the business of the digital ecosystem
DESCRIPTION
Presented by Michael Leppitsch from Apigee during Mobile Day Mexico 2014.TRANSCRIPT
The Business of the Digital Ecosystem
A Guide to Rapid Evolution in the Digital Economy
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All industries are in the process of a major transformation to software-driven, digital businesses.
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Apigee leads enterprises in transition to digital world
The leader in API technology and services for enterprises and developers Billions of API calls per dayOver 100,000 developers in the communityHundreds of enterprise customers worldwide across all industriesOver 50% of world’s top 10 telcos and retailersThought leader with over 100 webcasts, e-books, white papers, courses
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Global Digital Ecosystem
US Digital Ecosystem Mexico Digital Ecosystem
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Two-thirds of the 140 million U.S. adults with smartphones state they are more likely to shop at a store with an app.
Q: How much more or less likely are you to shop at a store that offers an app with a searchable product catalog, featured sales, and a store locator?
Source: Apigee Institute Survey of 1,000 US Smartphone owners, November 26-30, 2013; margin of error +/- 3.1
Total Top App Users
Millenials 18-49 $50K +0
50
100
1936
25 18 11
66
84
67 66 65TOTAL
More Likely
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Mobile apps are a necessity now
Source: Apigee Institute Survey of 1,000 US Smartphone owners, November 26-30, 2013; margin of error +/- 3.1
Total Top App Users
Millenials 18-49 $50K +0
50
100
1532
14 15 14
8192
78 79 79TOTALChanged how I do this
Q: How much has having a smart phone or tablet changed the way you shop?
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Nine out of ten smartphone users expect mobile to have changed their shopping behavior by 2015.
Q: Thinking of the next two years, how much do you expect smart phones, tables, and apps to change how you shop?
Source: Apigee Institute Survey of 1,000 US Smartphone owners, November 26-30, 2013; margin of error +/- 3.1
Total Top App Users
Millenials 18-49 $50K +50
100
9099
90 89 89
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Majority expect stores to have “key services and functions available by app” today, rising to two-thirds by 2015.
Total Top App Users
Millenials 18-49 $50K + Total Top App Users
Millenials 18-49 $50K +0
50
100
52 5747 46 49 53
6749 47 47
67
81
69 64 64 6677
59 61 62
NowWithin 2 years
Source: Apigee Institute Survey of 1,000 US Smartphone owners, November 26-30, 2013; margin of error +/- 3.1
Department Store Grocery Store
Q: Do you currently expect any of the following to have key services or functions available by app?Of those you did not select, do you expect any to provide key services or functions
available by app within the next 2 years?
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The implications of failing to meet rising expectations and changing behavior are dire
Total Top App Users
Millenials 18-49 $50K +0
50
100
1936
25 18 11
66
84
67 66 65 TOTAL
More Likely
Source: Apigee Institute Survey of 1,000 US Smartphone owners, November 26-30, 2013; margin of error +/- 3.1
Q: How much more or less likely are you to shop at a store that offers an app with a searchable product catalog, featured sales, and a store locator?
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Digital leaders outperform market on KPIs
0
50
100
71
53
75
55
79
65
80
55 TOTALOutperformed a lot
Digital leaders, about 43% of all companies. Above average score deploying apps, using data analytics, and operating APIs today. Digital laggards, about 57% of all companies. Below average score deploying apps, using data analytics, and operating APIs today.
Analysis of 1,321 companies from
3 Institute surveys from April 2013, Sept. 2013 and January 2014
Across surveys of 1,321 large companies, we have found that companies who outperform on big data analysis, API development, and app deployment
have seen report significantly better market returns.
Margin Market Share Gross Revenue Customer Satisfaction
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The pattern holds true with retail interviews
0
50
100
71
53
75
55
79
6575
55TOTALOutperformed a lot
Analysis of 57 Retail companies
from 3 Institute surveys
The retail data, while a smaller sample, follows the same pattern as the rest of the marketplace.
Margin Market Share Gross Revenue Customer SatisfactionDigital leaders, about 50% of all retailers. Above average score deploying apps, using data analytics, and operating APIs today. Digital laggards, about 50% of all retailers. Below average score deploying apps, using data analytics, and operating APIs today.
