New Study Details Digital Adoption Speed in APAC

Image credit: iStockphoto/kasezo

It is now a well-known fact that COVID-19 is accelerating digital transformation to more incredible speeds. The metrics are less clear.

The latest Global Interconnection Index (GXI), an annual market study published by Equinix, offers some quantifiable answers.

According to the report, digital service providers within industries like telecommunications, cloud & IT services, content & digital media, and technology providers, are forecast to increase private connectivity bandwidth by five times by 2023.

Edge matters

A greater demand from large enterprises to close digital gaps at the edge is a significant reason for the acceleration.

“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. This is not an overnight shift but an evolutionary change in thinking how we deliver services to our customers and to the business. 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,” wrote David Cappuccio, distinguished vice president analyst at Gartner and Henrique Cecci, senior director analyst at Gartner.  

Traditional business within industries like banking & insurance, securities & trading, manufacturing, and business & professional services, will represent more than 25% of interconnection bandwidth in Asia-Pacific by 2023. This is led by the growing need to move workloads to the digital edge while scaling core IT infrastructure.

By 2023, these traditional businesses are expected to reach a peak interconnection bandwidth growth rate of over 50% annually.

Interconnection accelerates

The Equinix report forecasted that overall interconnection bandwidth — the measure of private connectivity for transferring data between organizations — will achieve a 47% compound annual growth rate (CAGR) from 2019 to 2023.

APAC will see Cloud & IT Services taking the lead the Asia Pacific’s growth, reaching an anticipated 1,374 Tbps by 2023. This is 29% more than in North America for the same sector.

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

“Digital leaders have to prepare for post-pandemic recovery by planning and implementing the right digital transformation initiatives now,” said Claire Macland, senior vice president of marketing at Equinix. “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.”

Shifting adoption

According to the report, the digital adoption pattern has altered.

Service providers in Asia-Pacific now forecast to provision more interconnection bandwidth — 2,943 Tbps by 2023 — than enterprises, by a factor of nearly two times.

However, much of this service provider demand is anticipated to support enterprises that are prioritizing their digital transformation in preparation for post-pandemic recovery.

The report also predicted that enterprises with a digital infrastructure will extend their competitive advantage and lead to business growth. At the same time, those without one have struggled and are dependent on service providers to transform their business models.

Meanwhile, healthcare & life sciences and government & education are expected to lead the traditional enterprises in their interconnection growth rate as public and private initiatives in AI and machine learning are forecasted to drive a combined 50% CAGR in interconnection bandwidth from 2019 to 2023 in the region.

Network effect

Organizations are maximizing their digital advantage by building a presence in locations with the most users, the largest number of providers, and the densest activities, known as the “network effect.”

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.

The need for application exchange in digital ecosystems to support real-time engagement is essential and creates a network effect for businesses.

The Equinix report predicted that connectivity from service providers to networks and cloud & IT service providers will be the two primary sources of ecosystem interconnection, with an estimated 52% combined CAGR from 2019 to 2023.

Image credit: iStockphoto/kasezo