IT Intelligence Bulletin (HG Insights) — According to this year’s Global Interconnection Index (GXI – a study sponsored by Equinix that analyzes traffic exchange globally), the private exchange of data between companies is becoming the defacto method for businesses to operate in today’s digital world.

The second GXI forecasts that global installed Interconnection Bandwidth capacity will grow to 8,200+ Terabits per second (Tbps) by 2021. This is a five-fold increase, compared to last year’s GXI Interconnection Bandwidth forecast, with double-digit growth across all industries. To quantify the volume of data 8,200+ Tbps of Interconnection Bandwidth capacity can move, it is the equivalent of 33 Zettabytes (ZB) of data exchange per year – 10X more than the internet. This represents a significant five-year compound annual growth rate (CAGR) of 48%, almost double the expected 26% CAGR of global IP Traffic.

But, what’s driving all this interconnection growth worldwide? According to Tony Bishop, Vice President, Global Enterprise Vertical Strategy & Marketing, “Major macro, technology and regulatory forces are converging, creating unprecedented levels of complexity and risk, and changing how businesses, consumers and technologies interact. In addition, geo-specific trends have evolved from a year ago, making it easier in several regions for digital business to flourish, which drives up Interconnection Bandwidth.”

The second volume of the Global Interconnection Index reveals 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.

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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.

Trends driving Interconnection
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 relationships.
  • 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 trillion.
  • 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 triple.

Region-specific trends
The second volume of the GXI identifies significant insights into regional differences in how growth in Interconnection Bandwidth is accelerating in different regions of the world.

  • USA:As an early adoption market for digital business and the headquarters for the largest number of multinational enterprises, the United States is expected to see compound growth of 45% per annum, contributing more than 40% of Interconnection Bandwidth globally.
  • Europe:A growing number of regulations requiring data compliance is serving as a catalyst of growth for Europe, which is predicted to grow 48% per annum, contributing to 23% of Interconnection Bandwidth globally.
  • Asia Pacific:Benefiting from rapid urbanization and home to many of the largest digital content providers, Asia-Pacific is anticipated to grow 51% per annum, contributing more than 27% of Interconnection Bandwidth globally.
  • Latin America:Emerging market dynamics and growing digital business adoption positions Latin America for expected 59% per annum growth, contributing more than 9% of Interconnection Bandwidth globally.

Interconnection use cases

This year’s Index also reveals four classes of Interconnection use cases along with an IT maturity model. Adopted in combination, these use cases create a digital-ready infrastructure for today’s businesses:

  1. Network Optimization to shorten the distance between users and services applications.
  2. Hybrid Multicloud to connect and segment traffic between multiple clouds and private infrastructure.
  3. Distributed Security to deploy and interconnect security controls at points of digital engagement.
  4. Distributed Data to deploy and interconnect data analytics in proximity to users.

“As enterprises increasingly adopt hybrid cloud architectures to accelerate their digital transformation initiatives, Interconnection is a proven design strategy for reaching cloud services such as Oracle Cloud Infrastructure in an efficient manner,” commented David Hicks, Vice President, Worldwide ISV Cloud Strategy, Business Development and Marketing at Oracle Corporation.

“Direct and private interconnection to Oracle Cloud Infrastructure FastConnect network connectivity platform helps provide predictable and consistent performance, isolation and availability.”

Further information: https://www.equinix.com/global-interconnection-index-gxi-report/

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