The business value of APIs

PwC Technology Forecast 2012, Issue 2

www.pwc.com/techforecast

December, 2012

PwC

Speakers

•  Moderator: Sam Ramji, Apigee •  Bo Parker, Center for Technology & Innovation, PwC

§ The Business value of APIs •  Scott Monson , Strategy Advisory, PwC

§ Getting Business Value from APIs

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Architecture Infrastructure

PwC Center for Technology & Innovation http://www. pwc.com/cti

Applications

Data

Enterprise mobility

Cloud computing

Enterprise innovation

Social technology

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Sustainability

Advanced analytics

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Background

How should clients (CIOs) deal with the challenges from multiple disruptive trends, Social, Mobile, Analytics, Cloud (SMAC) happening together? Challenges:

•  Pace of change in the marketplace •  Demand for new apps, services, features •  Customer power (Consumerization of IT)

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Interviews

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David Zanca SVP of IT, Customer Access, and Revenue Systems FedEx Services

Thomas Wicinski VP Digital Access Marketing FedEx Services

Mark Noworolski Chief Technology Officer Streetline

Jon Donovan Senior EVP Technology & Network Ops AT&T

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Interviews

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Sam Ramji VP Strategy Apigee

John Musser Founder Programmableweb Alcatel-Lucent

Devon Biondi VP Strategy Services Mashery

Laura Merling SVP of Application Enablement Alcatel-Lucent

Brian Katz Director, head of mobility industrialization & engineering group Sanofi.

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How are leaders responding to the SMAC challenge?

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How are successful enterprises strategically managing the confluence of SMAC and related emerging trends?

They are rethinking their enterprise architectures and emphasizing three fundamental changes: 1.  Shift in value driver: digitization of business ecosystem means

information content accounts for a faster rising proportion of the overall value of any product or service.

2.  Shift in operating model: tapping into new drivers of value using a digital operating model, a model attuned to participating in or integrating with expanding digital ecosystems.

3.  Shift in architecture: adjusting their business and IT architectures to take advantage of the rise of RESTful APIs to become a permeable enterprise.

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Case example: Streetline and Parking ecosystem

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Business ecosystems are becoming more digitized, where information content accounts for a rising proportion of the entire value of any product or service.

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Tapping rising value of linked information

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“We were looking for something where we can assign a value to each one of those bits of information.” “We use this [parking spot availability and payment] information to create a smart parking ecosystem.”

—Mark Noworolski, Streetline

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Value drivers are shifting

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A consequence of SMAC is that value from bits will rise faster than from atoms.

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Case example: FedEx, a culture of valuing information

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•  “information about package as valuable as package”

•  All assets instrumented and connected

•  Innovations on customer access to information

•  Architecture for low cost interactions in the ecosystem

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A culture of valuing information gives FedEx a digital operating model

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“Information about the package helps us run our business better. That comes from a digital operating model where all our assets are connected and surface information to increase overall value to us and the customer.”

—David Zanca, FedEx Services “Not only do our customers want more information about the packages, but they also now want more interaction with FedEx and expect us to react to changes and resolve problems if they occur.”

—Thomas Wicinski, FedEx Services

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Why companies do not have a Digital operating model?

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Emerging use of APIs scale integrations

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Use of external facing APIs to make connections in a digital ecosystem is rising

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Growth driven by REST style of APIs

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REST connections are stateless, loosely coupled and use popular web protocols Although not suitable in all cases, REST is simpler and scales easily

Create permeability, promotes co-creation in digital ecosystems

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AT&T: A permeable enterprise AT&T’s API program: •  key pillar of innovation strategy •  an architecture to move at the

pace of change •  future proofs existing assets •  makes AT&T network into a

platform and addressable by other innovators

•  creates permeability

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“[The API program] is an architectural choice one makes for speed.”

—John Donovan, AT&T

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AT&T’s goal is to make its network the most addressable network globally.

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“If you have infrastructure assets and are going to operate at a pace at which the external market is moving, you have to take capabilities—industry-specific or not—and make platforms from them.”

—John Donovan, AT&T “We’re pivoting toward thinking about architecting everything we do in a more API-centric way”

—Jacob Feinstein

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Open IT: CIO enabling the permeable enterprise

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Open IT builds on prior SOA efforts to scale integrations and engage internally and externally with digital ecosystems.

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Getting Business Value from APIs

Scott Monson Director, Strategy Advisory PwC US Advisory

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The forces of SMAC transform the way firms collaborate with their stakeholders to unlock new value

SMAC: The power of the social enterprise Le

gacy

Bus

ines

s P

roce

sses

Employees

Trading Partners

Markets

Stakeholders

1. Business Objectives

2. Innovation Strategy

Operating Model Dimensions

4. Culture

5. Governance

6. Team/Resources

11. Motivators & Metrics

7. Funding

8. Portfolio

9. Processes

10. Ecosystem

3. Organization

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Why APIs: Business Drivers

PwC CTI http://www.pwc.com/techforecast 22

API

Relevance

Innovation

Revenue

Cost Reduction

•  Low touch sales channels •  Time to market •  Self-service

•  Agile, modernized environment •  Partner friendly •  Permeable

•  New distribution channels •  New markets •  New services and business models

•  Co-creation •  Wisdom of the crowd

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Typical Engagement Elements ‘Whole Product’ Solution Life-Cycle

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1 .Strategy

2. Productize

3. Expose and Manage

4. API Optimization

5. Developer Program

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Apigee

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API Strategy – answer key questions related to program success by using fundamentals to define, approach and plan

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What data and services do you have?

