Rise of the interconnected era

Equinix Australia Pty Ltd

By Jeremy Deutsch, Managing Director, Equinix Australia
Monday, 20 June, 2016

Rise of the interconnected era

A radical reinvention of IT is imminent, with the number of interconnected enterprises set to more than double to 84% by 2017.

Our world is increasingly interconnected. By 2020, the digital universe will reach 44 zettabytes, meaning there will be nearly as many digital bits as there are stars in the universe. In this new social and mobile-enabled landscape, we are in a constant state of cloud-fuelled collaboration and communication. Whether born-digital millennials or reinvented baby boomers, we are now all ‘omnichannel’ consumers who consider anytime, anywhere, any device connectivity the norm.

In this new interconnected era, organisations can’t go it alone when it comes to creating value. They must rely on each other — and interconnection — to succeed. And they need an interconnected IT strategy to position their enterprises for growth.

Modern interconnection establishes direct and secure physical or virtual connections between an enterprise and its partners, customers and employees. This new level of interconnection has become essential to market differentiation and growth, and a recent Enterprise of the Future survey of 1000 IT decision-makers by Equinix revealed that businesses worldwide have developed a vast and accelerating business appetite for it.

Among the key survey findings:

  • Revenue growth is the enterprise’s top priority, and the top IT strategies to drive growth are all heavily interconnection-dependent.
  • 3-in-5 businesses believe interconnection is “very important” to their ability to compete.
  • The number of interconnected enterprises worldwide is set to more than double by 2017 — increasing from 38% to 84%.
  • The benefits of interconnection are real and quantifiable — more than a third of survey respondents who have already deployed interconnection solutions report greater than $10 million in value created, with 58% reporting this value came from increased revenue opportunities.

The survey results demonstrate that not only do enterprises understand the value of an interconnected IT strategy, they are aggressively pursuing it.

The interconnected era is here

The Enterprise of the Future survey explored the priorities and perspectives of the IT leaders who are shaping the interconnected era, including CIOs, CTOs, chief architects and network and application vice-presidents across 14 countries.

Global awareness of interconnection was strong across the board among survey respondents, with 75% of global businesses extremely or very familiar with it.

The survey uncovered a diversity of views, but there was no doubt about the top strategic goal of enterprises worldwide. Respondents in 12 of the 14 regions surveyed ranked revenue growth as their most important IT priority, with employee productivity a distant though significant second at 23%. The findings underscore a broader shift in attitudes about IT’s increasing role in driving revenue growth. In a McKinsey & Company survey of executives, 29% of respondents said they expected IT-enabled business innovation to account for more than half of their company’s earnings growth from 2012–2017, up from 18% two years earlier.

As interconnection becomes a prerequisite for success, businesses are mobilising to become more interconnected. The Enterprise of the Future survey indicates that interconnection-driven enterprise transformation is imminent, with the number of interconnected enterprises set to more than double from 38% to 84% globally by 2017.

Battling old IT architectures

Even as companies increasingly turn towards direct and secure interconnection, they face significant obstacles adapting old systems to a new world. Today, there are more users, more devices, more locations and more data than ever, and everyone needs everything in real time. The following statistics illustrate how the digital enterprise is more dispersed, connected and cloud-dependent than ever:

  • 75% of enterprise employees reside in locations other than the corporate headquarters.
  • 82% of enterprises report a multicloud strategy.

The problem is that existing, highly centralised IT architectures, which are often contained in on-premise enterprise data centres, are struggling to scale to meet the growing numbers of dispersed users with which they interact. These complications were widely acknowledged by survey respondents, with 51% calling siloed business and IT architectures a “very important” barrier to their company’s IT agenda.

Today’s enterprise-grade interconnection must be fast and distributed to the edge, and close to high concentrations of users to meet increasing performance, security and compliance demands. It must be agile enough to scale up or down as workloads change. It must remove the security risks that get in the way of exceptional performance and on-demand responsiveness. At the same time, interconnection must encompass multiple network and cloud services while expanding computing, application and analytics capabilities.

Only private and distributed interconnection can deliver all that. The internet simply can’t.

Solving business problems

A Forrester study, The Total Economic Impact (TEI) of Equinix Interconnection Solutions, offered evidence of the benefits of direct interconnection.

  • Greater interconnection enabled higher systems uptime (supporting 99.9999% on average), with 15% fewer network incidents and outages, leading to reduced labour costs.
  • Major cost reductions were realised by migrating to a multicloud interconnection strategy to deploy and scale applications with lower-cost cloud service providers, versus running them internally.
  • Increased interconnection contributed to a 42% average reduction in latency and 40% reduction in bandwidth costs, due to more proximate interconnectivity between the organisation and its employees, partners and customers.

Direct and secure interconnection also has a significant positive financial impact on the enterprise. The Enterprise of the Future survey showed that more than a third (37%) of businesses that have deployed interconnection solutions reported at least $10 million in value created. Revenue opportunities accounted for the bulk of the value creation at 58%, while the other 42% of respondents attributed the value of interconnection to cost savings.

Traditional enterprise IT is not built to compete in the interconnected era. Existing architectures are highly centralised and can’t scale to meet the increasingly mobile enterprise end user. This reality is forcing a broad IT rethink as enterprises move direct and secure interconnection into their strategic centre. With 84% of enterprises intending to be interconnected by 2017 — more than double the number of interconnected enterprises today — we are on the precipice of a massive interconnection-led reinvention of enterprise IT.

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