How Data Is Becoming the Critical Business Agenda
Page 1
Data is pervasive.
1
Data has become the new business agenda.
2
Data requires aggregation and control.
3
Data is localizing.
4
Data-first strategies win.
5
Digital Realty’s 2021 Global Data Insights Survey points to five key imperatives for global enterprises:
It all adds up to data’s becoming the critical agenda topic of all businesses, not just those with digital-first products. It’s happening in part because of the convergence of the physical and digital worlds. Even products traditionally lacking a digital component increasingly depend on data for sales, supply chains, service-related offerings, and more. “There’s a physical/digital convergence starting to happen,” explains Tony Bishop, senior vice president for Platform, Growth & Marketing at Digital Realty. The result of this new reality: To remain competitive, business leaders must rethink data strategies at the global level, regionally, and locally as well as how those strategies relate to their industry and how they create value for their customers. To get there, leading firms must consider a factor that Digital Realty calls data gravity.
Page 2
The data center has become the new business platform.
— Tony Bishop, Digital Realty
An understanding of data gravity — that is, the tendency of data to attract more data at a given location — enables organizations to select the best geographies for storing and processing data and connecting to partners and customers. Getting this right will enable enterprises to:
Integrate data, security, and controls in ideally located multitenant data centers
Unlock new intelligent workflows at centers of data exchange between employees, customers, partners, and ecosystems
Foster robust connected data communities to advance their business agendas
It all comes down to putting data at the heart of the business. “The data center has become the new business platform,” Bishop says. “What does that mean? It means the data center is the meeting place for people, process, and technology to come together.” This e-book explores how global enterprises and service providers can apply data-first strategies to serve customers better and unlock trapped value in a data-first world.
Data Is Pervasive.
Page 3
Data creation is multiplying at all points of business presence. In fact, it will hit 1.5 gigabytes per second for the typical enterprise by 2024, according to the “IDC Worldwide Global DataSphere Forecast, 2021–2025.”1 Much of the new data comes from the convergence of physical and digital processes. A marker of this increasingly hybrid IT landscape is which assets organizations strive to keep secure. By 2023, 70% of security products will integrate three distinct systems — IT, OT, and IoT — according to Gartner.2 The implication is that the hybrid business and corresponding hybrid IT models that combine physical and digital assets are accelerating enterprise data creation and aggregation needs. Businesses are implementing hybrid IT models to address data performance, cost, and security concerns. At the same time, data sovereignty and other regulations exacerbate the requirements for data localization. Moreover, according to Digital Realty’s Global Data Insights Survey, almost half (47%) of global enterprises keep their data decentralized. In other words, for these organizations, data sprawl is happening at the edge and away from the traditional data center. It’s another sign of hybrid IT environments.
The senior business leaders surveyed in the study cited three top drivers for decentralization:
Demand for faster processing
IDC Datasphere 2021–2025 forecast; https://www.idc.com/getdoc.jsp?containerId=US46410421 https://go2.digitalrealty.com/rs/087-YZJ-646/images/Report_Digital_Realty_2009Data_Gravity_Index_Report.pdf?_ga=2.84477265.93647143.1639435987-37181685.1639006401
1.
On the other hand, 53% of enterprises take the opposite approach for managing data: They keep data centralized. Their top three drivers include:
Requirement to get data closer to users and devices
2.
Reduced budgets for processing
3.
Company IT strategy
According to Dave McCrory, global head of Insights and Analytics at Digital Realty, both groups will need a deeper understanding of data to meet the business goals. “There’s an evolution of using data within the business to make decisions,” he says. “Not only accounting or payroll decisions but also much more sophisticated decisions such as ‘Should a business expand or add new product lines?’” The required sophistication starts with IT infrastructure, he continues. But it also includes the ability to perform analytics on an organization’s unique data sets to reach
insights as quickly as possible. This enables business leaders to react to real-world events as they happen. With that in mind, “Data is becoming the lifeblood of a business,” McCrory says. Digital Realty’s survey shows that 75% of companies with more than $1 billion in revenue have a formal data strategy in place. But experts say it’s not about if there’s a data strategy in place — it’s about when and at what maturity level. Those that don’t take action to release trapped data and insights run the risk of incurring unforecast costs and falling behind. Accessing the opportunities that data presents depends on understanding the impact of data gravity, says Bishop. That’s because the effects of data gravity impact the proximity, security, and connectivity of platforms and devices that need to communicate.
By 2023, 70% of security products will integrate three distinct systems — IT, OT, and IoT — according to Gartner.
