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Why interconnection is the building block of APAC’s digital transformation

20 Mar 2018

It is forecast that by 2021, 25% of the world’s economy will be digital, up from 23% in 2016.

Digital is the growth engine of this global economy and interconnection has a fundamental role in helping to scale the building blocks of our highly virtualized world and achieving the Digital Transformation goals of today’s leading enterprises.

In Hong Kong, businesses have responded late to Digital Transformation. Playing catch-up, a lot of enterprises are now going through their own transformations quickly as they realize it is key to staying relevant.

Hong Kong, in general, is a cautious market; businesses don’t jump feet first – they wait for industry movements, assess these movements to see if they’re a fad, and ask themselves, “Do we really need to do it?”

However, there is now a step change in this thinking, as the benefits of transformation in other markets become increasingly apparent and harder to ignore.

Turning digital into reality

Speaking at the CIO Leadership forum in Hong Kong recently, it was clear from my conversations that Digital Transformation is now being seen cross-sector: from traditional retail, which went online and now has morphed into true omni-channel, to the ride-sharing revolution we have seen in transportation, through to the digital delivery of telecommunications and entertainment.

This has resulted in the most current iterations of global digital ecosystems now being made up of service providers in content, financial, and cloud, as well as enterprises operating across digital, payments and the internet of things, and all scaled to benefit from the outwardly blooming digital economy via one core component – interconnection.

Companies across the region are beginning to understand the importance of this interconnection building block. According to the Global Interconnection Index, published by Equinix:

  • Hong Kong has the fastest growing Interconnection Bandwidth in Asia-Pacific, with 149 Tbps and a projected growth of 51% CAGR by 2020. 
  • Regionally, it is anticipated that the Interconnection Bandwidth will reach 1,120 Tbps and a projected growth of 46% CARG by 2020. 
  • Banking & Insurance sectors in Asia-Pacific will grow at 71% CAGR to support new digital engagement models. 
  • Cloud & IT Services will consume the most Interconnection Bandwidth, reaching 20% of the forecast for Asia-Pacific. 

Learning from past mistakes

Everyone wants to be digital; people want customer-facing apps that work seamlessly, and businesses want to operate digitally in order to remain relevant and evolve.

Given the exponential growth in bandwidth required for this to work, the only way it can be sustained is through detailed and intelligently deployed Interconnection, and the solid backbone upon which it is deployed.

Those who fail to innovate are quickly left behind. Take Blockbuster Video, which was reluctant to embrace streaming, thinking that it would never be viable.

Then bandwidth got cheaper and more available, and along came Netflix. Technology is a game-changer when it first becomes available and then change comes and systems become outdated and have to grow and evolve once again.

The situation is somewhat ‘chicken & egg’ in the respect that change comes via apps, software and adoption, and yet the infrastructure needs to exist already for this to happen.

Uptake has been slow in Hong Kong, but now enterprises are beginning to make investments as these ecosystems reach their tipping points.

This is particularly apparent in the city’s retail industry, where bricks & mortar retailers face tough competition online and unmanageable rental prices. Yet whilst it’s becoming increasingly expensive to operate in retail, innovation is thriving, as businesses embrace digital media, omni-channel strategies, tracking and AI.

For example, a leading Hong Kong jewelry business is seeking to deploy end-to-end accounting for its diamond products to demonstrate authenticity to consumers.

By interconnecting the systems involved at every touchpoint – from diamond extraction through to distribution, setting, polishing and finally to the point of retail - customers can have confidence that the product they receive is authentic.

A great demonstration of how digital innovation is able to add value and profitability to traditional sectors.

Powering intelligence at the digital edge

The CIO Leadership Forum allowed Equinix to connect directly with key enterprise stakeholders and understand the challenges they face in remaining relevant.

Speaking on the topic of “Powering Intelligence at the Digital Edge”, I wanted to show those in attendance that putting infrastructure in place to scale IT for success in the digital economy is essential.

Businesses in Asia-Pacific need to understand that they can prepare for Digital Transformation by deploying intelligently and moving closer to the edge, where the internet traffic meets the applications, where users need data and enterprises must make it most available.

Our partners who are best placed to unlock digital value are those who are aligning business and IT strategies to ensure their own success, embracing the latest architectures and ecosystems along the way.

And to support this, what is needed is a fast, secure and robust infrastructure, which is both physically and virtually connected across continents and metros.

With this backbone in place, the meat on the bones – namely the planet’s insatiable demand for digital – can be allowed to reach everywhere, interconnect everyone, and integrate everything.

Article by Alex Henshaw, Equinix Blog Network

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