There’s a digital transformation development that’s been happening a bit under the radar, but it’s one that could radically transform the way businesses communicate. That is the trend toward bypassing the Internet in favor of direct connections between organizations.
Interconnection Takes Off
There’s no question that the Internet has been a boon to business, but with all its challenges (security, performance, compliance, etc.), it’s no surprise some businesses might consider bypassing it all together. In fact, according to a new study from Equinix, increasingly more businesses are doing just that.
Interconnection is the electronic exchange of information through direct, private connections between organizations. Through their research, Equinix found that interconnection traffic is growing at a CAGR of 48 percent as compared to a CAGR of 26 percent on the Internet.
The benefits of direct, private connections are obvious, but consider a few data points:
- By 2021, the global cost of cybersecurity breaches is expected to reach USD 6 trillion annually.[1] Direct, private connections help mitigate the risks.
- Currently, over 18 major countries globally block the transfer of data outside their borders.[2] Direct connections give organizations more control over the flow and ultimate destination of their data.
- Business ecosystems are growing. Sixty-three percent of C-suite executives believe their organizations will continue to expand their networks of business partners.[3] Direct connections between business partners will speed the flow of data while keeping it secure.
A Business Use Case: Supply Chain Optimization
There are countless business use cases for interconnection making hard to choose one to focus on, but the challenges associated with supply chain optimization are all too familiar to many telecommunications providers. The average supply chain can include hundreds of partners: manufacturers, distributors, third-party logistics, retailers, service providers, etc. Coordinating the flow of goods and information between partners has always been a challenge – and a competitive advantage for those organizations that accomplish it well.
The ability to create a private network of partners can improve communication and accelerate business throughout the supply chain by making collaboration faster, more effective, and more secure. Attempts at this form of networking have been around for decades, instituted by associations, private organizations, and others, but rarely have they covered more than one leg of the supply chain (e.g., manufacturer to supplier).
The capabilities now exist through technologies like Equinix’s ECX FabricTM to broaden the scope significantly and potentially transform what we consider a “supply chain.” The supply chain of the future may quite possibly be ecosystems of businesses collaborating, almost as though they were a vertically integrated business. Your competitive advantage may not have as much to do with the competencies within your four walls as it does with your ability to join the right ecosystem and add value to it.
Interconnection will also be instrumental in supporting the Internet of Things (IoT), especially on the industrial side of the equation. Forrester data shows that 63 percent of global enterprise telecom decision makers are implementing, expanding, or planning to implement IoT solutions across all major industry categories, and IoT direct spend will exceed USD 400 billion by 2023.[4] The use cases are varied, but the supply chain example we provided above will likely be populated extensively with both autonomous devices as well as intelligent man-to-machine interfaces.
Long Live the Internet!
So does interconnection spell doom for the Internet as we know it? One never knows what the future holds, but it doesn’t appear the Internet is receding any time soon. In fact, the consumer side of the equation is vital, and here, the public Internet remains a permanent force.
Respondents to a survey commissioned by Facebook say that “the Internet has helped them become more independent and economically empowered.” That’s good news for low-income economies where access has increased by 65.1 percent as compared to 8.3 percent worldwide.[5] This is good news for businesses, as these markets represent millions of potential consumers of goods and services. The Internet is the path that brings them to your door.
If anything, we’re entering an age where the Internet reigns supreme. In a recent IBM study, two-thirds (68 percent) of C-suite executives expect organizations to emphasize customer experience over products. Consumer and business buyers in developed economies already do a significant amount of research online before making a purchase. As they come online, buyers in emerging economies are sure to do the same. How companies leverage the internet to reach existing and potential buyers will be a powerful factor in their future success.
Attend PTC’19 in Honolulu as We Explore These Concepts and More
If you’re attending PTC’19 in Honolulu, be sure to add the session Data to the Masses! An Exploration of Networks and Transformation to your agenda. In this session, moderator Eric Hanselman, Chief Analyst for 451 Research, will be joined by many of the experts cited in this article to discuss their research and views on the future of connectivity and networks.
The expert panel will include:
- Tony Bishop, VP of Global Enterprise Vertical Strategy & Marketing, Equinix, USA
- Robert Pepper, Head of Global Connectivity Policy and Planning, Facebook, USA
- James Staten, VP & Principal Analyst – CIOs & Digital Transformation, Forrester Research, USA
- Rob Van Den Dam, Global Telecommunications, Media and Entertainment Industry Leader, IBM Institute for Business Value, NetherlandsSee you there!
[1]Cybersecurity Regained: Preparing to Face Cyber Attacks, EY, 2017
[2]Cross Border Data Flows, ITIF, 2018
[3]Global C-Suite Study, IBM, 2018
[4]Make Room for the Autonomous Edge in Your IoT Strategy, Forrester, December 2018
[5]The Inclusive Internet Index, The Economist Intelligence Unit, February 2018
