Industry executives and experts share their predictions for 2018.  Read them in this 10th annual VMblog.com series exclusive.

Contributed by Kaladhar Voruganti, VP, Technology Innovation and Senior Fellow at Equinix

8 Predictions for IT

IoT, blockchain, Artificial Intelligence and data sovereignty are but a few prominent industry game changers we see proliferating in 2018. We connected with Kaladhar Voruganti, VP, Technology Innovation and Senior Fellow at Equinix, a company that stands at the interconnection junction between network providers, cloud providers and the enterprise, for a unique perspective on IT trends and where things are headed.

Private blockchain networks take hold and multiply

The public blockchain at the heart of various cryptocurrencies is very different from the private blockchain we see appealing to more companies in 2018. The key difference is that private blockchain networks are "permissioned," rather than open, so private blockchain networks have more secure digital identity management, greater levels of trust and the ability to permit far greater levels of transactional throughput. According to "Top Trends in the Gartner Hype Cycle for Emerging Technologies, 2017," "of the two types of blockchain - permissionless-public ledgers and permissioned-public ledgers - enterprises should look toward the latter option. Permissioned-public ledgers have access controls owned/managed by rules, but still allow for a community. For commercial transactions, companies might look to permissionless-public ledgers such as bitcoin, which allows unknown or untrusted users to access the ledger."

Organizations that provide blockchain networks for various business verticals will need to host blockchain ledger nodes in multiple distributed locations to ensure low latency. In addition, enterprises in some private blockchain networks need to simultaneously learn about the completion of time-sensitive blockchain transactions. This is enabled by bringing enterprises together inside developing blockchain ecosystems. Finally, at any given point in time, enterprises will be involved in multiple blockchain networks (e.g. supply chain, finance, etc.), and they will want their business systems to be located close to these different blockchain network nodes.

Artificial Intelligence-based applications surge into the mainstream

Artificial Intelligence (AI) technology has existed for six decades, but it's just now going mainstream. Why? The advent of big data, AI-focused processors and deep-learning algorithms has enabled AI to power advances like smart homes, factories and cars, which have broad appeal. In September 2017, IDC forecasted that worldwide revenues for cognitive and AI systems in 2017 would reach $12.0 billion, and we see it making even deeper inroads into the mainstream in 2018.

But AI systems need to interpret and fuse data from multiple sources, and they also need to be distributed, with model building happening in clouds and model deployment based at edge locations to satisfy real-time processing requirements. Regulatory bodies are also becoming more interested in ensuring AI apps comply with security and data residency laws.

Internet of Things apps accelerate computing shift to the digital edge

Gartner, Inc. forecasts that 8.4 billion connected things will be in use worldwide in 2017, up 31 percent from 2016, and will reach 20.4 billion by 2020. In 2018, as these devices multiply, the computation needs at the heart of the Internet of Things (IoT) will increasingly shift to the digital edge.

Maintaining low latency is one of the main reasons companies are moving large amounts of data from IoT devices closer to cloud processing and analytics at the edge. But placing interconnection at the edge will also save on network costs, as companies filter out volumes of useless IoT data near the source to gain the faster access to valuable insights needed by IoT-enabled innovations like smart hospitals. And in growing numbers of regions, data must be processed at the edge to comply with data residency requirements.

A new architecture for subsea cable systems becomes prominent 

Subsea cables are a key component of the internet, as nearly all global data traffic touches one, and investment in new cables is increasing amid massive projected growth in that traffic. According to "Supply and demand," from the Global Bandwidth Research Service, TeleGeography, 2017, global subsea cable construction costs are expected to exceed $2 billion in 2018 for the third straight year, after not topping $1 billion since 2012. During this building boom, we see a new architecture taking hold that will improve costs, deployment agility and interconnection benefits.

Advances in laser technology have enabled subsea cables to bypass cable landing stations on the beach and directly land in retail multi-tenant data centers. For us, this means customers of subsea systems that land inside Equinix data centers that support this model get direct, low-latency access to the numerous industry ecosystems we host. That increases a subsea cable system's appeal to its potential customers.

