Europe revealed as the world's enterprise data superpower according to new study

The Data Gravity Index DGx™

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28 September 2020

  • Europe is the world’s enterprise data superpower according to new research from Digital Realty
  • Enterprise data slated to reach quantum levels by 2024 as volume of data created and exchanged continues to rise exponentially

 

LONDON, 28 September 2020 – Europe is the world’s enterprise data superpower, outpacing North America, according to new research released today from Digital Realty (NYSE: DLR).

The research comes as the world readies itself for growth brought about by the fourth industrial revolution, or Industry 4.0. According to recent research from McKinsey and the World Economic Forum1, Industry 4.0 has the potential to create USD 3.7 trillion in value by 2025. As digital transformation accelerates, Europe’s place as one of the world’s primary centres of enterprise data puts it in a strong position to capitalise on this growth.

The Data Gravity Index DGx™ – which measures the creation, aggregation and private exchange of enterprise data across 21 metros – reveals that regions with strong global connectivity and an abundance of data-led industries, such as a thriving technology scene or prominent financial services sector, create so much enterprise data that they produce a ‘Data Gravity’ effect, exponentially attracting more data to the region.

Europe’s pre-eminence in a wide range of knowledge economy industries, such as financial services and complex manufacturing, that create vast amounts of enterprise data, combined with the emergence of data-led industries in Europe, has turned the region into a global ‘enterprise data superpower’. According to the research, the volume of enterprise data being created, aggregated and exchanged among European cities is the largest in the world; even larger than North America. Europe is expected to extend its lead as the world’s enterprise data superpower even further in 2024.

Dave McCrory, who coined the term Data Gravity in 2010 and led research on the Data Gravity Index DGx™ explains: “We’ve seen that Data Gravity not only attracts data but makes both data and the services that rely on it exponentially more difficult to move. This gives cities with a particular weight in one industry, like London’s financial services sector or Frankfurt’s complex manufacturing sector, a huge advantage as they naturally attract more of the same kind of data and services – and with them businesses – while it becomes ever harder to attract opportunities away from them. For businesses, it’s less advantageous – data has become a key strategic resource, but Data Gravity means too much of it can be difficult to use and impossible to move while constantly creating and attracting more.”

 

Europe’s data lead

London is currently the world’s most powerful centre for enterprise data, with a Data Gravity score of 167.05, outpacing both New York (79.61) and Tokyo (80.32) – largely driven by its prominent and highly connected financial services industry. The average Data Gravity score across all cities is 22.64 and 48.45 across Europe. Four other European cities also currently rank in the top centres of enterprise data: Amsterdam, Dublin, Frankfurt and Paris.

However, it’s not only the abundance of enterprise data that’s putting European cities in the lead, but the flow of that data between them. According to the Data Gravity Index DGx™, Europe is home to several of the world’s most interconnected city pairings, no doubt helped by the regulatory ease of doing business with one another, as well as the cities’ thriving financial centres. These include London and Amsterdam (1st overall), Paris and London (2nd overall), Frankfurt and Paris (5th overall), London and Frankfurt (6th overall), as well as Dublin and London (10th overall).

 

Quantum levels of data

Despite the vast benefits of having a thriving data economy with strong, open data exchanges with other cities, being in a city with a strong Data Gravity effect is a mixed blessing for businesses. Many businesses are accruing increasing amounts of enterprise data in a bid to transform their businesses through digital transformation, but are overwhelmed by volume, weighing down digital transformation efforts instead of enabling them.

By 2024, as a whole Forbes Global 2000 Enterprises will have accrued enough data to need access to quantum computing to effectively handle it. They will need an additional 8.96 exaFLOPS of compute power and 15,635 exabytes of private data storage annually to effectively manage their enterprise data. Comparatively, the next quantum computer at Oak Ridge National labs will run at just 1.5 exaFLOPS by 20212.

These unmanageable volumes of enterprise data and the gravity they create are already resulting in issues for businesses beyond the IT department, including:

  • Limited innovation: inability to process enterprise data effectively will hold back technological advances.
  • Poor customer and employee experiences: too much enterprise data being produced will result in ineffective management of that data, subsequently leading to a negative customer experience.
  • Increased costs: more enterprise data being produced will mean more capital needs to be invested to capture, manage and process it.
  • Compliance issues: an abundance of enterprise data will result in organisational challenges when it comes to dealing with regulatory and compliance-related issues.
  • Security: an abundance of data gives bad actors more vantage points.

Munu Gandhi, VP of Core Infrastructure Services at AON plc, the London-based professional services firm, said that understanding Data Gravity — and its impact in the context of other macro-factors such as enterprise data stewardship and regulatory developments — is a megatrend with which global businesses must begin grappling. “Understanding Data Gravity and its impact on our IT infrastructure is a difference maker for our operations and will only become more important as data continues to act as the currency of the digital economy,” said Gandhi.

“As enterprises continue to be more data-intensive there’s a compounding effect to business points of presence, regulatory oversight and increased complexity for compliance and data privacy that IT leaders are now being forced to solve.”

The Data Gravity Index DGx™ can be downloaded here.

 

The trends driving Data Gravity

The Data Gravity megatrend is the summation of several growing forces in businesses, many of which have accelerated in recent months as COVID-19 has driven more business around the world online:

Enterprise data stewardship: the global shift of people from rural to urban areas has meant that by 2030, 43 cities around the globe will have a population of more than ten million, which subsequently increases the number of users creating and exchanging data in the enterprise.

Mergers and acquisitions: globalisation is driving a much higher volume of M&As – in fact, M&A volumes are expected to return to pre-COVID levels in 2021, which will subsequently increase the number of data sources participating in these regional exchanges of enterprise data.

