Digital transformation goes beyond mobile to the API layer

Phil Wainewright Profile picture for user pwainewright August 21, 2014
What's beyond mobile first? It's API first - and a new class of two-speed enterprise IT leaders that approach digital transformation from the outside in, says vendor Apigee

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Rolling out a mobile stretegy is often the first step towards digital transformation in the enterprise. But it mustn't stop there. As Sam Ramji, head of strategy at API technology vendor Apigee told me last month:

A smartphone is just one example of a non-laptop form factor that you want to interact with.

He explained that enterprises often find the data they want to expose to mobile apps is equally useful for direct interactions with their customers' applications or with Internet of Things devices. Then they discover that what they really need to build is an entire API layer of service interfaces.

The thing that's often below mobile first is API first. We've seen that as a large-scale pattern. About 60 percent of our customers come to us because they started with the mobile apps and they realize they need better access — and that leads them to the APIs.

For most organizations, this is an iterative learning process, he said:

Each time you realize quite a bit more. We see enterprises go through that. They iterate their app every six months and they start to see their opportunity to expand their business by being stickier and offering these services.

Finally, he said, they become aware of the potential to build out a portfolio of digital services:

They start to go beyond mobile experiences to start building out APIs and pretty soon after that, they start asking could we be a platform? What does it mean to be an enterprise and become a platform? Which means that each of their capabilities is digitally packaged in order to realize network effects.

As soon as you offer APIs to third parties — initially to partners — you are making baby steps into becoming a service provider.

Two-speed enterprise

This month, the vendor's in-house thinktank has published a research report analyzing the makeup of enterprises that are furthest advanced down this transformational path: Lessons from the App Masters (requires registration for download).

One of the most interesting findings is the consequence of exposing internal services to the outside world: it rapidly shows up the divergence between this outward-facing, digitally connected form of IT and the traditional enterprise core — a two-speed enterprise effect that I've previously highlighted. The report explains:

The companies that reported exceeding expectations on all five metrics for app development success — enterprises that we refer to as "app masters" — are distinguished from others by one significant characteristic: their strikingly different description of their IT organization.

App masters have IT departments that incorporate a two-speed structure to their IT program. They have a 'top gear' that features an 'outside-in' structure and process to maximize their agility and adaptability. This enables these companies to deliver competitive systems of engagement, while maintaining a first gear that provides the core competencies and support for stable systems of record ...

BCG, the Boston Consulting Group, describes the result as "two-
speed IT." There's the speed that traditional IT can deliver service to the business. Then there's "digital speed," which is necessary to enable and drive the company's digital agenda, BCG says.

"Industrial-speed IT, where the primary emphasis is on cost optimization rather than flexibility, is characterized by predictability, long lead times, and siloed, functionally organized teams of individuals who possess specific skills. Digital-speed IT is characterized by unpredictability and places a premium on flexibility, speed, and collaboration."

Outside-in IT

Another way of looking at this is that, to successfully achieve digital transformation, companies must allow their interactions with the outside world to set the pace of their IT, rather than vice-versa. Or, as the report puts it:

[T]he trait that most distinguishes app masters from other enterprises is the degree to which the IT decision makers at these companies describe their department as outside-in.

This trait manifests itself in two ways, says the report:

First, they have embraced delivering digital experiences for employees, customers, and partners as a competitive necessity. Rather than accepting that legacy systems and practices are a constraint, they ask how legacy systems and practices can change or be extended to make their company a digital leader.

Second, they have moved beyond "build versus buy" to view the IT function as an ecosystem orchestrator, aggressively leveraging external resources whenever and wherever they provide an edge.

As a consequence, they are aggressive cloud adopters, the report continues:

About half of them (49%) strongly agree that they are committed to leveraging cloud-based resources to meet business needs, compared to only 12 percent of the full sample.

The final message of the report is the need to adopt a new, micro-services oriented architecture more suited to the kind of apps that are needed:

As business drives demand for contextually-aware, highly personalized, predictive apps, delivered to new types of devices, built in tighter timeframes, the application architecture has to move beyond the integration-server/application-server pattern that has characterized much of the last decade of web application development to a four-sided model of API architecture — app-to-client, app-to-backend, app-to-app, and the exploded app built from micro-service APIs.

Once this happens, not only can the application be built in an agile fashion, deployed at scale, and support any form of future front-ends, it can also easily be connected to every other application inside and outside the enterprise. It can easily share the relevant data with analytics systems, and, in turn, deliver back data-driven, contextually-relevant actions based on real-time feedback loops driven from those same analytics systems.


The conclusion for IT leaders:

To meet and exceed expectations, IT leaders must move beyond the legacy of an inside-out, control-oriented mindset and toward an outside-in, cloud-first, and digital experience-centric approach.

To which I say, hear hear. But I have more to say on how that's achieved in the next post in this series, when I'll discuss the role of unbundling as a force for change (the previous post examined how digital transformation goes beyond customer experience. Also look out for my colleague Jon Reed's coverage of Apigee's I Love APIs conference, which he'll be attending next month.

Disclosure: Apigee is covering Jon's travel and expenses to attend its event.

Image credits: Phone with cloud © naypong -; others courtesy of Apigee.

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