Dont Get Ubered: APIs Hold Key To Digital Transformation

Author

Dan Woods, Contributor

October 20, 2015

Why is it that both short-term and long-term trading strategies can work in the world of investing?  How can it be that some people make money looking at short-term movements and others make a bundle taking the long view? Shouldn’t everybody be taking the same approach?

The answer is that both long-term and short-term traders can succeed because each is playing a different game. The price movements of the financial markets can be examined and exploited in different ways. Or you can just give up on both strategies, and take up index-based investing, which claims to do at least as well as any other strategy. Or you can use dozens of other strategies or just make up your own. But if you don’t invest – using whatever strategy works for you  – you stand no chance of winning in the market.

The current trend toward digital is a dilemma for many companies for the same reason that people find it hard to find the right approach to investing. What does it mean to make your business digital? What approach should you take? What benefits can you expect? These were the central questions driving much of the discussion at the annual “I Love APIs” conference hosted by the newly public Apigee, and I wrote this roundup to help guide you to your own investment strategy for digital transformation.

In two days of keynotes and sessions, dozens of companies explained how they all use APIs in different ways to accelerate their transformation to become digital businesses. In other words, their approaches are all effective, yet different. There was much to be learned.

APIs in a technical sense are simply a mechanism that allows the capabilities of a computer program to be used by other computer programs. Apigee sells products that make APIs secure, manageable, and scalable. That managing APIs is vital and important as a tool for business can no longer be in doubt. Amazon and Microsoft have announced and launched their own products for API management, and Tibco bought Mashery, the company that Intel had previously acquired.

In a larger sense, APIs are the secret sauce to becoming digital, that is, to transforming business so that innovation can happen at a faster pace, so that barriers to change are reduced, so that many more people can contribute to your company’s success, and so that you can create better products and defend yourself from the competition.

But how do you find a strategy for using APIs to best meet your goals? This is a fascinating question. Here are some of the more interesting aspects of what was presented at the conference which may help you find your answer.

Putting the Three Cs of Digital Transformation to Work

Apigee CEO Chet Kapoor set the stage for the conference by focusing in his keynote on his view of the crucial issue for 2015: How to become digital. In years past, many companies have struggled with the idea of whether to commit to a program of digital transformation. Kapoor says it’s time to stop such shilly-shallying and get to it.

The question for me is, What does it mean to become digital? Kapoor suggested that a digital business “creates value by delivering digital experiences.” This idea of digital is as good as any, and it does get people into the right ballpark. .

As I’ve written about the role of Chief Digital Officer (“Why Your Chief Digital Officer Efforts Will Fail Unless You Construct Platforms” and “Why The Rise Of The CDO Role Represents A Power Grab”), to me what digital really means is to get IT right so that the cost of change and of saying yes to new business initiatives is as low as possible. Being digital means being innovative like Google, Amazon, Apple, Facebook, and Netflix, some of the fastest moving and most innovative companies on the planet. It is no coincidence that all of these companies have been pioneers in making pervasive use of APIs.

APIs are far more than a technology mechanism. When you publish an API, if you do it right, you can do some amazing things. You take away prior restraint. People don’t have to ask permission to use important information or computing power. They can just do it. You empower creativity. Someone with a good idea can make it happen. You bring new people to the party. You create communities of innovation and learning. Oh, and you can transform your business into a platform, a powerful new form of defensible wealth creation.

Of course, these new ways of working feel rather funny to command-and-control sorts of organizations. Kapoor focused on three Cs to make the transition easier:

  • Take steps to promote a culture around the values that APIs enable.
  • Support a community of learning and innovation that reinforces these values.
  • Make sure that the code is managed, secure, reliable, and scalable.

It is clear that the real product Apigee is selling is not just technology, but a set of practices that can accelerate the transformation of a company to a digital future. The other players in this market are focused far more on technology than on this broader vision. Apigee’s future in large part rests not only on its technology but also on its ability to become the accepted platform for digital transformation.

Adopting a Modern Internet Architecture

On the second day of the conference, Apigee CTO Anant Jhingran expanded on what it means to make the transition to a digital business by explaining what is needed to adopt a Modern Internet Architecture, his term for the type of computing infrastructure and practices that support the innovation and power associated with digital businesses.

In his keynote, Kapoor had stated that companies must architect their businesses for trillions of transactions and for availability, efficiency, and intelligence at scale. His message was, “The old will not get you to the new.” Jhingran provided some details of what the “new” entails.

While Jhingran acknowledged that dozens of practices enable scalable delivery and innovation, he pointed out five important ones:

  • To achieve scalability, replace two-phase commits with eventual consistency.
  • To achieve reliability, replace message queues with replication and idempotent operations that mean the same message can be sent and received multiple times without causing errors.
  • To identify unknown threats, replace human created rules with big data pattern analysis.
  • To coordinate services, replace message brokers with distributed networks.
  • To make operations work, don’t revive broken components; dump them and replace.

