Here comes the third wave of cloud and colocation adoption. It began forming when COVID-19 showed that being digital-first is literally sink-or-swim for almost every organization. Companies with advanced digital transformation initiatives fared better than those that have been slow to go digital. Accenture reports that technology adoption leaders experienced 2X revenue growth compared to digital transformation laggards.
The third wave is shaped in response to the experience that digitally empowered “end users” (consumers, employees, business partners) have come to expect. Customer experience (CX) is becoming more important that some traditional drivers of competitive differentiation, such as price and innovation. 451 Research® recently observed, “…for digitally demanding consumers, the ideal CX is a simple, easy to use, efficient web experience, ahead of lowest prices and innovative products and services.”¹
The first wave of cloud and colocation adoption crested between 2000 and 2010. Network carriers recognized that interconnection within carrier-neutral data centers and through network peering could engender a “digital community.” At the same time, enterprises were primarily experimenting with the cloud, using it as a development environment. They were in the midst of taking a cloud-first approach to processes, implementing SaaS solutions such as Salesforce or PeopleSoft to improve productivity and reduce costs.
Public internet connectivity was sufficient for the first wave for a couple reasons. One is that the true value of the cloud was being proved (hence the experimentation just mentioned). Another is that users simply didn’t know better; the speed, personalization and options we have today were yet to be imagined, much less experienced.
The second wave, circa 2010-2020, was characterized by large enterprises with very large networks. They saw the advantages of low-latency cloud applications and that network carriers had the infrastructure to move data as needed within the digital communities. Interconnection enabled direct, private connections across vast enterprise networks, cross connects directly connected business partners, and direct connection to cloud service providers became part of multi-cloud architectures.
That brings us to the third wave of cloud adoption. What we are seeing is small and medium-size businesses making the transition to a digital-first business model. Service providers (offering SaaS, IaaS, PaaS) are seeing the benefit of direct access to their networks and the simplicity of accessing a large number of business consumers within a data center.
By developing a multi-cloud strategy, utilizing cloud services and interconnecting to other entities within digital communities, businesses of all sizes now can offer an elevated, modernized customer experience.
What does that experience look like? Always-on. Automated. Super-smart, with AI-directed personalization. Secure interconnection, enabling data sharing and trust. Telemedicine, e-learning and remote work are three prime use cases showing how digital transformation was accelerated in response to a nearly overnight shift in user needs. There’s more to it, but suffice to say the outcomes are competitive advantages for digital-first enterprises, increased opportunities for services providers in the ecosystem and happier end users.
Data centers are an “intersection of interconnection” providing the compute resources, network diversity, cloud access and redundancy that culminate in the user experience and business results I’ve been talking about. Colocation, along with a platform for orchestrating interconnections and data transfer create a complete solution. CoreSite customers leverage the Open Cloud Exchange® to take control of inter-market connectivity, direct cloud connectivity (which opens access to cloud service providers tools such as containerized application development, analytics, etc.), service provider connectivity and redundancy.
Perhaps the most important best practice forged by the pandemic is that agility is key to preparing for the unexpected, and building a component business model. Amit Zavery, VP and Head of Platform, Google Cloud, frames it up nicely: “Think of digital transformation less as a technology project to be finished than as a state of perpetual agility, always ready to evolve for whatever customers want next, and you’ll be pointed down the right path.”²
Anxious to adopt the third wave of cloud computing? If you have been exploring the idea, you probably have found that (as always) there are challenges. That’s where we can help, by bridging knowledge gaps and providing the interconnection, tools and guidance needed to build a future-proof hybrid IT infrastructure.
I encourage you to get in touch. Together, we can start thinking through how you can methodically, yet expediently, become a digital-first enterprise.
Vice President, Interconnection Strategy
Matt is VP of Interconnection Strategy at CoreSite and has over 11 years of data center and telecommunications industry experience.Read more from this author