Internet exchanges and cloud exchanges interconnect their end customers and cloud service providers (CSPs) around the globe. They also orchestrate hybrid and multi-cloud solutions across multiple global locations. Here, we’ll look at the key business trends in the interconnection space, as well as common issues and how they may be addressed.
What Are the Major Trends?
Hosting and colocation providers are offering higher value cloud exchange or cloud connect services to provide direct connectivity for their end customers to global carriers, service providers, Internet exchanges, content delivery networks, cloud service providers and other ecosystem partners. In all, colocation is growing at a double-digit CAGR into a market that is expected to exceed $50B USD (source: www.openpr.com).
Furthermore, many Internet exchange providers (IXPs) now collaborate with cloud interconnection services to provide a one-stop option to one or more cloud providers such as Microsoft Azure, Google Cloud Platform, Netflix, YouTube or Amazon Web Services. For example, IXPs such as AMS-IX are collaborating with cloud interconnection partners such as Megaport to provide multicloud connectivity and peering (source: www.ams-ix.net).
How Are Customers Driving This?
End customers (both enterprises and service providers) expect agility, in terms of the ability to deploy services rapidly. They also expect stringent service level agreements (SLA) and operational efficiency. Partnerships such as these facilitate incremental revenue opportunities by attracting new customer types, and boosting customer retention by making them more competitive.
Issues and Concerns
Even with the high growth opportunities, these are very competitive markets with a variety of challenges in reducing costs and increasing revenue potential. Among these are Internet traffic growth, increasingly difficult SLAs, and rising operational costs associated with handling larger numbers of customers who would like higher-value services. Slow service delivery means longer time to revenue and stalled access to auxiliary revenue streams.
When customers select exchanges or colocation facilities to meet their mission-critical business requirements and budgets, it becomes increasingly important to offer lower cost, automate common tasks, and offer new value-added services and increased resiliency, takes on increased importance. This helps IXPs and CXPs to offer compelling and competitive services, quickly and cost-effectively.
Costs need to be lowered in both capital and operations areas. Cost/port is a key factor as customer connections and services migrate from 10Gbps to 100Gbps. On the operational side, customers are confronting the inefficiencies of manual tasks or one-off non-reusable and inflexible, partial automation. This delays potential time to revenue that lowers the revenue side of the equations as customers may go to competitors.
How Are These Concerns Addressed?
Executives at this class of provider are asking themselves how they can:
- Reduce solution costs, both initially and over time
- Reduce time to revenue (identify and deliver new opportunities)
- Drive up operational efficiency (resolve issues faster and more permanently)
Scalable platforms are needed here. They need higher capacity, density, and power efficiency. The right platforms, both fixed and modular, can ease expansion and future-proof the solution, so that costs will in fact decrease over time.
Another way to reduce time to revenue is to turn up and start billing for new services in hours or days instead of weeks. Intelligent automation, based on high-level expressions of intent with real time visibility, further improves service levels by minimizing downtime during troubleshooting and automation. This leads to higher margin services with new service, user or application offerings.
Call to Action
If you’re in this unique industry, how are you addressing its challenges and opportunities? How much are you partnering into an ecosystem versus building out your own solution? What architectural choices are you making and how are you ensuring your infrastucture is future-proofed?
Brocade has a complete next generation data center portfolio to meet the needs of business leaders in these crucial areas. Our portfolio addresses needs for automation, pervasive visibility, and an adaptable, scalable infrastructure.
We will describe this solution in more detail in a future blog. In the meantime, tell us your thoughts….