The future for global business? Get interconnected

21 December 2018 | Eric Schwartz

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Eric Schwartz

Blog Author | president, Equinix EMEA

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Global business is changing, with the emphasis on global.

The ability to connect with other offices, partners and a user base anywhere in the world, is bringing with it huge opportunities for businesses, in a high stakes game of digital transformation.  

People, software and machines are consuming data faster than ever before. This is resulting in a deluge of data – creating new pressures and opportunities for companies hoping to ride the wave of digitisation. In fact, data is fast becoming a company’s most valuable asset. By capturing, combining and analysing data sources, businesses can transform data in to new customer value. Indeed, market intelligence firm IDC predicts that by 2021, at least 50% of global GDP will be digitised1 meaning businesses must act now to become digitally-native – it’s a matter of survival.  

As our digital world becomes more complex and decentralised, with partners and services all over the world, businesses need to simplify how they distribute and integrate their IT infrastructure while maintaining a high level of service. Thanks to the emergence of technologies including software-defined networking (SDN) and network function virtualisation (NFV), businesses can create and connect new lines of global business, dramatically increasing the number of interactions, and the volume of data, exchanged between users, applications and devices. 

To achieve this, companies are directly connecting with strategic partners to build their digital business ecosystems. This is where interconnection comes in – enabling the private exchange of data between businesses, allowing them to avoid the public internet and therefore vulnerability points for cyberattack. In this way interconnection is driving global business and as such, will only be ever-increasing.  

According to the Global Interconnection Index (GXI) Volume 2, the second of Equinix’s annual reports that analyses and forecasts Interconnection Bandwidth, private connectivity between businesses will grow to nearly 10x the Internet by 2021. This is in large part due to major macro and technology trends, in addition to regulation amendments, changing how businesses, consumers and technologies interact – integrating the physical and digital worlds. This is particularly true in Europe where a growing number of regulations requiring data compliance is serving as a catalyst for growth. The GXI Vol.2 predicts the region will grow at a 48% compound annual growth rate (CAGR), contributing approximately 23% of interconnection bandwidth globally. Interestingly, this remarkable growth rate will still see Europe fall behind APAC which is anticipated to grow at 51% CAGR. The US is expected to show the slowest rate of growth, at 45% CAGR, but will remain ahead overall thanks to its early strides in the digital market. 

Globally, interconnection between enterprises and cloud and IT service providers, continues to boom as businesses leverage hybrid multicloud architectures for digital business scale and agility. In doing so, companies gain access to vital business ecosystems, interconnecting distributed IT infrastructures with the clouds and partners that drive global digital business. In Europe, we expect this trend to increase by an incredible 98%. 

Unlike most reports which measure national or regional power through traditional economic measures, the GXI shows how industries, countries and regions, stack up among competitors in the race for data supremacy. And with urbanisation transforming global demographics and demand origins – every year 65 million people are added to the world’s urban population2 (the equivalent of adding seven cities the size of Rome) – there are more and more competitors to keep track of. 

Amsterdam, Frankfurt, London and Paris are set to continue to be the leading markets in Europe, accounting for almost 85% of European traffic by 2021, and expected to outgrow the rest of Europe by at least 10% CAGR. London alone will hold over 35% of Europe’s interconnection bandwidth, as the city remains a key trading hub, despite Brexit. Meanwhile, Amsterdam and Frankfurt’s rate of growth (57% and 58%) is projected to be faster than any key market in the US or APAC. 

Delving in to the European market a little further, we conducted an independent survey of over 1,000 IT decision makers. Over half (56%) of all respondents believe interconnection will be more important to their organisation in the next three years, with three quarters (76%) suggesting interconnection could help their business to gain a competitive advantage. More than half of respondents (56%) went on to identify interconnection as key to the survival of their business. This tracks with GXI Vol.2 which predicts for every 500 employees, businesses will need to increase Interconnection Bandwidth 4x to support the interconnection of users across their digital business workflows. 

With Interconnection Bandwidth predicted to grow to 8,200+ Tbps by 2021, it is clear business is only going to continue to become more digitised and more global. The opportunities this shift creates will continue to astound – 8,200Tbps (33ZB/year) in one minute could concurrently process 3 billion PayPal transactions, 7.4 million Uber driver streams, 30.8 billion emails with attachments, 1.5 million corporate training videos, 1.4 billion UCC calls, 1.4 billion document uploads and 57.6 million pre-production 4k video streams! The ability to run so many services at once will only improve productivity and therefore, economic wealth. Let the race begin.