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Across the board, owners embrace smartphones and apps with intense favorability
Aggregate Store Favorability
Your Smart Phone Your Apps Smart Phones0
50
100
16
7561
79
72
17 3917
Very FavorableFavorable
Source: Apigee Institute Survey of 1,000 US Smartphone owners, November 26-30, 2013; margin of error +/- 3.1
Q: I'd like to rate your feelings toward some brands, people and things, where 100 means you have a VERY WARM, FAVORABLE feeling, 0 means you have a
VERY COLD, UNFAVORABLE feeling, and 50 means you're not particularly warm or cold.
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Apps are an influential engagement channel
0
50
100
67
9
Very favorable (75+) scores of 10 well known large
national stores with apps
Source: Apigee Institute Survey of 1,000 US Smartphone owners, November 26-30, 2013; margin of error +/- 3.1
80 57 Mean Favorability Score
Q: I'd like to rate your feelings toward some brands, people and things, where 100 means you have a VERY WARM, FAVORABLE feeling, 0 means you have a VERY COLD,
UNFAVORABLE feeling, and 50 means you're not particularly warm or cold.
with apps without apps
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Even for frequent shoppers, favorability is 5% higher with who use the store’s app compared to those who do not
Very favorable (75+) scores of 10 well known large
national stores with apps
Mean Favorability Score
Q: I'd like to rate your feelings toward some brands, people and things, where 100 means you have a VERY WARM, FAVORABLE feeling, 0 means you have a VERY COLD,
UNFAVORABLE feeling, and 50 means you're not particularly warm or cold.
0
50
100
77 74
255
84 80 61 52
Source: Apigee Institute Survey of 1,000 US Smartphone owners, November 26-30, 2013; margin of error +/- 3.1
Frequent Shoppers Infrequent Shopperswith apps without apps with apps without apps
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Top app users enthuse about benefits from their smartphone including access, information, connectedness and ease
Source: Apigee Institute Survey of 1,000 US Smartphone owners, November 26-30, 2013; margin of error +/- 3.1
Q: In your own words, what has changed most in your life due to getting a smart phone?
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Leverage mobile apps to drive action and build engagement
Watch City Council Session Provide comments or response to a proposed project in your town
Report a pothole or other need for city services
0
50
100
43 46
93
68
56
92
All Consumers
Top App Users
Source: Apigee Institute Survey of 1,000 US Smartphone owners, November 26-30, 2013; margin of error +/- 3.1
Perc
en
tage G
row
th
In each case, being able to perform each action using a mobile app significantly increased respondent’s stated likelihood of performing each action.
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Place bets beyond table stakes
0 10 20 30 40 50 60 70 80
Top App UsersConsumers
Easily usable interface
A store-finder feature
Customer service access
The ability to buy items (delivery)
The ability to buy items (pick-up)
Seamless app/tablet/PC connection
Seamless app/in-store connection
An attractive design
Personalized services based on previous purchases
Connection to other apps
Percent who report feature is critical
Table St
akes
Small R
each
Innovation
Q: Thinking of retail store apps, please categorize the following feature in one of the following buckets: Critical for any retail app, desirable, ambivalent, or undesirable
Source: Apigee Institute Survey of 1,000 US Smartphone owners, November 26-30, 2013; margin of error +/- 3.1
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Achieving return on innovation requires strategic execution.
The beginning steps that must be forcefully executed are:
Business Alignment: portfolio / roadmap for digital products
Program Organization: platform roadmap to support product strategy
Program Execution: mobilize platform and product teams to deliver the roadmap
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Changing How You Change
CHANGE
AGILITY
• Organization• Product Management• Architectures• Timelines• Marketing
• Markets• Consumers• Partners• Offerings• Satisfaction
After
CONTROL
RIGIDITY
Before
Culture
Result
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Digital Value Creation
BRAND /HALOS
BUSINESS /CUSTOMERPROCESSES
DIGITALPRODUCTS
User Experience (UX)
Revenue Generation
Vanity Apps
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Customers
Partner Developer
s
Internal Developer
s
External Developer
s
Digital Assets
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Apps
APIs
Data
Digital Assets
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Apps
Grow
Acc
eler
ate
Engage
APIs
Data
Digital Assets
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APIAPI
API
Digital Assets
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Marketing Services9%
Education5%
Entertainment15%
Publishing10%
Financial11%
Travel & Hospitality8%
Public Sector8%
Transportation & Logistics
14%
Healthcare3%
Real Estate2%
Retail10%
Telco7%
Source: ProgrammableWeb data 7-25-13
10,000 Open APIs~ 4% of APIs are open
• Open• Diverse• Adaptive• Comprehensi
ve• Competitive• Dynamic• Iterative• Easy to Use
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CoreEnterprise
Assets
AppApp
App
Partner
Partner
App
Partner
Busi
ness
Dem
and App
Time
API Lay
er
App
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Impact to cycle times and costs
“<Top 5 operator> expects that APIs can reduce its application development cycle from 12 – 18 months to less than 6 months. Assuming each API initiative is reused at least one more time in addition to the original use, there’s an estimated $100 – 200M in IT capital cost savings in 2012 and over $500M by 2015.”
