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COVID-19 has dramatic effect on digital infrastructure initiatives in Asia Pacific, says Equinix

Published 16 October 2020

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Stuart
W.media | editor
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The COVID-19 pandemic has had a dramatic effect on how businesses plan their digital infrastructure initiatives over the next three years, according to the latest Global Interconnection Index by Equinix.

Private connectivity bandwidth is expected to increase fivefold by 2023 for industries like telecommunications, cloud and IT services, and technology providers. This rapid growth is driven by greater demands from enterprises to close digital gaps at the edge.

“As interconnected services, cloud providers, distributed cloud, edge services and SaaS offerings continue to proliferate, the rationale to stay only in a traditional data center topology will have limited advantages,” said David Cappuccio, Distinguished VP Analyst for Gartner, and Henrique Cecci, the Senior Director Analyst for Gartner.

Industries like banking and insurance, securities and trading, manufacturing, and professional services will represent more than 25% of interconnection bandwidth in Asia Pacific and are expected to reach a peak interconnection bandwidth growth rate of over 50% annually by 2023. 

This is led by the growing need to move workloads to the digital edge while scaling core IT infrastructure.

The report also forecasts that overall interconnection bandwidth, the measure of private connectivity for the transfer of data between organisations, will achieve a 47% compound annual growth rate from 2019 to 2023.

“This is not an overnight shift, but an evolutionary change in thinking how we deliver services to our customers and to the business,” said Mr. Cappuccio and Mr. Cecci.

The cloud and IT services segment is predicted to lead the growth in Asia Pacific, reaching an anticipated 1,374 Tbps by 2023, which is 29% more than the next largest region, North America. 

Service providers in Asia Pacific are now forecast to provision more interconnection bandwidth than enterprises by a factor of almost two times. 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.

“This trend, coupled with the new reality that outside factors might limit physical access to the data center, such as emergency quarantine, is driving new thinking in infrastructure planning,” added Mr. Cappuccio and Mr. Cecci.

Healthcare and life sciences as well as government and education are forecast to accelerate interconnection bandwidth adoption, as both industries prioritise digital initiatives such as machine learning and artificial intelligence, which are forecast to drive a combined 50% annual growth rate in interconnection bandwidth.

“Digital leaders have to prepare for post-pandemic recovery by planning and implementing the right digital transformation initiatives now,” said Claire Macland, the Senior Vice President of Marketing for Equinix.

The leading metros for private connectivity within the region are expected to be Singapore, Sydney, Tokyo, Shanghai and Hong Kong.

“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,” added Ms. Macland.

With a digital infrastructure in place, enterprises are said to extend their competitive advantage, while those without will struggle, as they are dependent on service providers to transform their business models.

By building a presence in locations with the most users and largest number of providers, which is known as the ‘network effect’, organisations are believed to maximise their digital advantage. To create a ‘network effect’ application exchange in digital ecosystems to support real-time engagement is essential.

Connectivity from service providers to networks and cloud and IT service providers will be the two main sources of ecosystem interconnection, with an estimated 52% combined CAGR from 2019 to 2023.

“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,” said Debika Bhattacharya, the VP-Global Solutions at Verizon Business.

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.

Got a story, opinion or more information on this article? Contact us at editor@w.media.
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