Connecting to strategic ecosystem partners via dedicated, private connectivity that bypasses the public internet, has been identified as a critical component for success as businesses build out their digital-first strategies. According to the Equinix 2020-2021 Tech Trends Survey (GTTS), 57% of digital leaders agree that interconnection is a key facilitator of digital transformation. Interconnection is the direct and private traffic exchange between two or more parties, inside a carrier-neutral colocation data center.
The opportunities are vast for Service Providers and partners that have made the leap to digital-first, according to the Global Interconnection Index (GXI) Volume 5 report, an annual market study published by Equinix. Service Providers include Network Service Providers, Cloud & IT Services, Hyperscalers, and Content & Digital Media companies.
Digital leaders are now moving 4.5x farther ahead by interconnecting digital core, edge and ecosystems to accelerate their transformation. The GXI Vol. 5 provides valuable insight and guidance for Service Providers and partners on industry- and location-specific expansion opportunities to support industry leaders worldwide on their digital-first journey.
The time for a digital-first strategy is now.
The Global Interconnection Index (GXI) is the industry’s leading source of data and insight on interconnection and its increasing impact on the digital world.
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Service Provider connections power Enterprise digital transformation
Organizations are increasing the number of partners they interconnect with on their journeys to become digital-first businesses, according to the GXI.
- Digital leaders are interconnecting with 10 times as many partners, helping power their digital transformation initiatives and gaining access to a range of best-of-breed services from an extensive pool of Service Providers and partners.
- Enterprises and digital native SaaS companies directly interconnect with 30 partners (on average), indicating that capitalizing on digital marketplaces drives exponential capabilities and speed.
- The trend to interconnect with partners has been tracked across 12 industries and three regions for traditional companies, born in the cloud businesses, Service Providers and even hyperscale providers.
Companies that have adopted a comprehensive digital strategy as a core business pillar—connecting with and leveraging digital platforms with partners, ecosystems, and customers, consistently emerge as disruptive market leaders. Adopting digital platforms and services is essential to achieve the level of agility and resiliency that is required to outpace and out-innovate the competition."- Courtney Munroe, Research Vice President, Worldwide Telecommunications Research, IDC [i]
Globally, the GXI shows that Service Providers interconnect on average with over 100 discrete partners, introducing opportunities to co-create and offer new value-added services to Enterprises and cloud native businesses. Service Providers and partners with a digital-first approach are leading the way by growing capacity in regional aggregation points to scale and deliver new digital services.
The GXI Vol. 5 forecasts worldwide interconnection bandwidth reaching 21,485+ terabits (Tbps) by 2024, a compound annual growth rate (CAGR) of 44%. Overall, Service Providers will consume 64% of the global interconnection bandwidth by 2024, with Network Service Providers making up 32% of the global mix. Being digitally mature, Service Providers deploy on average 16 locations: eight core aggregation points and eight metro edge locations to extend their reach. Service Providers are also expanding to the edge, with deployment benchmarking showing edge infrastructure growth almost double the growth of the core.
Identifying the vertical density of Enterprises in core and edge metros is also informing Service Provider and partner expansion plans. For example, the GXI benchmark data shows that Financial Services is the largest vertical mix in the New York core metro, with access to business partners (i.e., electronic trading) the dominant use case in the Americas.
Financial Services is anticipated to make up 50%+ of the Enterprise interconnection bandwidth or 18% of the global capacity due to the increase in global e-commerce and digital payments during the pandemic. Manufacturing is estimated to become the largest non-financial services leader, as it rapidly moves to digitize logistics and supply chain business models.
Digital-first strategies require flexible partner business models
Entire industries are rethinking their business, from edge to cloud. Industries hardest hit by the pandemic—like Transportation, Healthcare & Life Sciences, and Public Sector—are now experiencing the fastest digital infrastructure growth as confirmed by the GXI CAGR[ii] projections for interconnection bandwidth. Digitally mature Service Providers and partners can take this opportunity to tailor and position solutions to these industries. GXI Vol. 5 shows that Enterprises are increasingly relying on as-a-service providers, technology and delivery through partners as they start to establish a digital presence and transform experiences at the edge.
This growth is not occurring without putting new demands on Service Providers and technology partners. We’re seeing dramatic investments in edge-to-cloud capacity with the introduction by technology manufacturers of flexible and scalable consumption models and the transformation of their products for as a Service or cloud-like delivery. SaaS is now the largest IT spend item globally. Technology manufacturers can use the GXI to evaluate the growth in demand across industries and regions to prioritize locations to roll out services.
Additional partners provide guidance on digital-first journeys
In addition to the Service Providers and partners we’ve already discussed, there are other specialty partners that digital leaders rely on as they transition from a cloud-first to digital-first model. The GXI Vol. 5 helps systems integrators understand the trends accelerating digital adoption. The insights provide guidance on prioritizing new hybrid infrastructure solutions that can cost effectively scale performance while simultaneously benefiting from access to various ecosystems. As a Service and digitally native companies can use the GXI to evaluate the density of demand across regions to prioritize where they will expand—to new core and edge locations, or both.
Managed service providers, resellers, and value-added resellers are more critical than ever to enabling enterprises to shift to a digital-first mindset and addressing the knowledge gap that has resulted from this shift. As companies expand their digital infrastructure, adopt new ways of consuming technology, and optimize the integration of private and public cloud services and ecosystem capabilities, these partners are becoming key to providing knowledge-as-a service. In addition, resellers can leverage the GXI Vol. 5 to monitor shifts in demand and digital adoption patterns to plan their next delivery models.
Identify and prioritize industry and metro expansion opportunities
The GXI presents compelling insights on why now is the time for Service Providers and partners to capitalize on opportunities to support Enterprises that are starting or accelerating their transition from cloud-first to digital-first strategies.
Service Providers in any industry or stage of digital maturity can apply the information and guidance shared in the GXI to:
- Discover where and how quickly to help Enterprises expand their infrastructure nationally, regionally and globally.
- Capitalize on opportunities as ecosystem partners to co-ideate and offer new value-added services to Enterprises.
- Understand increased demand for as a Service solutions.
Leverage the GXI Vol. 5 report to identify the key digital core and edge metros and industry ecosystem deployments that align with your strategies to expand to new industries and nationally, regionally or globally.
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[i] Digitally Mature Businesses Expanding Digital Infrastructure 4x Faster Than Pre-Pandemic Levels, Equinix Press Release, October 19, 2021
[ii] CAGR = Compound Annual Growth Rate
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