The COVID-19 pandemic has forced businesses to transform how they operate, driving extraordinary demand for digital service providers and a need for increased interconnection—private data exchange. Organizations that lack a robust digital foundation have struggled with this rapid shift in demand.
Service provider interconnection bandwidth growth is accelerating, surpassing enterprises that are typically still undergoing digital transformation. Enterprises have prioritized immediate connectivity issues and cost reduction, but the leaders—those that have built a foundation to fully digitize—have accelerated their plans and are extending their advantage.
Five trends are impacting today’s digital transformation challenges, requiring interconnection as a solution.
As new demand for distributed digital engagement rises, businesses need to solve remote workforce, network efficiency and workflow latency issues.
As population centers grow, businesses will have greater demands for distributed compute, and will need to manage the complexities of localization.
By 2030, urban areas are projected to house 60% of people globally, and the number of cities between 1 and 5 million people will grow to nearly 600.
As the number of user devices and cloud resources increases, organizations must solve for distributed security risks.
A majority of the world’s ever-increasing data volumes are not being leveraged for actionable insights.
API-driven application exchange issues, real-time engagement, multiparty workflows and dynamic service chains require on-demand connectivity to a variety of ecosystems at the lowest latency.
Leverage digital interconnection on a secure, agile global business platform and solve your digital transformation challenges.
The GXI predicts interconnection bandwidth—the total capacity provisioned to privately and directly exchange traffic—to grow, even as the overall economy slows down. This shows that digital economy growth is not directly tied to the physical economy and cannot be estimated based on traditional economic trends (such as the GDP).
Global interconnection bandwidth is forecast to grow at a 45% CAGR—translating to 16,300+ terabits per second (Tbps).
North America leads globally, and service providers lead the growth, showing a greater than 4x increase in interconnection bandwidth.
In Asia-Pacific, Cloud & IT Services is forecast to have the largest growth of any region in this sector. Healthcare & Life Sciences and Government & Education both show an acceleration in interconnection bandwidth adoption as both industries prioritize digital initiatives.
Europe is predicted to grow at a steady rate as Telecommunications and Cloud & IT Services contribute to 54% of the interconnection bandwidth growth, outpacing many industries.
Latin America is predicted to grow at an impressive rate. Content & Digital Media is expected to grow at a 62% CAGR, making it the highest growth rate of any sector in any region.
As digitization increases, installed capacities are forecast to grow at a tremendous rate for industries across regions.
Rapidly shifting requirements drive service provider growth to meet infrastructure needs and rising demands from enterprises.
Healthcare & Life Sciences and Government & Education lead the traditional enterprises in their interconnection bandwidth growth rate as public and private initiatives drive a combined 47% CAGR. This group is forecast to experience 4x the growth over the next five years as it adopts service provider best practices for digital infrastructure deployment.
YoY growth rate by 2023
Service providers, covering sectors like Telecommunications, Cloud & IT Services and Content & Digital Media, have digital traffic flows as a primary element of their business model. Their surplus network capacities are meeting their needs as well as supporting enterprises in building out digital workflows. These fully digitized companies are predicted to experience a 50% CAGR, driven by the increased demands by enterprises at the edge and a requirement to support initiatives like 5G, AI and Edge Computing.
Growth over the next four years
Enterprises and service providers are leveraging interconnection to support these processes by connecting to strategic ecosystems, both in the cloud and at the edge.
Interconnection to Networks—67% of ecosystem connectivity demand from 2019-2023
Organizations interconnecting to Networks shifts from 73% of all interconnection use cases to 67% as organizations mature and demand for additional use cases increases.
Interconnection to Cloud & IT Providers—16% of ecosystem connectivity demand by 2023
Interconnecting multiple Cloud & IT Providers across multiple locations and cloud regions represents the fastest growing use case of interconnection bandwidth, growing to 16% of ecosystem demand by 2023.
Interconnection to Financial Services Providers, Payments, Content Providers and Supply Partners—remaining 17% of ecosystem connectivity demand
Interconnecting digital business partners for Financial Services Providers, Payments, Content Providers and Supply Partners integration makes up the remainder of interconnection bandwidth use cases (17%).
Get an in-depth analysis of what’s happening across the global interconnection landscape in the new digital economy.
The GXI identifies three typical paths that innovative organizations and digital leaders take by transforming through a five-step process to achieve an end state of digital-readiness. Benchmark your organization.
Transform WAN architecture by removing the distance through an initial hub deployment. Expand capabilities to the edge and optimize last-mile connectivity.
Connect to multiple clouds in strategic locations with high concentrations of cloud and network providers and establish a second hub for business continuity. Scale capability across regions.
Distribute secure infrastructure and edge services to support DDOS/WAF, CASB, SASE and other capabilities across hubs needed to locally secure digital interaction.
Deploy edge computing to support AI and machine learning solutions for local analytics of large pools of data. Establish cloud adjacent data infrastructure to leverage cloud analytics and ecosystem exchange.
Build out digital infrastructure at strategic exchange points for real-time participation in data marketplaces, industry exchanges and B2B real-time processing.
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