In the age of pervasive mobility, the Internet of Things (IoT), and cloud computing, IT users have gotten used to low-latency, always-on, anytime delivery of data and applications.
Having to deliver more data faster than ever, many organizations are pushing content, processing and peering closer to the edge of the Internet, according to 451 Research. This will lead to an inevitable change in the role of traditional data centers (DCs). Gartner predicts that 80% of enterprises will have shut down their traditional DC by 2025, versus 10% today.
Gartner also expects the topology of networked DCs to evolve over the next five years from a centralized mega DC approach to one augmented by smaller, interconnected DCs. Autonomous, independent edges communicate occasionally with a central core, rather than depend on the core for real-time computing. Such an interconnection-oriented architecture extends closer to concentrations of users and generators of content to optimize end user experience.
“The macro technology and regulatory trends for the building blocks and growth engine of the digital economy such as digital trade services, urbanization and cybersecurity risks are changing the interaction between businesses, consumer and physical infrastructure, forcing participants to rethink interconnection strategies to their counter-parties,” says Hisham Muhammad, director of Global Solutions Architect at Equinix Asia Pacific.
Degrees of separation
Indeed, Equinix’s Global Interconnection Index (GII) predicts that, by 2020, interconnection bandwidth growth will outpace that of internet traffic. Interconnections, or private data exchanges between businesses, are forecasted to grow nearly 2x faster and resulting data volume by nearly 6x faster than global IP traffic.
“This compounding year-over-year growth is primarily due to the growing need for secure and reliable interconnection services to cloud service providers and the localized integration across a company’s ecosystem of providers, partners and suppliers to build an ecosystems-based digital stack for new business models and capabilities,” Hisham added.
This is where modern enterprises stay competitive by adapting to an edge computing strategy to meet the rising demands of storage of apps, IoT and new user/machine interfaces. Factors that drive the shift tend to be the proliferating connected devices handling richer content, which also implies greater volume of traffic. Even with fiber cabling, any effort to reduce latency over wide distances is constrained by the laws of physics, such as speed of light.
Hence, locations such as Singapore and Hong Kong have become important DC and financial hubs for edge computing and interconnection-driven ecosystems. They fulfill key considerations such as support for real-time interactions to capture digital value; proximity to deliver digital services; data sovereignty regulations; strategies to address cybersecurity risks; and the need to optimize interactions and digital processes among customers, partners and employees.
Be nimble, be quick
So, while today’s cloud capabilities have made access to IT resources flexible, especially for the back office, caching data closer to users is still important. To this end, the edge will flip the cloud computing paradigm, creating ecosystems at the digital edge to manage, transfer and process large volumes of data effectively and efficiently.
Digital commerce companies, for example, can improve the customer experience by hosting their DCs in close proximity to their partners and suppliers, who directly connect to one another and bypass the public internet.
Equinix’s global interconnection platform provides access to such an ecosystem with direct, fast and secure physical and virtual interconnections among digital commerce customers, banks, retailers, mobile network operators, fraud protection services and other players in a digital payment supply chain. Real-time collaboration among them are needed to facilitate real-time interactions and allow instant and secure payments to be made by anyone to anywhere.
Equinix’s GII predicts that by 2020, direct interconnections to financial service providers that transact and exchange payments digitally is expected to grow 38% among enterprises and 34% among service providers.
One digital commerce platform provider, FreedomPay, leveraged Platform Equinix – a distributed, physical edge – to transform and expand its IT infrastructure in support of new business in the UK and Asia Pacific. The platform ensures business continuity, scalable cloud storage capacity, and fast and secure shopping experience.
As a colocation and interconnection provider, Equinix positioned FreedomPay near their business partners for consistent low-latency connection between cloud, network and business services. Through the Equinix Performance Hub, FreedomPay could work with their partners to process payments close to where they are taking place. All in, it saved £1million in both capex and opex costs.
“In the coming three years, the interconnection bandwidth consumption for enterprises is projected to be significantly higher, especially in banking and insurance,” Hisham said. “This is because enterprise organizations are seeing the value of interconnections in new ways such as connecting to clouds to deliver new digital services on demand and enabling new supply chain communication and collaboration channels to drive business more effectively.”
Indeed, Equinix has been connecting its DCs globally to expand interconnection opportunities for businesses and enable vertical ecosystems. Already, cloud, IT and telecommunication service providers are consuming the most interconnection bandwidth as they serve growing demand from enterprises, their customers and ecosystem partners for IT at the edge.
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