Apigee CEO Chet Kapoor - “Demand for better customer experiences grows from murmur to roar.”

Jessica Twentyman Profile picture for user jtwentyman March 2, 2016
The role APIs will play in digital transformation is only just starting to be understood - but it promises to be massive, says Kapoor.

chet kapoor
Chet Kapoor

It’s absolutely freezing in the Tobacco Dock event centre in London’s Docklands, where I meet up with Apigee CEO Chet Kapoor. It’s so cold, in fact, that our interview has to be conducted on chairs moved as close as possible to a portable space heater and we occasionally strain to hear each other over the noise of its fan.

But Kapoor isn’t letting the cold get to him. He’s having a “terrific” day, he says. The company has just announced record second quarter revenues, comfortably beating estimates with sales of $22.9 million, up 35% year on year. During the quarter, it added four Fortune 100 companies to its customer rollcall. In short, he’s pretty chipper.

Apigee’s second annual European conference, meanwhile, is packed. This year, it’s attracted around 500 attendees, says Kapoor, more than twice last year’s number. Among them are representatives of the BBC, Burberry, Marks & Spencer, BUPA and Thomson Reuters.

It seems that these companies, and others like them, are starting to recognise the role that APIs [application programming interfaces] will play in their digital transformation efforts. They will do this by exposing back-end information assets and services, so that these can be consumed by other applications as part of entirely new, digital offerings for customers and partners, many of which will be delivered over mobile devices.

In order to launch more of these new services faster, developers must be able to build, manage and secure APIs at scale - which is where Apigee, along with competitors in API management (such as CA Technologies with Level 7, Tibco with Mashery and Mulesoft) come in. Says Kapoor:

Demand for better digital experiences has grown from a murmur to a roar.

What he means by that, he explains, is that companies are under intense pressure to deliver access to services and information, across multiple devices and platforms, to employees, partners and customers. Increasingly, the Internet of Things is only going to make integration more complex. An armoury of well-built, well-managed APIs, he insists, is increasingly a competitive weapon in the race to disrupt, or be disrupted. It may even be:

the key to corporate survival in our increasingly digital world.

Here, he may be getting a little carried away, but a touch of hubris may be warranted. The big challenge for Apigee, along with other companies in this space, is to get its name known beyond the development team members who work with its technology on a day-to-day basis - but unsurprisingly, discussions of synchronous versus asynochronous API calls, access tokens and JSON versus REST services tend to leave business users cold.

In effect, all API management vendors need, to a greater or lesser extent, to emerge from the back office and into the boardroom. The digital transformation message is one that resonates strongly with the audience companies like Apigee are looking to reach.

Traffic rise

Either way, Apigee’s State of APIs 2016 report, also released today, reveals some interesting trends in API traffic that business users can hardly fail to grasp. It’s based on an analysis of the approximately 400 billion API calls that passed through the Apigee Edge cloud product during the 2015 and shows that:

  • API traffic volume increased 2.8 times over the previous year. The company interprets this as “enterprise digital transformation gaining momentum.”
  • Partner initiatives driving the most API growth in enterprises. In 2015, partner/ecosystem initiatives accounted for 56 percent of all APIs, with customer APIs accounting for 39 percent.
  • But customer experience initiatives drove four times more API traffic. While partner programmes led in the number of APIs, customer experience initiatives accounted for approximately 80 percent of all traffic - “a reflection of the millions of consumers using apps”, says the company.

With so much hoopla around customer experience right now, it seems surprising that Apigee customers are more interested in creating APIs that power transactions with partners: their suppliers, resellers, or logistics providers, for example. Kapoor says:

Automating partner collaboration is happening a lot. I was certainly surprised about the percentage of partner use cases, because I didn’t expect it to be more than customer use cases, but that’s what our research shows. When I think about it, though, it does make sense: it’s about companies going back to B2B relationships they already have and value, and making them more efficient.

Look at this way: a telecommunications firm may have 600 resellers and 600 different ways to interact with those resellers. Then imagine they want to change their rate card, to push prices up. What do they do? They have to make that change 600 times, because every reseller’s using different technologies. But if all 600 use the digital service, based on the same API, then I can make a change and everybody gets the update at the same time. The impact in terms of efficiency and cost savings is just felt quicker.

But I think this is going to change. I expect it to change over the next year or so, as companies experience early wins in partner use cases and then turn their attention to delivering great customer experiences.

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