Australia’s digital appetite exceeding pre-pandemic interconnection growth
Global supply chain constraints and geopolitical and economic instabilities are not slowing the pace of digital infrastructure investment for the most connected companies, according to a new report.
The latest Global Interconnection Index (GXI) 2023, an annual market study published by Equinix, found that the most ecosystem-connected businesses—those directly interconnecting with partners to provide their own digital services—have expanded their digital operations more in the past five quarters than in the previous five years.
On average, organisations are connecting to three times as many business ecosystem partners and metros, consuming more than twice the amount of interconnection bandwidth.
As Australian businesses reinvent themselves in the aftermath of the global pandemic, ecosystem density has become a catalyst for digital innovation, which continues to fuel the growth of interconnection bandwidth. According to GXI 2023, Sydney continues to be one of the fastest-growing core metros in Asia-Pacific. The city’s interconnection bandwidth is forecast to reach 942 terabits per second (Tbps) by 2025, representing a five-year compound annual growth rate (CAGR) of 39%, in line with the entirety of the Asia-Pacific region’s average CAGR of 39%.
Further, Melbourne is the fastest growing edge metro, with a 53% CAGR, and shows the largest percent mix of interconnection from enterprise sectors. This forecasted growth shows how Australia’s digital leaders are rethinking their business to implement future-proof infrastructure on technology platforms.
“In today’s dynamic setting, every business is becoming a digital provider, which requires a new type of digital infrastructure built sustainably around leveraging ecosystems to deliver seamless digital experiences," says Steve Madden, Vice President of Digital Transformation & Segmentation at Equinix.
"Those with a digital-first strategy in place, investing in a robust, future-looking business model and interconnecting to rich ecosystems, are prepared to scale, adapt and thrive,” he says.
The report found interconnection bandwidth is forecast to continue growing at over 35% CAGR across all regions and major metros through 2025, with Sydney continuing to be one of the fast-growing metros in Asia-Pacific alongside Hong Kong, Singapore, and Tokyo.
The move to the edge is accelerating, with both enterprises and service providers forecast to interconnect to edge infrastructure 20% faster than the core globally. Melbourne is the fast-growing edge location in Asia-Pacific with 53% CAGR, closely followed by Guangzhou (52%), Shenzhen (52%) and Beijing (51%).
According to the report, businesses are becoming digital providers: GXI 2023 predicts that 90% of Fortune 500 companies will become digital providers, both selling and consuming digital services by 2025.
It also found all industries are harnessing digital to accelerate ESG objectives, where 65% of Australia’s IT decision-makers in Equinix's 2022 Global Tech Trends Survey say they will only work with IT partners who can meet key carbon reduction targets. GXI 2023 forecasts the Energy & Utility sector to lead in digital growth rate through 2025 as all organisations explore a sustainable approach to build and expand their digital presence.