The most urgent challenge facing businesses now has fundamentally changed. For the first time in the history of information technology, the barrier to success is not the pace at which technology can be implemented, but the pace at which people can redesign their business and change their behavior. A digital transformation is forcing everyone to think fast and act fast. Given the abundance of choices, most businesses are now either in a state of extreme excitement about the opportunities at hand, in a state of panic about how to move forward, or both.
Here’s how we got here. Just before the turn of the century, most companies were struggling to implement a small number of enterprise apps, most commonly ERP, often in response to the Y2K problem. Then, it seemed that each department got its own application: CRM for the VP of sales, supply chain applications for the VP of operations or manufacturing, not to mention application for HR, maintenance, customer service, and so on.
The Internet Boom: Tectonic Shifts
But several tectonic shifts happened during the first Internet boom. First, the consumer-focused Internet companies such as Apple, Google, Yahoo!, and Amazon took the ball of innovation. The latest technology started to arrive first in our personal lives, not in our offices. Email, social media, video, blogging, texting, and instant messaging all changed how we lived. Smartphones became powerful and tablets quickly followed, opening the door to a huge number of apps that could follow us anywhere.
Then the amount of data being created dramatically ballooned. Every smartphone and many other devices used a growing number of sensors, cameras, and other mechanisms to generate massive amounts of data. Every application and server also became a source of data. New technology such as Hadoop, Splunk, QlikView, and Tableau arrived at all points of the business intelligence stack to help process this data. The world of traditional business intelligence was transformed.
A Sustainable Advantage
The potential to apply technology to help automate business and create new ways of making products and services dramatically expanded. The problem facing businesses today is how to harness this abundance of technology and data to gain a sustainable business advantage.
At CITO Research, we have been studying how companies are facing this problem. Our broad conclusions are as follows:
- Business strategy must drive a process of business design that is able to evolve and adapt rapidly.
- Businesses must build platforms as a foundation for rapid development of applications.
- The platforms must include both existing enterprise applications and new services available from third parties as a foundation.
- Top-down thinking and design about organizing a business must be balanced with the ability to allow change, development, and innovation at the edge.
- Platforms and applications must be built to allow rapid and orderly evolution rather than occasional massive changes.
- The model for computing has changed from the notion of a stack to the notion of a network. IT has become a digital supply chain in which the best orchestrator wins.
- Traditional ways of analyzing and providing data must be transformed to handle both increased volume of data and the need for a distributed data supply chain.
- Companies will increasingly find competitive advantage from creating and accessing proprietary sources of data inside and outside their companies.
APIs: The Glue of the Digital Supply Chain
The digital transformation will be different in each industry and at each company, but one thing will be common: The entire digital supply chain will be glued together using APIs. The large nodes of the supply chain, such as Amazon Web Services, are controlled through APIs as are the smaller nodes, such as apps running on smartphones and tablets.
APIs will be used as the glue between companies and partners but also will be an important way for different parts of companies to communicate. It was this reason that Jeff Bezos demanded that all parts of his organization open up the data and services they had through APIs.
The winners in this world of digital transformation will be master orchestrators of services of all kinds. They will be able to unlock the energy of their own people by allowing them to create and solve problems on their own. They will be excellent at moving data to where it is needed. The one skill common to all of these competencies is mastering the power of APIs.
Celebrating the Digital Transformation
Our goal in this CITO Research mission is to celebrate companies that are accelerating their digital transformation. Apigee is sponsoring this research because they believe that by focusing on the larger story, that is, the business value that can be achieved by digital transformation, people will better understand the central role of APIs and products like Apigee’s that support their use.
Because the digital transformation cannot be achieved in one big bang, it is useful to examine the bite-sized chunks that companies are actually executing today. We find that these projects fall into various themes. Here are the ones we have discovered so far. Our goal is to find as many themes as possible and write up examples that show how companies have succeeded using those themes.
- Internal Platforms: These examples show how building internal API platforms can accelerate innovation and improve the value created from data.
- Internal Expertise: These examples show how companies have focused on building specific skills in house to accelerate progress.
- Exploiting the Digital Supply Chain: These examples show how making effective use of external services can cut months or years off time to market and increase the power of products and services a company can offer.
- Harvesting Data through Mobile Applications: These examples show how mobile applications can be an important source of data about consumer behavior.
- Using the Mesh Model: These examples show how companies are imitating Zipcar’s so-called mesh model of allowing use of resources in smaller chunks that are scheduled in new ways to open up new markets.
- External data: These examples show how companies are getting significant advantages from external data sources.