SDN/NFV technologies transform wide area networks

A fundamental shift in enterprise acceptance of software-defined networking (SDN) and network function virtualization (NFV) technologies is underway, and it's changing how large enterprises architect their wide area networks (WANs) to increase their cloud access services. This shift will gain strength in 2018.

Enterprises can no longer afford to backhaul traffic on expensive MPLS networks from their branch offices to a centralized location, where they apply network security policies on physical networking gear before accessing the cloud. Instead, they are sending their traffic to regional hubs, via more cost-effective SD-WANs technology. There, they are applying security policies on virtual network and security appliances that leverage NFV technologies.

IDC's most recent forecast for the worldwide Datacenter SDN market noted it will expand at a compound annual growth rate of 25.4% between 2016 and 2021, when it will amount to nearly $13.8 billion. 

Companies look for a global data center platform to meet emerging data sovereignty and auditing mandates

Several major data privacy, security and sovereignty regulations will be enacted in 2018, and all have major implications for businesses:

• The General Data Protection Regulation (GDPR) restricts data transfer in the EU to countries that are GDPR-compliant, which could affect transfers between EU companies and important international business partners.
• Consolidated Audit Trail (CAT) reporting in the U.S. requires companies to log every securities transaction and ensure the accuracy of timing services at the nanosecond level.
• The Markets in Financial Instruments Directive (MiFID ii) in Europe imposes new reporting requirements and tests on investment firms.
  

The enforcement of GDPR and similar data sovereignty laws across the world will make it necessary for organizations to have data centers in multiple regions in order to store data locally. CAT and MiFID II laws also require organizations to log financial transactions at a granular level. This, in turn, makes it necessary for organizations to have a finely synchronized internal clock system across multiple data centers.

The multicloud trend leaves companies in need of hybrid IT platform

In "The Future of the Data Center in the Cloud Era," from Gartner, June 2015, refreshed Sept. 2016,Gartner says "a multicloud strategy will become the common strategy for 70% of enterprises by 2019, up from less than 10% today." Respondents to an IDC survey two years ago put the percentage even higher - and the timeframe sooner - with 86% indicating that they would need a multicloud strategy by 2017 to complement their future business goals. As multicloud becomes more prevalent, we see an increasing  enterprise need to bring its management under control on a hybrid IT platform.

Companies are distributing their applications over multiple clouds, based on the best cloud for the job. In addition, businesses are increasingly relying on redundant clouds to support business continuity and disaster recovery initiatives. This requires a multicloud strategy that can be deployed on a hybrid IT (on-premises and cloud) infrastructure.

Digital transformation (DX) platform strategies proliferate across enterprises

IDC describes a digital transformation (DX) platform as enabling the "rapid creation of externally facing digital products, services and experiences, while aggressively modernizing the ‘intelligent core' environment." And they predict that by 2020, 60% of all enterprises will embrace an organization-wide DX platform strategy. 

To accelerate this shift, we see DX platform companies investing more in open application programming interfaces (APIs) and customer/partner-facing development portals in 2018. An external-facing, API-enabled DX platform speeds up the development and integration of digital services and enables more intelligent tools for IT automation and orchestration. It also promotes innovation and faster time-to-market for new solutions. On DX platforms, businesses can collaborate within ecosystems made up of interconnected customers, service providers and business partners. As companies make services available via an API-driven DX platform, many will have to satisfy performance, availability and security-related SLAs for it.

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About the Author

Kaladhar Voruganti is currently Vice President Technology Innovation and Senior Fellow at Equinix. He previously worked at IBM Research and NetApp CTO office.

He obtained his BSc in Computer Engineering and PhD in Computing Science from University of Alberta, Canada. He has 70 patents filed/issued in the area of network and storage systems. At Equinix, he is actively working on distributed AI/Analytics and Blockchain architectures. He is also in charge of company wide employee innovation program.