As the world shifts to digital, the pace of change is accelerating and no industry is immune. In 1958, the average tenure of companies listed on the S&P 500 was 61 years. At the present rate of churn, a recent study estimates that three-quarters of today’s S&P 500 will be replaced by 2027.[i] A good part of what is causing this disruption is the convergence of major macro, technology and regulatory trends. These trends are playing a central role in driving businesses to make the dramatic changes described in Volume 3 of the Global Interconnection Index (GXI). To effectively compete in the global digital economy, companies must be ready to solve the challenges these powerful trends create.
The GXI Vol. 3 report identifies five pivotal actions digital leaders can take to clear these hurdles, transform IT and reach a digital-ready state. Each of these steps leverages direct and secure, private interconnection, which enables companies to bypass the public internet to collaborate and exchange data traffic.
Five forces driving digital transformation and interconnection growth
Together, the following macro trends are accelerating digital transformation and increasing the requirements for private interconnection bandwidth capacity.[ii]
Digital business needs to capture new value by supporting real-time interactions, which require the local interconnection of people, things, locations, clouds and data.
Urbanization is transforming global demographics and the sources of demand, creating a need for localized digital capabilitiesthat require proximate interconnection and analytics for applications, data, content and networking, close to high concentrations of users.
Cybersecurity demand rises exponentially as vulnerability points are increased with data being distributed across many different creators and consumers – requiring interconnection and security controls to be distributed locally and globally.
Data volumes and compliance means processing, maintaining and securing data locally while making it available globally, which requires data, storage, analytics and networking to be directly interconnected in the business regions with specific requirements.
Business ecosystems are being created from digital trade flows that involve an increasing mix of customers, partners and employees, and require a scalable technology infrastructure that interconnects participants and related digital flows.
These trends are driving more companies to shift how they do business from a centralized to a distributed model at the digital edge, where a company’s data needs to be interconnected to concentrations of digital and business ecosystems.
Leading indicators for interconnection adoption
Findings from the GXI report reveal a few indicators that help predict a growing requirement for interconnection: number of employees, number of geographic locations and size of investment in distributed IT services. The results show that as a businesses’ users and locations expand and IT services become more distributed, the need for private interconnection increases. For example, the GXI identified that when businesses spend greater than US$50,000 per month on distributed IT services, the need for interconnection bandwidth capacity
increases 4x on average to support real-time interactions.
The report describes five key steps that leading businesses consistently take to create digital-ready infrastructures capable of supporting distributed users, locations and IT services. When combined, these actions form an interconnection maturity model that addresses the challenges presented by digital business, urbanization, cybersecurity, data and compliance, and business ecosystem trends.
These steps and relevant example use cases follow, demonstrating how enterprises are successfully leveraging interconnection to grow their digital businesses:
- Network optimization reduces costs, latency and increases bandwidth. European-based, digital payment company iZettle, needed to decrease payment processing times for its customers outside of Europe. By harnessing high-speed, low-latency interconnection across three continents, it lowered its average network latency from 98 to 73 milliseconds to meet the increasing demands of its digital business.
- Hybrid multicloud simplifies complexity and reduces connectivity costs to cloud platforms, providing greater connectivity to more scalable cloud resources. A major U.S.-based, on-demand and streaming OTT video operator leveraged secure and reliable interconnection to multiple networks and clouds to successfully deploy a next generation consumer video storage and playback service for millions of subscribers, for less cost.
- Tighter cybersecurity controls over data and application access reduces risk. Consumer food manufacturer, Nestlé Japan, wanted to implement digital IT infrastructures that added new value to its supply chain and promoted rapid growth, like moving its Electronic Data Exchange environment to scalable cloud services. Private interconnection to the public cloud and access to operational monitoring services across its hybrid infrastructure, enabled the company to leverage ecosystem partners and meet its global IT standards for service levels and security.
- Localizing data volumes reduces data transport costs, enables real-time delivery and analysis, and helps to maintain compliance. U.S.-based Sysco, a multinational food service distributor, faced a data deluge from its increasingly global operations. The company leveraged interconnection to reliably and cost-effectively connect diverse IT resources across multiple regions, improve data management and provide users with faster access to data anytime, anywhere.
- Providing high-speed, low-latency throughput for application exchange or sharingimproves user experience, collaboration and time to market. ModEx is a catastrophe (cat) risk modeling platform for the insurance industry, delivered by Simplitium. By directly interconnecting to industry partners at the edge, closest to data and users, Simplitium was able to deliver a shared cat risk modeling service for its customers that increases efficiencies while reducing model licensing costs and onboarding time.
Taking these critical steps to achieve digital readiness and interconnection maturity was vital to each of these enterprise’s digital transformation success. For companies making similar journeys, leveraging private interconnection to address the challenges generated by the five macro trends will empower you to meet any new competitive force, head on.
Read the GXI Volume 3 report to learn more about how you can increase your digital maturity and accelerate your business’ digital transformation.
Is the increase in interconnection bandwidth demand when businesses spend greater than $50,000 per month on distributed IT services.