Data Has Become the Business Agenda
Page 4
Strategy and value outcomes rely on data-driven insights to attract and retain customers, drive business growth, and develop new digital solutions, among other things. This is critical for business leaders as they work to understand territory traditionally left to data specialists. “Businesses have to redesign themselves,” Bishop says. “They have to architect around data they can turn into intelligence, which translates into new opportunity and outcomes.” He says many of those opportunities can come from connected infrastructure, including smart buildings and supply chains. According to Digital Realty’s survey, the top three value drivers for data-driven insights are:
According to the Digital Realty research, IT departments will allocate additional funds to address:
However, budgets will increase only slightly, according to the survey. And these modest increases may not be sufficient to address the growing demand to meet data, location, and CX needs. That’s partly because CX improvements must include geographic expansion that places hybrid IT infrastructure closest to the customers, McCrory explains. Simply, the closer to the customer data gets processed, the more quickly the customer gets served. “Maybe you’re saving a small amount of money by having the processing located somewhere else,” McCrory says. “But what you’re missing out on is the ability to process that data more quickly and get those answers across the network faster to provide a better customer experience.”
https://www.gartner.com/en/newsroom/archive/2021-07-27-gartner-ceo-survey-reveals-cost-optimization-as-top-issue-that-chief-supply-chain-officers-should-focus-on-in-the-near-futureGartner, “Driving Value & Innovation with Data & Analytics,” Virtual Executive Retreat for CDAOs, September 2020
Analyzing data
Expanding IT investment at new points of presence (PoPs)
Using data to improve CX
Improving the customer experience (CX)
Providing new digital products or services
Implementing data location strategies
It should come as no surprise that CX is at the top of the list, since the very essence of business is serving customers. The good news is that 80% of CEOs expect to increase investments in digital technologies,3 according to Gartner, and 70% are betting on digital data products to grow.
Data Requires Aggregation and Control
Page 5
There are many obstacles to developing data-driven insights, according to the Digital Realty survey. The top five obstacles are:
It’s common knowledge that data growth is accelerating rapidly. As you accumulate data, you attract more data. You also attract services and applications to consume that data, and data interacts with more and more applications. This has a constant, compounding effect until the gravity is too strong.
process increasing amounts of data. Indeed, the study found that most current company locations support three critical functions:
However, executives rated themselves worse in the area of secure data exchange. For example, they average 3.93 (out of 5) in their ability to share data with partner ecosystems. That’s a problem, because secure connectivity outside the enterprise is essential to meet the challenges of today’s increasingly hybrid IT infrastructures. With users and data growing exponentially, integrating the data to garner insights requires a secure ecosystem of providers and business partners, Bishop explains. “If you organize business around how data is created, aggregated, enriched, and exchanged, then you’re able to see how this new physical and digital world comes together,” he says. The result is a competitive advantage over companies that don’t master this approach. Businesses are getting the message. By 2024 over 70% of organizations will have deployed multiple data hubs to drive mission-critical data analytics, sharing, and governance, according to Gartner.5 These hubs are critical for serving customers and connecting with partners as efficiently as possible.
https://blogs.gartner.com/andrew_white/2021/01/12/our-top-data-and-analytics-predicts-for-2021/06401
Connectivity to networks, clouds, and IT providers
Performance needed to process data
Integration for users, devices, and endpoints
The top three obstacles for achieving data-driven insights among companies with more than $1 billion in revenue are:
According to the Digital Realty study, executives across the board rated their company’s ability to support connectivity, integration, and performance highly. For example, they score an average of 4.23 out of 5 in their ability to create, store, and
Data privacy and regulation
Lack of investment in data and systems
Customers’ reluctance to share data
53%
Lack of sufficient investment in data systems and/or infrastructure
50%
Lack of sufficient investment in relevant analytics tools
35%
Reluctance on the part of customers or clients to share data
28%
Data privacy regulations
25%
Lack of clean data
This is data gravity.
Data gravity creates physics barriers that impede the efficient exchange of data.
Data gravity slows you down, opens you up to security concerns, and contributes to poor customer experiences.
With all that force, it’s no surprise that there’s less flexibility to respond to shifting markets and user behaviors.
What Is Data Gravity?
Data Is Localizing
Page 6
Enterprise workflows typically use 400+ data sources exchanged across 27 cloud products. And as more and more locations, users, and devices create more and more data and exchange it with other devices and locations, data gravity emerges as a critical megatrend. “The way we define data gravity? The idea that as you accumulate data, you attract more data,” explains McCrory, who coined the term. “You also attract services and applications to consume that data.” Business growth and the need for compliance with regulations accelerate data localization, further increasing data gravity. Reflecting this reality, almost 90% of IT leaders say their organizations will maintain local copies of customer and transaction data for compliance in 2022, according to 451 Research. Data gravity can create bottlenecks that impede the efficient exchange of data and must be addressed in the design of any business strategy to drive successful outcomes. But it can also create opportunities in the presence of robust and data-centric IT architecture capable of handling the traffic, processing requirements, and connectivity needed to realize them. “The growth in data, the growth in digitized processes drive the need for proximity — to have infrastructure close to where you do business,” Bishop says. “It doesn’t need to be based in the same building, but it needs to be within proximity. You also need to have a neutral meeting place where you can connect everyone and your data.”