Digital-enabled interactions: business operations are shifting from physical to digital, with digitally enabled interactions perceived as twice as important as physical interactions. More digital interactions mean more enterprise data being produced.

Data localisation: the expansion of legal and regulatory policies is ramping up the requirement for more local data storage. By 2022, 87% of IT leaders will maintain local copies of customer and transaction data for compliance-related purposes, increasing the number of business locations where data is present.3

Cyber—physical: businesses are increasingly integrating their physical and digital systems to improve cybersecurity. By 2033, it’s expected that 70% of security products will be digitally integrated, which will increase the types and volumes of data being created and exchanged.4

Tony Bishop, data centre industry pioneer and Senior Vice President at Digital Realty, which backed the study:

“Data is growing at stratospheric rates due to the growth of IoT, AI and social mobile analytics. There’s a good story there. But there’s another side to the story too, with growth resulting in the compounding force of Data Gravity.

“Unchecked, Data Gravity can result in limited innovation, poor customer and employee experiences, increased costs, information silos, compliance issues, security concerns and slow decision-making for the enterprise.”

Eric Hanselman, Chief Analyst, 451 Research:

“Data Gravity is the idea that data is an anchor that is often hard to move, especially as data volumes grow. If that growth happens in clouds that aren't easily accessible by the enterprise using it, its full value can't be realised, and they’ll be trapped into spending exorbitant sums to free it.”

Allen Holmes, VP, Strategic Business Development & Alliances at Yellowbrick Data:

“Yellowbrick Data makes the world's only modern data warehouse for hybrid cloud, and offers unmatched performance, price/performance, and enterprise features for the most demanding and complex business needs. Our customers face the stresses of increasing data volumes and a growing user base, both of which are creating operational complexity. The Data Gravity Index DGx™ highlights this complexity and provides measures that we can use to overcome the challenges that enterprises face”.

Chris Sharp, CTO, Digital Realty:

“Most enterprises and service providers are just at the beginning stages of understanding data gravity’s potential impact on their innovation, customer experience, and profitability, but they need to be designing for it now. The study is designed to give CIOs, chief architects, and infrastructure leaders insight into the phenomena causing architecture constraints as well as a blueprint for addressing them.”

Joe Zhu, founder and CEO, Zenlayer:

“With the Data Gravity Index DGx™, Digital Realty has taken thousands of data points about where data is being stored and processed and boiled them down into one easy-to-understand number. The DGx makes it clearer than ever how important low latency is to emerging markets (e.g. China, India, Brazil) and will serve as an important guide to Zenlayer as we make new deployments around the world.”

Methodology 

Data Gravity Index DGx™ implements a patent-pending formula which quantifies and predicts the continuous creation of data across 21 metros globally.

 

Analysing thousands of attributes

The methodology is based on analysing thousands of attributes of Global 2000 Enterprise companies’ presences in each metro, along with factors and/or considerations for each metro, including GDP, population, number of employees, technographics, IT spend, average bandwidth and latency, along with flows of data.

 

Solving for Data Mass and Data Activity

The size and attraction of data for each metro was created by solving for a Data Mass number and a Data Activity number. The result was then multiplied by the average Bandwidth and divided by the average Latency squared.

Data Gravity Formula

Calculating Data Gravity between metros

The Data Gravity between metros was calculated by adding Data Masses together and adding the Data Activity numbers together, then multiplying their product by Bandwidth and dividing the result by the Latency squared between metros.

 

Calculating the Data Creation

Lifecycle Data Creation was calculated by combining data created by both G2000 Enterprise employees and end points. Data Processing was calculated by analysing G2000 Enterprise IT processing needs to handle new data-centric workloads, such as AI & ML, analytics, costs per TFLOPS and other factors. Data Storage was calculated by taking the storage capacity, growth and annual rate of deployment of Enterprise storage (HDD, SSD, and Tape) and analysing across 21 metros.

The Next Economic Growth Engine Scaling Fourth Industrial Revolution Technologies in Production,” WEF/McKinsey white paper, 2018

https://www.technologyreview.com/2019/05/09/135440/the-new-benchmark-quantum-computers-must-beat-to-achieve-quantum-supremacy/

3 451 Research, Infrastructure Imperative – IT Leader Survey, November 2019

4 Gartner, Emerging Technology Analysis- Cyber-Physical Security. ID: G00726994

About Interxion: A Digital Realty Company

Interxion: A Digital Realty Company, is a leading provider of carrier- and cloud-neutral data centre services across EMEA. With more than 700 connectivity providers in over 100 data centres across 11 European countries, Interxion provides communities of connectivity, cloud and content hubs. As part of Digital Realty, customers now have access to 47 metros across six continents. For more information, please visit www.interxion.com.

About Digital Realty

Digital Realty supports the world’s leading enterprises and service providers by delivering the full spectrum of data centre, colocation and interconnection solutions. PlatformDIGITAL®, its global data centre platform, provides customers a trusted foundation and proven Pervasive Datacentre Architecture PDx™ solution methodology from which to scale digital business and efficiently manage Data Gravity challenges. Digital Realty’s global data centre footprint gives customers access to the connected communities that matter to them with more than 280 facilities in 47 metros across 22 countries on six continents. To learn more about Digital Realty, please visit digitalrealty.com or follow us on LinkedIn and Twitter.

Media Inquiries

Helen Bleasdale
Interxion: A Digital Realty Company
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hcbleasdale@digitalrealty.com

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Investor Relations

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Digital Realty
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investorrelations@digitalrealty.com

Forward-looking Statements

This press release contains forward-looking statements which are based on current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially, including statements related to the Data Gravity Index™, Intensity Factor, our expectations around Data Gravity, data growth, expected global trends. For a list and description of risks and uncertainties, see the reports and other filings by the company with the U.S. Securities and Exchange Commission. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.