President, Equinix Asia-Pacific
The insatiable data appetite of Asia-Pacific has fueled the growth of digital economies throughout the region. With this in mind, Southeast Asia is leading the region’s digital shift, with markets collectively representing a digital economy worth nearly US$200 billion in Gross Merchandise Value by the end of 2022 and forecast to reach US$330 billion by 2025. This exponential growth in digital goods and services is expected to increase demand for data centers, which provide the necessary infrastructure and connectivity for the continued growth of digital economies.
According to the latest Global Interconnection Index (GXI) 2023 recently announced by Equinix, Singapore continues to be one of the largest core metros in Asia- Pacific, with the city-state’s interconnection bandwidth forecast to reach 1,429 terabits per second (Tbps) by 2025, representing a five-year compound annual growth rate (CAGR) of 37%. Emerging markets, such as Indonesia and Malaysia, are also growing their digital footprint, and have received significant investment as the market for digitization continues to develop at scale.
Looking ahead, the shift towards a larger number of devices in an increasingly integrated network environment raises the bar for cloud ecosystems along with the connectivity and automation solutions they can provide. Driven by cloud computing, we foresee new innovations that are focused on achieving higher efficiency and sustainability. Here are some trends for the next generation of data centers, and how sustainability is set to be intricately woven into the future of cloud computing.
Ambient Computing and 5G Lead the Transition to Everything Digital as a Service
The Internet of Things (IoT) revolution has silently grown through ambient computing, integrating technology seamlessly into the backdrop of daily life. With ambient computing, technology will become ubiquitous in our work and home environments. Device sensors constantly collecting data triggered by sight and sound, will allow artificial intelligence (AI) to make decisions without direct human intervention, eliminating decision friction while enhancing the human experience.
IoT spending in Asia-Pacific is forecast to reach $436 billion by 2026, with anticipation for greater investment and the potential to transform sectors across all industries. Singapore currently leads Southeast Asia in IoT spending in 2022, likely driven by national-level digital transformation initiatives and the nation’s smart city aspirations.
Through 5G, new achievements in machine-type communications, ultra-low latency and mobile edge computing can be achieved to improve customer experience and create new revenue streams. Enhanced interconnection capacity will be the underlying technology to allow sensors, devices and gateways to collect, analyze and communicate data in a strengthened network. Robust connectivity at the edge will become key to ensuring the pipeline of data transfer, analysis and storage is sufficient to power the new era of a smart future. As the edge footprint grows with the adoption of 5G, demand for data and digital as a service will continue to grow as legacy enterprises across industries begin their transition to digital.
Digital Supply Chains Spur Industry 5.0 Onwards
The goal of the next-generation digital supply chain is ambitious: to build a new supply network that’s both resilient and responsive. Companies with highly digitized supply chains and operations can expect efficiency gains of 4.1% annually while boosting revenue by 2.9%. Potential for disruption remains high in the current economic climate; sudden shifts in demand, lack of raw materials, and natural disasters can wreak havoc on even the best-laid supply chain plans.
To mitigate these risks, businesses have been working tirelessly to transform their supply chain. Continued digitization of supply chains will accelerate the pace towards Industry 5.0 where efficiency and productivity can be truly optimized with human-robot collaboration. This means hyper-connectivity and automation are essential in the ecosystem for Industry 5.0.
Digital Twins: Moving Beyond Automation Into Sustainability
The industry size for digital twins in Asia-Pacific reached $1 billion in 2019 and will register a 35% CAGR up to 2026 owing to the rise in government initiatives for the development of IoT infrastructure and smart cities. Optimizing operations is not the only benefit that digital twins bring. Digital twins are also enabling businesses to achieve their ESG (Environment, Sustainability, Governance) goals.
Digital twins are changing the way new sustainable data center designs are being created, leading to faster inception and greater iterations than ever before. For instance, Equinix engineers collaborated with partners to create a digital twin of a data center 3D model with variations based on differing capacities, equipment densities and cooling system paths. This centralized digital twin platform allows engineers to predict the impact of proposed changes based on live feedback from the data center’s digital twin. Engineers could quickly pinpoint and suggest the adjustments needed to improve a design based on forecasted efficiency boosts and projected energy consumption in real-time.
Leveraging digital twins, businesses are now reinventing the way they measure energy consumption and emissions. This enables them to simulate multi-factor scenarios, and ascertain the best approach to reaching sustainability goals, increasing their speed of time-to-market while reducing the risks associated with complex projects.
Environmental Stewardship and The Data Centers of the Future
Conversations around sustainability have been growing steadily across 2021 but began experiencing a decline for the first quarter of 2022 and further consecutive decline in the second quarter. One possible reason could be that sustainability initiatives are growing, and implementation is under way leading to less buzz. However, a
divergent trend is surfacing where sustainability projects are suspended and put on the back burner due to pressures from a worsening macroeconomic environment.
Amid an uncertain economic environment, many companies, especially small and medium enterprises (SMEs), are withholding investments in sustainability as they perceive it as an unnecessary cost that does not contribute to driving revenue. Greater awareness on the benefits of digitization paired with sustainability would spur SMEs to invest more confidently into initiatives like colocation facilities, which reduce energy usage for companies by spreading cooling and power across multiple customers.
We anticipate the easing of Singapore’s data center moratorium in mid of 2022 to have a broad impact on the region’s data center industry by setting higher standards regarding efficiency and sustainability. Renewable energy investments by data center providers and other sustainability features adopted can help companies achieve their sustainable energy goals and lower their overall carbon footprint.
Sustainability remains a core focus moving forward, where data centers must concurrently mitigate the effects of climate change while striving towards carbon neutrality. Digital twins, while traditionally relevant to manufacturing, are helping to solve sustainability issues, aiding in rapid turnover for future data center designs that meet ESG criteria. Finite land, water, and energy resources on our planet have spurred forward-looking innovations to solve our planetary constraints.
5G development continues to drive the digitization of supply chains, creating automation solutions that move us closer to Industry 5.0. Digital ecosystems must host the frameworks to sustain next-generation connectivity and network stability. Organizations must remain cognizant of the need for backward compatibility of 3G and 4G using network software as consumer adoption of new technology inevitably lags.
“With great growth comes greater responsibility.” For every new project initiated, Equinix has always kept an eye on the rearview mirror to examine how the organization can exceed past expectations in sustainability and delivery. With 2023 on the horizon, Equinix remains committed to raising the benchmark for sustainable development that is built on the strength of existing standards and initiatives in tandem with like-minded partners. The best way to predict the future is to create it, and we believe that the spirit of collaboration will lead to innovative and sustainable outcomes for all.