The senior business leaders surveyed in the study cited three top three drivers for decentralization:
It’s clear that companies can outpace their competitors when they reshape themselves to make data a central part of their business, not simply a cost center. They win customers, market share, and new opportunities to reimagine products and services. But some leaders struggle to connect the dots from the data flowing through their systems from customers and partners with their business strategies. McCrory recommends getting started by examining data gravity. “Understand the concept of data gravity,” he advises. To do that, business leaders can turn to Digital Realty’s Data Gravity Index™, which provides a valuable tool that enables companies to benchmark their data strategies against those of their peers. From there, McCrory says, get clear on what’s happening with the data in your own business. For example, start with simple questions about a database: Who’s in charge of it? What data goes into it, and where does it originate? What data is flowing out of it and to where? “It’s not that complicated,” McCrory says. “But understanding those data flows is a great beginning.” With such information, company leaders can determine whether they’re processing data far from customers and slowing interactions. “It might be optimal costwise,” McCrory says of such a situation. “But it may not be optimal for customer experience or the business.” McCrory points out that although data-first companies such as those in financial services have long known the value of such analysis, even companies in far-removed industries must undertake data-first business strategies. “And all of them are going to be pushed into it,” he says. “It’s just a matter of when.” In the end, where global businesses place and connect their data matters.
https://solutionsreview.com/data-integration/companies-are-drawing-from-over-400-different-data-sources-on-average/ “Infrastructure Imperative – IT Leader Survey,” 451 Research, November 2019
Data-First Strategies Win
6
7
Page 7
With an ever-expanding hybrid IT landscape and connected partner and customer ecosystems, enterprises and service providers must now redesign their business strategies around data. According to the Digital Realty survey, 63% of global companies overall have these strategies, indicating that a strong majority understand the benefits of adopting a data-first business practice. The top three strategic areas for companies overall include:
These multitenant data centers can help foster intelligent workflows and data exchange centers between employees, customers, partners, and ecosystems. Critical attributes include:
According to the Digital Realty survey, unlocking data’s value must include:
At the end of the day, says McCrory, there’s no perfect solution for all scenarios. “There’s no guidebook for all companies to go through a digital transformation and leverage data for business decisions, product decisions, and customer outcomes, because each business is different,” he notes. But understanding the concept of data gravity and following the Data Gravity Index™ to understand what others are doing are key to long-term success in unlocking the value of data.
Companies with more than $1 billion in revenue also cited educating the C-suite on the importance of data as a top consideration. In other words, people are just as important as technology for global enterprises undergoing digital transformation. A successful strategy includes creating data meeting places to support hybrid business models, according to McCrory. In addition, leading firms will integrate data, security, and controls in multitenant data centers to support critical localization needs. Those that don’t will risk getting left behind.
Using data to inform strategy
Sharing data within the company
Having the capacity to create, store, and process growing amounts of data
Unlocking Trapped Value
As the study results show, it’s not enough to just have a strategy to move and store data, however. Businesses also need strategies for acting on data-driven insights. Simply put, digital leaders treat data as a strategic lever and actively pursue ways to apply data-first strategies to serve customers better and unlock trapped value in a data-first world.
Improving data infrastructure
Investing in artificial intelligence/machine learning (AI/ML) technology
Upskilling data capabilities
Meeting global coverage, capacity, and direct connectivity needs
Providing a meeting place where companies can connect
Enabling secure data exchange
Page 8
To learn more about industry collaboration, visit
https://www.digitalrealty.com/engage-with-us
About Digital Realty
Digital Realty supports the world’s leading enterprises and service providers by delivering a full spectrum of data center, colocation, and interconnection solutions. PlatformDIGITAL®, the company’s global data center platform, provides customers a trusted foundation and proven Pervasive Datacenter Architecture (PDx™) solution methodology for scaling digital business and efficiently managing data gravity challenges. Digital Realty’s global data center footprint gives customers access to the connected communities that matter to them with more than 280 facilities in 49 metros across 25 countries on six continents. For more information, please visit or follow us on and .
About the Survey
Digital Realty interviewed 7,295 senior business leaders from nine industries in 23 countries. Company revenue ranged from $100 million to more than $1 billion.
To benchmark your company on the Data Gravity Index™, visit
https://www.digitalrealty.com/platform-digital/data-gravity-index
To learn more about Digital Realty’s Pervasive Datacenter Architecture (PDx™)
Click here
digitalrealty.com or follow us on LinkedIn and Twitter.
