This sponsored thought leadership article was authored by Sean Baillie, Executive Vice President, Connectivity Strategy at QTS Realty Trust
While the unprecedented global pandemic has paused our lives for more than a year and a half now, it has not slowed the massive digitization of data, often referred to as digital transformation, that is now a primary challenge as businesses evolve their digital strategies.
Digitization of the enterprise, and the resulting digital services, are rapidly increasing requirements for larger technology stacks to store, compute, analyze and connect the data. Supporting this is the Valuates Report that projects the global data center market for power increasing from $15 billion in 2020 to $21.5 billion by 2026.
As a result, enterprise digital infrastructure deployments are accelerating, expanding and starting to take on junior hyperscale-like requirements for space, power and connectivity. What used to be normal enterprise requests for 250-500 KW environments are now requests for multi-megawatt, multi-site, multi-geography engagements.
Growth of Connectivity Ecosystems
Along with the space and power growth, demand for bandwidth of all types is also expanding. Requirements for connectivity sophistication are increasing as large enterprises shift to digital models required to get their digital services to more customers on a global scale. This is necessitating direct access to a myriad of internet, cloud, SD-WAN, transport, dark fiber and subsea networks.
As a result, enterprises are hiring network and connectivity specialists, and in some cases, hiring them from the hyperscalers. And it stands to reason, because if you’re going to deploy one, two, three, four+ megawatts, with the associated capital required, you must ensure that your network strategy is as well thought out as your colocation strategy is.
We are hearing it in virtually every discussion with customers and prospects. If you are lacking in dense connectivity ecosystems and the strategy to expand them, you aren’t going to win with the enterprise. And as evidenced by our financial performance we are winning at a healthy rate.
Digital Transformation’s Impact on Connectivity
I think we reached an inflection point this year. Until recently, IP networks and cloud on ramps were exclusively housed in carrier hotels, and, if your workloads weren’t in those buildings, you had to buy metro backhaul to get to these networks. This adds complexity, risk and expense to your networks.
This is changing. Fiber and transport have been spreading out (decentralizing) for over a decade, routers are next. The routers are the ingress and egress to the internet networks and the cloud networks, and are starting to decentralize beyond carrier hotels and into alternate locations, like QTS. This is a very important trend, offering more access locations and better overall architecture mitigating risk and expense. And this trend will continue. The acceleration of delivering digital services relies on the continued decentralization of Internet and cloud ingress/egress points. This is what we are ultimately addressing at QTS.
Post-Pandemic Demand Increasing
As we weather the pandemic, we’re bullish when analyzing colocation and connectivity demand as a whole. The enterprise migration out of on-premises data centers into multi-tenant colocation facilities is increasing. The number, and size, of colocation opportunities is growing.
Multi-tenant colocation facilities long ago reached the point in cost effectiveness, operational expertise and validated service offerings that the idea of enterprises building and operating their own data centers does not make financial or operational sense. Enterprises are increasingly understanding this and embracing the place that third party colocation plays in their overall digital strategy.
Learn more about hybrid and hyperscale colocation by contacting QTS.
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