Jhingran’s message was that the data, compute, and operations layers all have to change and that APIs are the foundation of such a change. “All modern systems work and run on APIs. They are API first,” Jhingran said.

Digital Strategy: Who Ubers Whom?

So Kapoor and Jhingran drew a large circle around the kinds of transformation APIs enable and the sort of changes demanded in general to accelerate digital transformation. Three sessions focused a bright light on how to figure out what to do with your business.

Sam Ramji, formerly of Apigee, but now CEO of Cloud Foundry, presented a detailed roadmap for thinking through a digital strategy. He incorporated a vast amount of thinking and research in a fascinating presentation. His message was that you really don’t have to fly blind. By doing your own research, interacting with developers and your customers, and applying the frameworks and lessons of the thinkers he cites, you have a great shot and creating a workable digital strategy. Creating such a strategy may not yet be a science, but it is far from a miraculous process.

Michael Schrage of MIT, Ed Anuff, Apigee vice president of Product Strategy, and two other industry executives gave a fascinating talk on “Dollars, Discovery, or Dominance? Value Creation Strategies for APIs.” The point of the conversation was that instead of thinking of a broad, abstract API strategy, focus directly on how to make developers successful and rich so they want to use your APIs to make customers happy.

In “Data Strategy: How to Compete and Win with the Next Best Action,” several practitioners explained how they are creating systems for advanced recommendations based on new forms of data and analytics enabled by APIs. I was inspired because Michael Hart, CEO of Attune, and Jerry Wolfe, CEO of Vivanda, were both CIO/CTOs who struck out on their own to capture much more of the value created by their wisdom and expertise. It was in this session that the connection between trading strategies and data and digital practice occurred to me. Each of the speakers took a completely different approach, and all of them were working.

Getting Started: Moving from UI to API

One of the most vexing problems in the world of digital transformation is how to begin. Kapoor ended his talk with simple advice: “Get started!” Everyone I spoke with agreed that the wrong way to get started is to attempt some large, boil-the-ocean analysis to try to understand everything and then design a digital business in a waterfall fashion. But if you aren’t going to do that, what should you do?

One recommendation that showed up in several sessions was to start with the user interface and user experience, then determine what you need in terms of APIs to make that happen. From there, build the APIs and the application in an iterative and interactive way. Mike McNeil, creator of Sails, a node.js framework for building enterprise-grade apps, surveyed a wide variety of iterative techniques in a presentation that was clearly borne of deep experience.

Facing a Device-Driven World

Companies like SAP, Accenture, CentraLite, Orange, and Tech Mahindra all had impressive demonstrations about the Internet of Things. One session covered how Phillips had promoted its API for its HUE connected lights to the developer community.

The IoT arena also seemed like one that would accommodate many different trading strategies. Kapoor suggested abstracting IoT and mobile to a higher level called devices, which I think captures the reality of what will be happening better than the word “things.”

What was clear from all of these sessions is that API strategy may be more important than product strategy in the Internet of Devices.

APIx and Other Vertical APIs

Finally, one trend where Apigee seems far ahead is in creating infrastructure to support vertical API ecosystems. The Apigee Health APIx solution makes it easy for healthcare providers, including hospitals and clinics, to connect with app developers and health data partners to build new FHIR (Fast Healthcare Interoperability Resources) API-based digital services. The idea is to create a reliable infrastructure so APIs can be deployed, used, and monitored in a reliable way in a context where failure can have massive negative impact. It is clear to me that this sort of support for vertical ecosystems is going to be crucial for accelerating innovation.

The Time is Now

In his keynote, Kapoor underscored the urgency of the situation, and the evidence is palpable. Wal-mart was hammered in the market on Wednesday, down 10%. It was its worst day in the market since 1998. Why? One of the main reasons is that the company needs to invest a massive amount of time and money to build up its e-commerce systems to compete with Amazon. Wal-mart says it needs to invest in creating a seamless customer experience, but it’s clearly late to the game.

The takeaway is clear, according to Kapoor. He said that if you haven’t started to transform your business for digital by now, don’t wait. In today’s digital economy, the platform effect will create a WTA (Winner Takes All) in many industries.

So no matter what your approach to investing in APIs for digital transformation is, there’s really one sure way to lose and that is not to do it. Investments in digital transformation yield results with bottom-line impact. And if you’re not sure where to start, take a look at the resources from the conference linked in this article. You’ll find actionable advice from wise investors whose success with digital transformation speaks for itself.

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Dan Woods is on a mission to help people find the technology they need to succeed. Users of technology should visit CITO Research, a publication where early adopters find technology that matters. Vendors should visit Evolved Media for advice about how to find the right buyers. See list of Dan’s clients on this page.

This article was written by Dan Woods from Forbes and was legally licensed through the NewsCred publisher network.


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