Telecommunications Technology Transformation Market Research 2013Coding reduction
50,000 LOC
4,000 LOC
Onboarding reduction
12WEEKS
4HOURS
Greater reach
5KDEVS
150KDEVS
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end-to-end solution
end-to-end solution
Technology Platform
Consumption
exposes the core assets and applications as a consistent externally addressable system.
enables interaction with the enterprise assets in a controlled manner from any app or device regardless of type or language.
provides leverage for development of first-party end-to-end experiences and for deriving value from partners and customers.
Silo Solutions
Compute Resources Compute Resources
Enterprise Assets
DigitalAsset
FinishedApp
PartnerFinished
App
CustomerFinished
App
Digital Asset
Exposure
TRADITIONAL ENABLED
Enable innovation by exposing digital assets
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Digital Business Success Model
Digital Business
Mission + strategyOutcomes + KPIsGovernanceDigital ecosystems
Product lifecycleAPIs for productsMonetizationAPI lifecycle
Developers + partnersAPI TeamStyle of API programs
Developer communityDeveloper supportDeveloper analytics
Logical architectureAPI facades + policiesAPI analytics
Lifecycle supportBaaS and other servicesSecurity + auditing
Infrastructure architecturesPerformance + scaleSecurity + identity
Availability + continuityAnalytics + diagnosticsIT change management
Digital Products
DeveloperEcosystem
API Services
IT Architecture
Context and insightsKPIs + metricsData science
Big data + fast dataRealtime consumer
BehaviorInsights
Exec
utive
W
orks
hop
Ecos
yste
m
Pack
age G
over
nanc
e Pa
ckag
e
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Example of an Enabled Organization
Field Service
Partner Business
Retail Business
Chief Digital Officer
API Team
CEO CIO
IT Core Systems
IT Integration
IT Platforms
App Development
Revenue, Ecosystem Speed, User Experience, Innovation Security, Reliability, Cost
App Development
App Development
App Development
Vision and Influence
ServiceService
Cont
rol
Cont
rol
Serv
ice
Cont
rol
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Software Engineers
Profile of an API Team
Operations
SolutionArchitects
QA UX
APIProduct Manager
APIDesigner
APIGatewayOperations
ExecutiveSponsor
DeveloperCommunityManager
PartnerSupport
BusinessLiaisons
Technical skills for API Team are similar to that of a solid web team
Strong software product management skills
Strong web-centric data architecture skills
In depth platform expertise
Evolves into Chief Digital Officer
Social, technical, evangelist
Internal transformation and development skills
Creative, hands-on business development skills
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Context is key to understanding customers
Customer Experience
Partner Interactions
Enterprise Services
Location Time Weather Habits Social Prior Purchases
Discounts Brand Affiliation Promotions Integration Logic
DeveloperUser APIApp API Team Backend
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Deliver & Collect
analyze behavior across digital channels
generate new class of data
Enrich
add relevant surround data for context
internal and external
Adapt
optimal contextual experiencereal time
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Deliver & Collect
analyze behavior across digital channels
generate new class of data
Enrich
add relevant surround data for context
internal and external
Adapt
optimal contextual experiencereal time
w/ APIs w/ Big Data & Earned Data
w/ PredictiveAnalytics
Digital AssetsAP
I API
API
API
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All New Businesses are built on APIs
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Composite of New Revenue Channels
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About the research
This report is based on two sources of data. The information regarding the enterprise results is based on a database of 1,321 interviews amongst executives and IT decision makers at companies with more than $500 million in annual revenue. The data is compiled from three surveys: 200 interviews from an April 2013 survey, 321 interviews from a September-October 2013 survey and 800 interviews from a January 2014 survey. All three surveys were conducted online via verified double-opt-in panel. The consumer data came from an Apigee Institute survey of 1,000 US smartphone owning adults conducted via a verified double-opt-in panel. The survey was conducted November 26-30, 2013 and has a margin of error of +/- 3.1. The demographics were weighed to match The Pew Research Internet Project’s October 2013 poll of smartphone owners.