Building data center business with interconnection

Ivo Ivanov, CEO of DE-CIX International

According to recent market research, over 60% of enterprises with a workforce of more than 2500 consider a holistic approach to interconnection to be strategically important. Enterprises have concerns about the security and confidentiality of their critical data (50%) and want private connections to the cloud and other resources that bypass the public Internet (40%). Finally, for the new business models they are developing, enterprises need to exchange data with an increasing number of trusted partners (e.g., suppliers, retailers, digital content and cloud application providers, etc.) across multiple sectors and geographical regions. Therefore, interconnection is becoming paramount to their digitalization strategy.

Enterprises need a new interconnection model that brings them closer to their customers and partners and allows them to interconnect directly. As a result, interconnection is also becoming paramount to the future of data center business. So data centers need to become more than simply a closet offering power, physical security, and uptime. Enterprises are being faced with infrastructure challenges for which data center operators can offer easy solutions. These challenges are: a) increasing the performance and strengthening the security and resilience of their connectivity, b) ensuring their flexibility by avoiding vendor lock-in, c) reducing the complexity of their connections to partners, and d) increasing their control of compliance within their ecosystem of partners. For these challenges, enterprises must be able to control their infrastructures and data flows.

Therefore, data centers need to accommodate a new set of KPIs: local access to a greater density and diversity of networks, greater geographical coverage of interconnection infrastructure, and a variety of scalable and customizable interconnection services to support enterprise digital transformation. No data center operator can hope to offer all of this on their own. Therefore, to effectively meet the demands of customers for seamless and efficient interconnection – across cities, countries, continents, and oceans, and regardless of location – and make their own facilities more attractive, data center operators need to be part of a healthy and vibrant interconnection ecosystem. Experience shows that the most effective way to achieve this is through the presence of an Internet Exchange (IX) in the data center. Whether this is home-grown or externally operated depends on the conditions in which the data center operates. Whatever the case, now is the time for data center operators to take decisive action.

The virtual MMR – how to achieve network density as a data center

Today, connecting with other networks only present in one data center facility is no longer conducive to growth: When choosing a data center operator, enterprises are demanding network density – vastly more networks than a single data center operator can hope to accommodate alone. Therefore, data centers need to ensure that they are part of a wider ecosystem that does not solely revolve around their own customers. They can do this by joining an open and distributed Internet Exchange ecosystem – one that is data center and carrier neutral – where as many networks as possible meet. This increases the network density at the data center, with a flow-on effect for the latency and resilience of connections, creating a competitive advantage for the data center.

Think beyond the physical cross-connect – modern interconnection services add value

In today’s world, the physical cross-connect is also no longer sufficient. Enterprises are demanding specialized interconnection services to support their transformation process. Data center customers are seeking direct, dedicated, and multi-homed access to their resources and applications sourced from a variety of clouds. They want access to DDoS protection and network security services. And beyond all of this, they also need simplicity in the booking and cancelling of interconnection services and cloud connectivity, as well as the enablement of an interconnection fabric API that they can embed in their own systems.

Again, all this is not something that a single data center operator will be able to provision in isolation. Here, they will need to work with an interconnection partner that can deliver customized, low-latency, and secure interconnection services, integrated as part of a large ecosystem of thousands of networks, well distributed, as local as possible, and as global as required. For the data center operator, this brings new opportunities to package and sell interconnection/connectivity services on to their enterprise customers.

The bundled power of a neutral interconnection ecosystem

Further, enterprises want flexibility. Not only do they want access to a large ecosystem of networks, but they also want to know they can change providers according to their strategic and business needs. This means they need diversity in the ecosystem, not just size. Therefore, the neutrality of the interconnection ecosystem is central, as it is the only way an enterprise can be sure to avoid vendor and provider lock-in.

Destination IX: How to build your interconnection business as a data center

Take the DIY road and create your own IX: A rewarding undertaking, but it requires consistent effort and specialist interconnection knowledge to grow the ecosystem to get the most out of it. The more your ecosystem grows, the more gravity it will generate, making it more attractive for further networks to join. However, developing that initial gravity can be challenging. Furthermore, if your platform is only available in your own facilities, it is a closed environment that does not offer the benefits of a broader interconnection ecosystem. Therefore, if you do choose to do it yourself, you should also make your platform open to other data centers.

Partner with an interconnection specialist: An interconnection specialist can offer the know-how and experience, but also a ready-made ecosystem, to enable an immediate offering for your DC customers. However, the choice of partner is crucial because, to get the most out of your interconnection ecosystem-building, you need a partner that is open and neutral.

If your data center is within the geographical proximity of an existing open and neutral IX, the best option would be to become an enabled site of that IX. Doing so embeds your DC within this ecosystem so that you can capitalize on its interconnection gravity. Depending on your partner, this allows you to enrich your portfolio with interconnection services, offering your customers and prospects access to a diverse ecosystem of network, content, cloud, and application providers, as well as interconnection services specifically designed for the needs of enterprises.

 If, on the other hand, your DC is operating in a greenfield interconnection market, the alternative would be to work with an interconnection partner that offers Infrastructure-as-a-Service (IaaS) solutions. Along with the advantages of having seasoned experts build and operate your IX, you have an additional benefit if the operator allows your IX to be integrated within their own ecosystem.

A solution to the challenges of digital transformation

In the face of increasing demands on data center interconnectivity, the only way forward is to join together with others. Whichever way a data center operator chooses to approach the interconnection business, when it comes to nurturing a diverse and healthy interconnection ecosystem, there needs to be recognition that openness – engaging with competitors – and neutrality enables a heightened value proposition for customers. And that working with a neutral specialist interconnection provider will offer a competitive advantage through increased network density and customized interconnection services to provide added value to data center facilities. There is strength in numbers that vastly surpasses what each of us can achieve in isolation. And this strength will help overcome the challenges of digital transformation.