Megaport CEO Vincent English talks to Disruptive.Asia editor-in-chief John C Tanner about how (and why) enterprises are learning to love the cloud, and the importance of local partnerships.
Disruptive.Asia: When I interviewed your predecessor Denver Maddux in 2016, we talked about how a lot of enterprises were still wary of the cloud for a number of reasons. How has the market changed since then? Is cloud becoming more acceptable to companies?
Vincent English: Absolutely. I think credibility has been a huge factor over the last three or four years for enterprises and businesses. A lot of early adopters who used cloud providers probably would have used best-effort internet to connect to it. Now that we’ve got application security, data sovereignty, everything coming into play, cloud providers have recognized two things.
One, we need to make sure there’s more cloud on-ramps available in certain regions, because of data sovereignty and security, and also for latency and proximity. But also, they’ve worked really hard over the last couple of years between themselves to make sure that as a customer, when they do come onboard into a cloud environment, they’re able to easily consume those products within the cloud. So they’ve taken the clunkiness out of it and made it easier and building blocks and stages of how to consume certain aspects, whether it’s something to do with analytics, compute, storage, whatever it is.
The second thing is that the direct connect products that they’ve all brought out allow for that direct connectivity into security and performance and applications, which has made it a lot easier for businesses to accept it. And Megaport has had a real role in that involvement, because now you don’t have to be in the same data center as that cloud on-ramp – Megaport can get you there in the same manner.
And there’s been a recognition that the speed of connecting does not necessarily relate to having to be in the same location, or that you have to build your own network, or find two or three providers to get you that same service, which takes 90 to 120 days, etc, etc. Businesses don’t want to manage networks – they want to just get in and use the data. So I think the combination of all of those factors have given cloud a lot of credibility.
Security and trust were significant barriers for many enterprises three or four years ago – are they growing more comfortable with that aspect as well?
I think lots of businesses have had time to digest and go through what’s the best way to build their infrastructure for the next couple of years, what’s their strategy, etc.
This is where hybrid cloud comes in. Most people have settled on the fact that they actually want to have some of their own infrastructure privately held, whether it’s in a data center, or it’s in a building, your own offices or whatever that is, and whatever applications. But they’re comfortable putting probably half or whatever of their non-critical data in the cloud – that makes sense. They can cherry-pick what they want to keep in-house, and they siphon off the components that are less critical into the cloud. Andover time, they get comfortable moving more and more stuff to the cloud. Then they start putting a little bit more into the cloud and little bit more, and you go from maybe 70% private and 30% public to 50/50 or 40/60 over time.
Will things like India’s data localization rules impact your business, or is that just an extension of the existing sovereignty issue?
I think you’re going to see more and more that. That’s why you see so many cloud on-ramps in different countries in Asia-Pacific – not just because of performance and latency, but also it covers the security piece where I can now feel comfortable that my data stays in the sovereignty or jurisdiction where I’m doing my business.
The cloud providers have addressed it by building national cloud capabilities. So Microsoft, as an example, has a German cloud, so the data resides within Germany, and then they work with data networking partners who have networks that are capable of keeping that traffic terminated within Germany, and it won’t go outside the national borders. You can make a copy of the core data and send that outside the borders, but the core data must reside in the country.
Does that affect us? Not really – we’ve been very close to the whole regulatory piece and making sure that we’re compliant as possible where we can be. But 62% of all of our connections today are to the Top 7 cloud providers, so we’re pretty aligned with where they are in terms of what markets they’re going into, and if they’re going to another market, we make sure we do our due diligence and make sure it works for us internally.
But the other thing is that in the markets we’re in, we’ve tried to build an ecosystem of local providers around that as well, not just the global providers, because nine times out of 10, the customer’s predominant use case may be to actually connect to AWS, but they might want to connect to a local provider, maybe a financial vertical, or a media and content provider, or some other niche provider. So that helps to localize things as well.
Speaking of local providers, you’ve just announced a deal with OneAsia [PDF] in Hong Kong, where they’ll use Megaport to sell their data center customers managed connections to public cloud providers.
One of the things about OneAsia is that they’ve got a dense enterprise presence inside their data center, which effectively is really a target audience looking for extra outer services, so it makes complete sense that we would partner together. It’s the same model – they don’t have to go and get the cloud access and the cloud nodes, and we go to market together, they satisfy demand inside their data centers for international cloud providers and it also allows them to draw more customers to their data centers because of the ecosystem.
You’re probably going to see more of that over time – over2019 we will definitely have more of that coming along, either enabling new markets or new partnerships, increasing the access points and helping drive distribution.and that in turn for our business means more businesses connecting. The more volume we have with partners coming onto the ecosystem, that creates a network effect where you’ve got more and more connections going across that network.
We talk a lot about cloud, but the reality is our platform is really an interconnection system, so we can drive interconnection further to the edge for a number of use cases, it just so happens that it’s very easy to get enterprises plugged into the cloud because of a lot of the integration that we’ve done to go to market.
That’s interesting, because carrier-neutral data centers and interconnection existed well before Megaport started in 2013, but you’ve managed to be at the epicentre of cloud growth before demand really took off.
Well, yeah, like I said, over the last two years, there’s been a transformation in terms of credibility around cloud, but keeping the neutrality in the independence was really important. And that’s why I keep emphasizing the partnership piece – the more partnerships we do where we get win-wins for everybody, then it just becomes an easier way to do business. And it’s also allowed us to scale very fast.
But even in 2016, the general carrier-neutral interconnection model was geared towards keeping customers inside your own data centers. You broke that rule with the Digital Realty partnership two years ago, and that’s paid off, hasn’t it?
Yeah, the whole idea of being in a carrier neutral location is that you’re relying on networks to actually get customers to that location. And our idea was, well, let’s break that wall a bit further down and make it so those nodes and locations don’t all have to reside in the same data center – let’s have a neutral network across it and make it easy, which is the SDN component, so now I’m not beholden to one cloud provider or one data center provider. I’ve now got choice as an enterprise – why should I have to be holed into any one data center to go and get access to those services? We’re going to keep going that direction. I think it’s the right thing to do for the industry and the right thing to do in general for the customer.