What can be made

available?

Who is interested in that data?

How well do you engage

them? What can be monetized?

Do you aggregate

APIs?

Strategy Fundamentals

• Simplify the complexity by identifying certain aspects of the situation as critical.

Diagnosis

• The overall approach chosen to cope with or overcome obstacles identified in the diagnosis

Guiding Policy

• Feasible, coordinated policies, resource commitments, and actions designed to carry out the guiding policy.

Coherent Action Plan

Customer

Cost Competition

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API Strategy: Cost - Monetization and Business Models

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•  Charge for access or usage of the API Direct Revenue

• Syndicate Content and Data • Embed your API in other sites and apps – Google Maps Distribution Channel

•  Expand awareness through 3rd party distribution •  Measure API interactions and new traffic Marketing Channel

•  Cheapest and Fastest way to build applications •  Enable all platforms with one set of APIs Application Enablement

•  Use to enhance existing software and platforms •  Enhance internal and external use of data and

content Distribute Services

•  Address the long tail of markets and segments •  Increase availability to innovation 3rd Party Innovation

•  Integrated enterprise code tends not to change Lock-In

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API Strategy: Customer – Developer Segments

Awareness Commitment (decision)

Development (support) Certification Marketing

(promotion)

Business Development ROI Core

Membership Managed Process

Contract/ Relationship

Marketing Opportunity/ Interest

GM 50% Community 50% Distinguish Contract/

Self Marketed

Word of Mouth /

Marketing

Excitement

Community

Informal

Word of Mouth

Corp

orat

e Pa

rtne

rs

Smal

l /

Inde

pend

ents

H

obby

ists

Most likely to have business impact

Most likely to create breakthrough innovation

Most likely to create excitement & support the community

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API Strategy: Growth Scenarios

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Bus

ines

s B

enef

its

2013 2014 2015

Scenario 1 – Minimum Investment

Developer Support

Event Marketing Portal

Development

Increased Support Staffing

Thought Leadership

Exclusive member

programs

Community Management

Partnership Development

Sample App Development

Developer Evangelists

GM Specific Events

“Foundry” Design Centers

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API Optimization: Getting the Most Out of Your Program

§ Key metric management § Performance measurement § Usage patterns § Standards § Competitive landscape

§ Versioning / Deprecation § Tweaks & feature updates § New API’s § Business model updates § End of life

Analyze Optimize & Maintain

Communication

Developer Community Partners

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Promotion

Recruiting

Community

[[

]]

Support [ ][ ]

Developer Program: Framework

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Infr

astr

uctu

re

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Developer Program: Recruiting - Getting Developer’s Interested

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Build Skills Increase Productivity

Promote Win - Win

Solve Problems

Help developers solve real world problems

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Developer Program: Recruiting - Venues for creating program awareness

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• Business development • Established relationships • Trade shows • Speaking at conferences • Media

Corporate partners

•  Trade shows •  Speaking at

conferences • Media

Small and/or independent

• Word of mouth •  Contests •  Social media • Media

Hobbyists

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Developer Program: Community - Three Forces of Engagement

Substance [ ]

Opportunity [ ] Charm [ ]

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Developer Program: Support

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Info Resources: Documentation, Code samples, Forum, Blogs/Social Technical Resources: App lifecycle

management, Testing, Moderation, Certification

Program level

Core

Gold

Community

Fee

$$$$

$$

Free

Support level Hand

holding Some

support Open

community

Certification / Membership Levels:

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Developer Program: Promote - Go to Market Strategies for Developers

Co-branding Co-Marketing

User ratings Community voting

• Co-sponsorship of trade shows

• Co-branded advertisements

Corporate partners

• App marketplace • Leaderboard of popular apps

• Periodic app marketing campaigns

Small and/or independent

• Community portal where developers can propose ideas and get voted on

Hobbyists

Help developers bring apps to market

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Typical engagement elements

Measurable Value Opportunities 1.  API and Developer Program Strategy 2. API Productization 3. API Exposure and Management 4. API Optimization 5. Developer Program Execution

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Conclusion: Consumerization of APIs

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•  APIs are becoming open and ubiquitous in digital ecosystems

•  The ability to create, expose and consume these interfaces is available to all (not just software or digital native companies)

•  Abstracting business capabilities to programmable interfaces provides a systematic method and architecture to engage with SMAC and related emerging trends

•  APIs are now strategic to all enterprises.

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Questions?

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“APIs are the building blocks for the digital economy.”

- Laura Merling, Alcatel-Lucent

PwC

Disclaimer

PwC US helps organizations and individuals create the value they’re looking for. We’re a member of the PwC network of firms with 169,000 people in more than 158 countries. We’re committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com/us. © 2012 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved. PwC refers to the US member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.

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