Interconnection bandwidth is forecasted to grow to over 8,200 Tbps of capacity – ten times the projected capacity of internet traffic – thanks in large part to digital transformation, according to the second annual Global Interconnection Index published by Equinix.
That represents a significant five-year compound annual growth rate (CAGR) of 48%, almost double the expected 26% CAGR of global IP traffic, Equinix says.
According to the GXI, digital transformation is accelerating for every company in every industry, everywhere around the world. As a part of this necessary transition, people, software and machines are creating and consuming data faster and in more distributed locations than ever before, creating dissonance and driving businesses to private and direct Interconnection to solve their complex integration challenges.
Interconnection – defined here as direct and private traffic exchange between key business partners – is becoming the de facto method for companies to operate in today’s digital world, said Sara Baack, chief marketing officer for Equinix.
“Significant macro, technology and regulatory trends are converging to form an unprecedented era of complexity and risk and forcing the integration of physical and digital worlds,” said Baack. “The second volume of the GXI has found that companies are solving their increasing digital requirements by directly connecting to key business partners through interconnection, as traditional forms of connectivity do not meet the demanding requirements of today’s businesses.”
Some of the key macroeconomic, technology and regulatory trends that have driven interconnection growth in the past year and will impact its future growth include:
- Digital business transformation, which drives the need to support real-time interactions between people, things, locations, clouds and data to enable value capture. At least 50% of global GDP will be digitized by 2021, with growth in every industry driven by digitally enhanced offerings, operations and relationships2.
- Cybersecurity risk, which expands Interconnection consumption as firms increasingly shift to private data traffic exchange to bypass the public internet and mitigate against digital threats as data is distributed across a growing number of vulnerability points. Large-scale cybersecurity breaches are one of the most serious risks facing the world today, and the scale of the threat is expanding drastically. By 2021, the global cost of cybersecurity breaches is projected to reach US$6 trillion3.
- Business ecosystems, which are experiencing an increase in mix of customers, partners and employees and require digital ecosystems and Interconnection to scale. By 2021, organizations using a mix of intermediaries are projected to more than double, and active engagement with industries outside the organization’s native industry are projected to nearly triple4.
To capture digital value, companies will need to support real-time interactions by more strategically interconnecting the workflows across people, things, locations, cloud and data. The GXI identifies four classes of Interconnection use cases5along with an IT maturity model. Adopted in combination, these use cases create a digital-ready infrastructure for today’s businesses:
- Network optimization to shorten the distance between users and services applications.
- Hybrid multicloud to connect and segment traffic between multiple clouds and private infrastructure.
- Distributed security to deploy and interconnect security controls at points of digital engagement.
- Distributed data to deploy and interonnect data analytics in proximity to users.
The index is available for download here.