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    Quantifying How COVID-19 Is Accelerating Digital Transformation

    By
    CHRIS PREIMESBERGER
    -
    October 28, 2020
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      At eWEEK, we report on advances in conventional data centers and in cloud services providers, but we don’t report on interconnection centers often enough. That changes here in this article.

      Data center interconnect (DCI) hardware and software connect two or more data centers together over short, medium or long distances using high-speed packet-optical connectivity. There is little data storage in a DCI facility; data in “flight” is directed and redirected in microseconds. In this cloud-based, web-scale world, access to that flow of data is a critical challenge.

      The news: The latest Global Interconnection Index (GXI), an annual market study published this month by Redwood City, Calif.-based Equinix, shows that the COVID-19 pandemic has had a major effect on how businesses are planning their digital infrastructure initiatives during the next three years. According to the report, digital service providers—such as telecommunications, cloud and IT services, content and digital media and technology providers—are forecast to increase private connectivity bandwidth 5x by 2023, driven by greater demands from enterprises to close digital gaps at the edge.

      Bandwidth Predicted to Grow by 45% in Next Three Years

      The report also predicts that overall interconnection bandwidth, the measure of private connectivity for the transfer of data between organizations, will expand by a 45% compound annual growth rate (CAGR) from 2019 to 2023. The expected growth is driven by digital transformation, and specifically by greater demands from enterprises extending their digital infrastructure from centralized locations to distributed edge locations. 

      This comes as businesses scale and support real-time interactions by strategically interconnecting workflows closer to and across people, things, locations, cloud and data. The capacity of this connectivity, Equinix said, is equivalent to 64 zettabytes of data exchange, which is enough bandwidth for every human on the planet (7.8 billion) to transmit their full DNA sequence in an hour.

      The GXI Vol. 4 delivers insights by tracking, measuring and forecasting growth in interconnection bandwidth—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. 

      Highlights of the research are as follows:

      Vertical/Industry Insights 

      The GXI Vol.4 provides insight on how global macro trends and COVID-19 have impacted certain industry segments:

      • Digital adoption patterns are changing in response to massive disruptions. 

        • According to the GXI Vol.4, the digital adoption pattern has altered, with service providers now forecast to provision more interconnection bandwidth (10,284 terabits per second by 2023) than enterprises, by a factor of nearly 2x.
        • However, much of this service provider demand is anticipated to be in support of enterprises that are prioritizing their digital transformation in preparation for post-pandemic recovery. 
        • The report also predicts that enterprises with a digital infrastructure will extend their competitive advantage and continue to lead in business growth, while those without have struggled and are dependent on service providers to transform their business models. 
      • Traditional businesses are moving workloads to an edge-first architecture.

        • The GXI Vol.4 predicts that traditional business, within industries like banking and insurance, manufacturing and business & professional services, will represent a combined 30% of global interconnection bandwidth by 2023. This is led by the growing need to move workloads to the digital edge while scaling core IT infrastructure. By 2023, these traditional businesses are expected to reach a peak interconnection bandwidth growth rate of 50% annually. 
        • Healthcare and life sciences and government & education are expected to lead the traditional enterprises in their interconnection growth rate as public and private initiatives on artificial intelligence (AI) and machine learning (ML) are forecasted to drive a combined 47% CAGR in interconnection bandwidth from 2019 to 2023.
      • Organizations are benefiting from the “network effect.”

        • Organizations are maximizing their digital advantage by building a presence in locations with the most users, largest number of providers and the densest activities, known as the “network effect.” According to IDC, 80% of digital leaders will see the impact of connecting to multiple ecosystems, including improving their value to end customers by 2025. 
        • The need for application exchange in digital ecosystems to support real-time engagement is essential and creates a network effect for businesses. The GXI Vol.4 predicts that connectivity from service providers to networks and cloud & IT service providers will be the two main sources of ecosystem interconnection, with an estimated 49% combined CAGR from 2019 to 2023.

      Regional Insights 

      The GXI provides insight into how growth in interconnection bandwidth is expected to accelerate in different regions of the world between 2019 and 2023:

      • Global interconnection bandwidth is forecast to grow by 45% CAGR. By 2023, global installed interconnection bandwidth is expected to reach 16,300+ Tbps.
      • North America is expected to grow at a 43% CAGR, with service providers leading the growth, showing over a 4x increase in interconnection bandwidth. The top metros for private connectivity growth in the region are forecasted to be Silicon Valley, Washington D.C., Chicago and New York. 
      • Europe is forecast to grow at a 45% CAGR, where telecommunications and cloud & IT providers are to contribute to 55% of the total interconnection bandwidth growth, outpacing other industries in the region. Frankfurt, Amsterdam, Paris and London are predicted to be the top metros for interconnection bandwidth growth. 
      • Asia-Pacific is expected to grow at a 47% CAGR. Cloud & IT Services are to lead the growth in this region, reaching an anticipated 1,374 Tbps by 2023, which is 29% more than the next largest region, North America, in this sector. The GXI Vol.4 anticipates healthcare & life sciences and government & education to see an acceleration in interconnection bandwidth adoption as both industries prioritize digital initiatives such as telehealth and AI. The leading metros for private connectivity within the region are expected to be Singapore, Sydney, Tokyo, Shanghai and Hong Kong.
      • Latin America is predicted to grow at a 50% CAGR. Content and digital media is expected to grow at a 5-year CAGR of 62% between 2019 and 2023, making it the highest growth rate of any sector in any region. Buenos Aires, Mexico City, Rio de Janeiro and Sao Paulo are expected to be the top metros in this region for interconnection bandwidth growth.

      Go here to read the details of the Equinix report.

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