Digital everything, everywhere is the mantra of businesses throughout the world. To the chagrin of consumers, workers, and data centers alike, it’s about adapting or risking being left behind. This applies to everything from schools and remote learning to sectors, like the automotive industry, banking, health care, farming, transportation, energy, and almost anything else that can be automated, programmed, and digitized. Enabled and powered by the internet, almost anyone with access can order and review products/services, make payments, watch movies on demand or live TV, learn, and exchange information. With cloud computing becoming further adopted, localizing data and access points is more important than ever before.
Michael Leidinger, senior vice president and CIO of Hilton, put it most succinctly when he said, “One part of the digital experience in a global company is how to localize — getting the content and applications as close to the customer as possible [by] distributing content and core application functionality effectively to multiple locations around the world and out to the edge.”
Hilton moved away from centralized data centers to build instances wherever hotels are being built, bringing the digital experience as close to customers as possible.
“That's absolutely critical,” Leidinger said. “It's all about resilience and performance.”
This testament is further supported by a survey commissioned by DE-CIX with Research in Action that included 400 enterprise companies — 200 from Germany and 200 from the U.S. — each with a workforce of more than 2,500 staff and minimal revenue of $250 million.
Key data points garnered from the survey indicate that three-quarters of companies with a workforce of more than 2,500 are planning to upgrade their connectivity solutions for remote working within the next two years. With this drive to enable work-from-home (WFH) capabilities for employers, connectivity to internet-based cloud applications is important. To accommodate WFH, enterprise businesses must have consistent performance for employees to access cloud-based applications. Unfortunately, that is often not possible today. The DE-CIX survey revealed that 80% of enterprises are experiencing an increase in performance issues with enterprise-grade software packages, such as Microsoft 365. This feedback exemplifies the issue of a distributed and remote workforce and how digital localization is required to reduce latency and improve connectivity, access, and performance for everyone.
Data Centers: the Epicenter of Connectivity
Interconnection and connectivity commonly take place in colocation or data center facilities, purpose-built with the space, power, and infrastructure to support large-scale computing. Data centers offer a natural interconnection point, as many customers require connectivity in and out of the facility with the need to ensure network diversity and redundancy. Furthermore, these customers also need direct access to applications and service providers, such as cloud operators. Inherent in a data center’s business plan is the ability to provide connectivity access in and out of its facilities in a variety of flavors to meet the varying needs of its customers. Most data center operators offer a meet-me-room (MMR) to facilitate interconnections — this centralizes the ability to connect networks and can be done automatically with the right MMR platform capabilities.
With no other capabilities apart from space, power, and an MMR, data centers are at the epicenter of connectivity. While most data center operators recognize their positions as confluence points for their customers, space and power are primarily real estate talk. As such, facility managers enable horizontal solutions by providing space on the data center floor with access through cabling to reach other customers in a managed central location. However, the real opportunity for data center operators lies within the capabilities that only network solutions can deliver — the internet.
As we consider the data center model, most operators focus on a horizontal plan to fill up their spaces and to provide power and connectivity. What happens in the cabinets, cages, or four walls of a private suite is up to the customer to then optimize. Since connectivity is the cornerstone byproduct of a data center, operators have an opportunity to explore additional revenue streams by considering a vertical product plan.
Horizontal Versus Vertical Solutions
Traditionally, we consider data centers as a horizontal model, where customers expand by taking more space (additional square footage) and power. However, operators should also consider a vertical model, one that can expand a company’s product suite up the OSI stack into services, including cloud-based solutions, automation, applications, and more.
Although real estate expertise is prevalent across a data center provider, tapping expertise to identify product opportunities up the “stack” can make a greater impact on a company’s bottom-line than just acquiring more real estate. A key requirement to do so is an interconnection platform. These are typically enabled by third-party providers. By taking a position in owning an interconnection platform, data center operators can work in partnership with a platform operator to enhance their customers' ecosystems much in the same way their physical MMRs do today.
Interconnection platforms, operated and powered by professionals, provide data center operators an effective and successful solution to building private and public ecosystems for their customers. The platform can serve as a virtual MMR across a data center operator’s entire footprint, enabling private interconnection across a company’s dispersed customer ecosystem. Fortified with security features to ensure data residing in a closed ecosystem is secure, customer networks can achieve a lot more within the four walls of a facility. Developing this kind of interconnection gravity can have a multifactor impact on the business value of a data center by meeting the needs of large enterprises on the road to digitalization. This is what the vertical model is all about.
For digital interconnection platforms to succeed, there must be an inherent ecosystem ready to be accessed without the wait for networks, customers, and others to join. Data center operators should consider how they manage the platform, where and how it connects its private facilities, and where and how it connects to the public internet, cloud, content, and other providers. Whether it’s for private interconnection, public internet access, or more secure and direct cloud connectivity, data center operators should challenge themselves to consider how they can further enhance their services for customers by shifting from a horizontal model to a vertical model.
Once data center operators understand the vertical model and its impact on business, expanding facilities horizontally, and into new markets, can be analyzed differently. Since not all markets are the same, and each market’s demands and needs are different, how a company’s interconnection capabilities can bring content and applications closer to the edge is a vertical business solution that can help cost-justify expansions. As digitalization at the edge continues to be needed, data center operators are challenged to consider how they can adjust their business models – including the way they design and support smaller facilities in hard-to-reach locations.
By adopting an interconnection-focused approach to data center deployments, operators can leverage the connectivity and ecosystem from more mature locations to uplift a new market relatively quickly and effectively. There are a number of ways that this can be done cost-effectively and efficiently.
Data center operators throughout the world recognize the need to empower their customers through their own digital ecosystem. Knowledge and know-how are the common factors for data center operators inhibiting exploration of how to do so. Today, there are a number of ways data center providers can expand their “vertical footprint.” If this expansion is not already underway, it’s time to start — because you may be soon left behind.