The future of the digital economy and the role of the IT service provider

27-05-2021

Digitalisation is noticeable across the full breadth of our society. The transition is occurring rapidly and the rate at which information is being put into a digital form is ever increasing. This has an impact on the role of IT service providers, which continues to grow more important. The shift to a digital economy is changing how we work as digital applications take over or alter much of the work we do. For about a quarter of the working population in the Netherlands, a large proportion of work is already driven by IT. To meet the increasing IT demand and associated more complex requirements, it is essential that IT service providers are able to provide a strong IT foundation for businesses in the digital economy, in which connectivity plays a key role. What does the digital economy mean for you as an IT service provider, and what do you need to watch out for?

What is the digital economy?

Let’s start at the beginning: what do we mean by the digital economy? In the report ‘De Toekomst van de Digitale Economie’ (‘The Future of the Digital Economy’) – a publication of Rabobank, Surf, DHPA, Dutch Cloud Community (formerly ISPConnect), AMS-IX and Dutch Data Center Association – this question remains unanswered. The report states that there is no unambiguous definition for the digital economy. However, there is a general understanding about the digital economy. The digital economy, also referred to as the internet economy, is described as an economy based on digital technologies that relates to multiple sectors of a society. The digital economy is based on data.

The transition to a digital economy and the economic growth resulting from digitalisation have been clearly reflected in the figures in recent years. In particular, web services, e-commerce services, hosting services, content services and digital platforms are well above the annual GNP, while figures for consumer e-commerce have increased by double digits in recent years. ‘Traditional’ IT services are still at the GNP level in terms of growth.

This growth is can also be explained in practice. Take digital services like Uber, AirBnB and social media platforms for example. All of these digital applications offer products, and yet, they don’t. The above-mentioned report includes the question “Is Uber a taxi company or a digital marketplace for transportation?” The same goes for AirBnB: AirBnB is a digital marketplace for holiday accommodations, but does not own any accommodations itself. Social media are content platforms, but do not post any content themselves. These are interesting examples of shifts from physical products to digital services.

What the digital economy means for you as an IT service provider

The fact that digitalisation contributes so much to the economy will only encourage the conversion of more products to digital services in the future, as well as the digital transformation of physical work processes. This will give you an increasingly important role as an IT service provider. The Dutch working population will look to you for help in the optimisation of its digital processes.

New value chain

Data is an important key word in this transition. Digitalisation also causes an increase in the amount of digital data. “The storage and transfer, transport and processing of data is achieved by IT infrastructure such as networks, data centres, servers and storage.” This makes IT infrastructure the foundation of the digital economy.

IT outsourced increasingly

IT services will be outsourced more and more frequently. Consider, for example, relocating a company’s own data centre to a multi-tenant data centre, or purchasing the desired server capacity from a hosting service or cloud provider. In addition, applications will increasingly be purchased as a service, placing different demands on your own IT infrastructure.

Shift from physical data centres to the cloud

The as-a-service model is popular in the digital transition. An increasing number of companies are using IT as a service. More and more IT applications are placed in the cloud or outsourced to external service providers. There is often a combination of as-a-service IT applications and in-house IT services, which makes the IT infrastructure more complex in some respects. Thus IT service providers not only play a role in ‘traditional’ IT solutions, but are also considering these as-a-service models.

Major challenges in the digital economy

The transition to a digital economy brings challenges for IT service providers. One of the main challenges is that end customers desire 24/7 availability of digital services, in sectors like healthcare, and also for companies that have transformed their physical products into digital services, such as Uber and AirBnB. Their entire business model is online, so the IT infrastructure must be prepared for this.

Customers want constant availability and large exchanges of digital data through various on-premise and off-premise applications. It is essential that IT service providers have the right bandwidth available to actually exchange that information and satisfy that desire. That bandwidth must also be stable, and that stability is not automatically guaranteed. Here too, connectivity is an important factor. As an IT service provider, you can set up a redundant connection for example, to maximise availability.

Cybersecurity is also a huge challenge. As an IT service provider, it is essential that you have clear protocols for security to keep all of the end customer’s data secure. The shift from physical to digital information also increases the risk of hacks and data leaks. IT service providers must be prepared for this. Having your own connectivity in the form of a Dark Fiber connection can contribute to this because it allows encryption to be applied at the lowest level. At the bottom layer, hardware-based encryption is used for all traffic. In addition, Dark Fiber offers lower latency and thus a higher data transfer rate. End customers often outsource this connectivity issue to their IT service provider as well; after all, they want a full-service solution.

Connectivity with Dark Fiber

A Dark Fiber connection is a fibre-optic connection that does not yet have active equipment connected to it. A Dark Fiber connection is a private, unshared connection between multiple locations, for example, between different branches of an organisation. A regular fibre-optic connection is linked to a central network source used by multiple parties. Dark Fiber offers a number of benefits: unlimited bandwidth, rapid scalability and – one of the most significant aspects in terms of security – complete control.

A Dark Fiber connection can be the missing piece of the puzzle when creating a secure, future-proof IT infrastructure. Relined Fiber Network would therefore be happy to explore with you how we can use our combined knowledge and expertise to prepare businesses for the digital economy.

Relined has a close-knit Dark Fiber network and can work with you to create a reliable and secure Dark Fiber connection with the aim of meeting the end customer’s requirements for stability, unlimited bandwidth, 24/7 availability and optimum cybersecurity. Our network is still growing, and we continue to connect key data centres to it. By joining forces, we can offer end customers a total IT solution now and in the future.

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