The latest Global Interconnection Index (GXI), an annual market study published by Equinix, shows that the COVID-19 pandemic has already had a dramatic effect on how businesses are planning their digital infrastructure initiatives over the next three years. According to this, the fourth volume of the report (Vol.4), digital service providers, within industries like 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.
As the pandemic continues to accelerate the shift to digital, enterprises facilitating more remote working, such as telecommunications and cloud and IT providers, are expected to contribute to 54% of the total interconnection bandwidth growth in EMEA, outpacing other industries in the region. Frankfurt, Amsterdam, Paris and London are predicted to be the top metros in Europe for interconnection bandwidth growth, with the region as a whole expected to account for 23% (3,782 Tbps) of the projected global installed interconnection bandwidth.
The report also forecasts that overall interconnection bandwidth — the measure of private connectivity for the transfer of data between organisations — will achieve a 45% compound annual growth rate (CAGR) from 2019 to 2023, within the EMEA region. In London, interconnection bandwidth is expected to grow at the same CAGR as the wider EMEA region, to 1,337 Tbps. This growth is at least three-times higher than Paris and more than twice that of Amsterdam. This supports London’s vital position as a strategic interconnection hub for digital business looking to compete on a global scale, despite the UK’s recent departure from the European Union.
The expected growth is driven by Digital Transformation and specifically by greater demands from enterprises extending their digital infrastructure from centralised 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 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.
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 (Tbps) 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 prioritising 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 & 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 & 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 forecast to drive a combined 47% CAGR in interconnection bandwidth from 2019 to 2023.
- Organisations are benefitting from the ‘network effect’
- Organisations are maximising 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.
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 centres.
David Cappuccio, Distinguished VP Analyst, and Henrique Cecci, Senior Director Analyst, Gartner, said: “As interconnected services, cloud providers, distributed cloud, Edge services and SaaS offerings continue to proliferate, the rationale to stay only in a traditional data centre topology will have limited advantages. This is not an overnight shift, but an evolutionary change in thinking how we deliver services to our customers and to the business. This trend, coupled with the new reality that outside factors might limit physical access to the data centre (such as emergency quarantine), is driving new thinking in infrastructure planning.”
Bernard Wright, Head of IT Operations, ClearBank, said: “Across Europe, interconnection bandwidth within the banking and insurance sector is set to grow at a 37% CAGR to 310 Tbps by 2023. A key driver of this growth is the rapid adoption of cloud within the financial services industry — a trend that has accelerated significantly in recent years — and is transforming the way payments are moved between financial institutions. The use of cloud platforms is only set to grow as companies look to increase their as-a-Service offerings and diversify their portfolio of cloud service providers. To keep pace with cloud adoption, Platform Equinix gives us access to an unrivalled number of cloud providers, allowing us to provide our customers with secure real-time access to Bacs, CHAPS and Faster Payments.”
Debika Bhattacharya, VP-Global Solutions, Verizon Business, said: “With the pandemic creating a sudden global shift to remote and work-from-home practices, our customers have a renewed appreciation of the need for reliable networking solutions. Prioritising Digital Transformations and cloud connectivity is imperative. Our top priority is to provide customers with differentiated solutions to drive business agility so they can achieve their goals and mitigate risks.”
Justin Day, CEO, Cloud Gateway. said: “The COVID-19 pandemic has brought a massive wave of demand in the healthcare and life sciences sector. The immense need for urgent care has put additional stress on healthcare professionals across the country and forced many of them to adapt to new ways of providing care through virtual workspaces or online video consultations. As a result, the need for interconnection bandwidth has grown exponentially. It is predicted that by 2023, the level of interconnection bandwidth in the sector across EMEA will reach 113 Tbps, at a CAGR of 49%.
“An integral part of our hybrid cloud connectivity platform is connection to Equinix Cloud Exchange Fabric (ECX Fabric). Underpinning the platform, ECX Fabric provides the flexibility to support healthcare companies with genuine multicloud strategies, while Equinix’s rich, extensive ecosystems and 200+ global data centres ensure we can interconnect to partners, clouds and digital ecosystems everywhere, especially at this crucial time.”
Claire Macland, Senior Vice President, Marketing, Equinix, said: “Digital leaders have to prepare for post-pandemic recovery by planning and implementing the right Digital Transformation initiatives now. We believe those that have a foundational infrastructure which helps bring together all the right places, partners and possibilities will gain a business advantage over the long term.”
Eugene Bergen Henegouwen, President, EMEA, Equinix, said: “The COVID-19 pandemic has only accelerated the Digital Transformation journey that businesses across the region were already undergoing. Europe’s predicted 45% CAGR is indicative of the increased demands from enterprises to enhance their interconnection capacity in order to compete in an increasingly digital economy. It’s now even more critical for businesses to find innovative ways to interconnect with their customers and partners to gain a competitive advantage in an increasingly remote and dispersed environment.”
Russell Poole, Managing Director, UK, Equinix, said: “This latest version of the GXI clearly showcases London’s importance as an international hub for enterprises looking to interconnect strategically with businesses, ecosystems and partners around the world. London is predicted to reach 1,337 Tbps of interconnection bandwidth by 2023. This figure is not only higher than other key European cities, it also surpasses that of many other major technology hubs such as São Paulo, Silicon Valley and Tokyo.”
