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The network effect in Indonesia
Companies build a competitive edge by offering the best user experience, and creating a growth loop where digital growth supports Indonesia’s economic growth vice versa.
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Tech attachment: A man is glued to his computer. A significant number of Indonesian internet users are still digitally illiterate. (Kemudi Facebook Page/File)
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aking root in the 1980s, Metcalfe’s Law theorized that the value of a network is based on how many people or things are connected to it. Now referred to as “the network effect” after decades of modification, it is a concept that can be applied to technology, finance, social networks, software, cloud services, Web3 services, and more. In essence, in order for these services to thrive and expand, adoption rates that make it more beneficial for new customers to subscribe to or utilize the services must be reached.
The concept can apply to an industry that provides a service through multiple providers to a fast-growing audience of customers and end users such as the data center industry as its markets expand around the world.
Zooming into Indonesia, 73.7 percent of the over 270 million population utilize the internet daily, making it one of the world's largest digital economies. However, compared to Singapore’s 183 watts per capita, Indonesia's overall data center capacity currently equates to only 0.6 watts of power per person, a significant mismatch given the country's online population.
Therein lies a significant gap that needs to be filled, where data centers with dependable networks are paramount towards supporting a developing digital economy of businesses that are storing and processing data and hosting online applications for their end users.
The value of a data center platform lies not only in its size or power but whether businesses and service providers can rely on it and the benefits it provides to end users. The deployment of data centers in Indonesia to support public access to digital services and a growing digital economy creates a valuable network that will benefit businesses and users.
This translates to companies getting their data closer to customers by adopting local solutions that reduce latency and increase data sovereignty, making it easier and more secure for companies to operate and transact online, and for individuals to access digital services and participate in the global digital economy.
The drive to move data, cloud, and computing services closer to customers requires localized strategies offered by providers that keep user experience as a focal area. The financial benefits of superior customer experience are clear, creating value for businesses and customers alike.
Companies build a competitive edge by offering the best user experience, and creating a growth loop where digital growth supports Indonesia’s economic growth vice versa. Data centers are essential to strengthen this loop. The true key that unlocks the network effect of an in-market data center’s fullest potential is the ability to provide its customers with the services, scale, reach, and flexibility they need.
Flexibility has become indispensable for data center providers working with customers who are pushing forward with advanced technologies that need creative, adaptive data center solutions. Providers have to be flexible, whether they are providing high-density power for machine learning or a looking towards a smaller deployment to facilitate EV charging, data off-loads, and firmware and software updates for a new generation of cars, trucks, and other vehicles.
Different customers require different solutions but ultimately a well-tailored offering will help customers achieve their end game: a unique experience for their own customers.
How does the network effect fit into the digital supply chain that runs from the data center platform to the service provider and end user in Indonesia?
When more businesses tap onto data centers, they can be used and operated more efficiently, broadly, and accurately, increasing its value to more businesses through expansion. As business growth is driven into broader marketplaces, they will take notice of the corresponding network effect in their products and services as they become available to more users in more global markets, with correlated user experience improvements.
The world really is getting smaller, in no small part due to the services provided by data centers. But all of us – data center providers, service providers, enterprises, innovators, or networks – are part of the network effect and play key roles in enhancing the experiences our end users as they interact with our products, tools, and platforms.
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The writer is managing director for Asia Pacific at EdgeConneX.
