companies are taking to do this. In upcoming blogs, we’ll explain how those steps can be applied to digital readiness. And we’ll lay out how to deploy an interconnection model, based on the analysis of the interconnection and deployment patterns of 450 companies on Platform Equinix® over three years, which will enable your business data to be exchanged in proximity to your customers, employees and partners to fuel optimal business performance and exceptional user experiences.
In the meantime, check out the Global Interconnection Index Volume 3.
[i] “Winning in Digital Ecosystems,” Digital McKinsey Insights, January 2018.
“The Digitization of the World from Edge to Core,” IDC, November 2018.
[ii] APCO Insight survey, sponsored by Equinix, August 2019.
[iii] Interconnection bandwidth is defined as the total capacity provisioned to privately and directly exchange traffic, with a diverse set of partners and providers, at distributed IT exchange points inside carrier-neutral colocation data centers.
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