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2018-10-02

The connected reality is here – is your organisation there?

2018-10-02
Over the past couple of years we have both talked and blogged about the digital transformation, with connectivity through APIs & integration being an integral part of the transformation. We (and others with us) have argued that you need to act to not be overrun by your competition and explore the possibilities of the digital future. Judging by recent studies it is time to conclude that the connected reality is already upon us. The remaining question is whether your organisation is embracing it or not?

After having spent some time reading studies investigating the state of connectivity and APIs worldwide and my conclusion is that the connected reality is already upon us. Many organisations have established strategies and technology to enable APIs and connect their business with the outside world.

The question is whether they have been able to utilize the technology to implement new business models, new partnerships, improved customer experiences or whatever the objective was for the initiative in the first place.

APIs and integration on a global scale

Globally there is evidence that IT decision makers are realizing the value of APIs and integration with 61% of them saying that API integration is critical to their businesses (State of APIs report 2018).

There is further evidence of the importance of APIs and integration in the Connectivity Benchmark report for 2018 published by MuleSoft, where 650 IT decision makers all over the globe where questionned on the importance of the subject.

With these decision makers representing large corporations with an average of 1,020 individual applications (only 29% of them integrated), no surprise in them naming APIs and integration as one of the key success areas. To reach overarching objectives of the digital transformation, such as modernising legacy systems, integrate SaaS applications and enable investments in mobile applications APIs and integration are extremely important.

5 reasons why initiatives and investments fail

Currently large corporations see IT related initiatives and investments failing due to reasons such as:

  • Time constraints
  • Business and IT misalignment
  • Legacy infrastructure and systems constraints

With small or insignificant increases in IT budgets for next year and a requirement to deliver on average 27% more projects next year, the pressure is really on. Especially when knowing that failing in your digital transformation initiative might affect revenues for the coming 12 months. 81% of the decision makers questioned said that point-to-point integrations still cause the biggest headache for digital transformation projects.

Maybe this explains why the estimation is that next year 22% of total IT spending globally will be spent on integration and connectivity related projects (MuleSoft Connectivity Benchmark report). Comparing that figure with the Gartner press release on the expected total IT spendings, this would equal annual investments of 814 billion USD on integration and connectivity (Datacenter spending is 178 billion USD).

Why money is not the sole answer to success

How come then that with all big spending on APIs and integration, organisations are still failing in some of their digital transformation projects? Well, of course there is no one simple answer to this question, but if we limit ourselves to the area of APIs and integration we might be able to add some color and findings.

Self-service is key

From our perspective the purpose of an API and integration initiative is to free up IT resources and enable innovation within the organisation and the extended eco-system (partners and customers). To achieve this, the purpose of the initiative should be to create self-service capacities and reuse of key components/resources.

This could be in the shape of an API marketplace or other common assets to be used for self service. To reach this objective is however not only about technology. It is also a lot about implementing new ways of thinking and organise a bit differently than before. Many businesses are still used to run their IT departments or ICCs to get integration done or gain access to information.

Driving towards a marketplace

This behaviour make IT departments and ICCs bottlenecks for innovation within digitization. IT departments should work on driving the rest of the organisation towards the marketplace instead. They also have to work hard to persuade system owners and IT development projects towards including APIs and visualise themselves at the marketplace instead of building information/system silos to leave it to the IT department to solve the integration/access issues.

This will require not only technology, but also an organisational change.

”Culture eats strategy for breakfast”

This is an old saying, but also very true today. My colleague Henrik Gavelli elaborated on this topic in a blog post. Putting his text in context with the numbers accounted for in this blog post makes it interesting.

Looking at the numbers in the ”MuleSoft Connectivity Benchmark Report 2018” and the ”State of APIs report 2018”, one can see that there is a lot of funding pouring into digitization and API/integration initiatives globally. Question is if all invested money really turns into real value for the business and if all initiatives meet their targets?

There is no simple answer to this question, since I haven’t been able to find any tangible numbers on the amount of successful API/Integration initiatives, number of public or private API marketplaces etc. Sure, the referenced reports, give account to the fact that more and more organisations see APIs/connectivity as a key element of their business and several are really making money on APIs.

However, judging from contacts with Scandinavian organisations working with digital transformation and connectivity, there is still a lot of work to do to fulfil the full potential. In most cases it is due to the fact that true digital transformation does not only require a state-of-the-art technical platform and architecture, but also a cultural and/or organisational change.

This is often where the biggest challenge lays (old truth for change management).

Connecting your business through culture

There are a bunch of various technical solutions/platforms on the market to solve the connectivity challenges, but many forget that there are also strategic/cultural/organisational challenges associated with connecting your business. This is why many Scandinavian organisations feel that they do not reach the objectives of their initiatives and why they sometimes feel a bit frustrated with their connectivity projects.

This is also why the ”Strategy & Organisation” step of our ”API Ready model” has proved to be so very important when assisting our customers with their connectivity journeys. The Digital Transformation and connectivity solutions of the future often requires a new way of thinking and a new organisational or cultural approach.

You must plan for this and respect the fact that organisational/cultural changes often takes a lot more time than merely implementing new technology. In this area there is also no ”one fits all” solution. Culture changes must be implemented with the existing organisation/stake holders in mind. That is why experience is so important in this field.

Conclusion – the connected reality is here!

So to conclude this discussion, one can safely say, that the connected reality is really here. Judging by investments and number of connectivity initiatives recently, there is a lot of money being put into technical solutions/platforms to digitally transform and connect businesses.

The question is whether these investments are efficient and creates the desired effects. After having talked to Scandinavian organisations we can see that there is some frustration with these targets not being met or that it takes a lot longer than expected. Our conclusion based on this is that even though the technical solutions might be in place, the organisations around them might not be ready.

Invite the entire organisation and be prepared for the unexpected

This is why we recommend whoever embarks on a digital transformation journey with a connectivity initiative, to first really think the strategic approach through and not forget to make sure that the organisation has bought a ticket for the journey.

Be prepared for unexpected challenges (as connecting your business brings new challenges) and give your organisation some time to adopt to new opportunities.

This is how your business will thrive in the connected reality! 

Written by Fredrik Svensson