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    Techforecast 2012-issue-2 Techforecast 2012-issue-2 Document Transcript

    • A quarterly journal 06 34 542012 Exploiting the growing Consumerization Embracing open IT:Issue 2 value from information: of APIs: Scaling Enabling the permeable Creating an operating integrations enterprise model for permeability The business value of APIs David Zanca (on right) Senior Vice President FedEx Services Thomas Wicinski (on left) Vice President FedEx Services
    • Contents Features2012Issue 2 Exploiting the growing value from information: Creating an operating model for permeability Creating open interfaces to engage a growing digital ecosystem will empower enterprises to embrace social, mobile, analytics, and cloud (SMAC) trends. 06 Consumerization of APIs: Scaling integrations A new generation of tools based on RESTful APIs will help enterprise IT to scale integrations. 34 Embracing open IT: Enabling the permeable enterprise By positioning IT capabilities as a platform composed of open, self- describing, modular services, CIOs enable the permeable enterprise. 54
    • Interviews Departments21 02APIs: An architecture for speed AcknowledgmentsJohn Donovan, Sanjay Macwan,and Jacob Feinstein of AT&T detail 04 Socialhow the API program is a driver of Message from the editorspeed in their innovation efforts. 7424 SubtextTapping value in informationDavid Zanca and Thomas Wicinskiof FedEx Services describe howFedEx is a connected enterpriseand provides digital access to itsservices on the customer’s terms.30 MobileThe rising value oflinked informationMark Noworolski and Peter Leiserof Streetline detail how they aretransforming the parking ecosystemwith cloud, mobility, and analyticstechnologies using RESTful APIs. Value from atoms46The digital indirect channelSam Ramji of Apigee explains whyAPIs are of strategic importanceto all businesses. b i ts Value from50Getting into the Analyticscustomer’s contextDevon Biondi of Mashery detailshow APIs allow businesses to engagewith customers in their context.64Creating a platformLaura Merling and John Musser ofAlcatel-Lucent share how enterprisescan use APIs to create platforms fromexisting assets to unlock new value. Cloud68Users as partnersBrian Katz of Sanofi discusses howconsumerization of IT means enterpriseIT should treat users as partners. The business value of APIs 01
    • Acknowledgments Advisory Center for Technology Principal & Technology Leader & Innovation Tom DeGarmo Managing Editor Bo Parker US Thought Leadership Partner-in-Charge Editors Tom Craren Vinod Baya Alan Morrison Strategic Marketing Natalie Kontra Contributors Jordana Marx Galen Gruman Carol Hildebrand Bud Mathaisel Bill Roberts Editorial Advisor Larry Marion Copy Editor Lea Anne Bantsari Transcriber Dawn Regan02 PwC Technology Forecast 2012 Issue 2
    • US studio Industry perspectives Mark NoworolskiDesign Lead During the preparation of this Chief Technology OfficerColleen Donato publication, we benefited greatly Streetline from interviews and conversationsIllustrators with the following executives: Sam RamjiDon Bernhardt Vice President of StrategyTatiana Pechenik Randi Barshack Apigee Vice President of MarketingProduction Mashery Andy RuskinJeff Ginsburg Director of Marketing Devon Biondi MasheryOnline Vice President of Strategy ServicesManaging Director Online Marketing Mashery Ted SheltonJack Teuber Managing Director John Donovan PwCDesigner and Producer Senior Executive Vice PresidentScott Schmidt Technology and Network Operations Thomas Wicinski AT&T Vice President ofReviewers Digital Access MarketingLowell E. Billings Jacob Feinstein FedEx ServicesDaniel M. Cameron Executive Director, New TechnologyChristopher Curran AT&T David ZancaManish S. Dharnidharka Senior Vice President of IT, CustomerDaniel Eckert Brian Katz Access, and Revenue SystemsKevin A. Hecht Director, Head of Mobility FedEx ServicesChristopher Isaac Industrialization & Engineering GroupSimrit S. Kamboe SanofiSurajit KarEoin Russell Peter LeiserPatrick Shankland Vice President of Engineering,Alejandro Trujillo Platforms, and Applications StreetlineSpecial thanksNatashia Gregoire Sanjay MacwanFedEx Global Media Assistant Vice President AT&T Chief Technology Office AT&T Laura Merling Senior Vice President of Application Enablement Alcatel-Lucent John Musser Founder of ProgrammableWeb Alcatel-Lucent The business value of APIs 03
    • Contents1. The business value of APIs2. Exploiting the growing value from information: Creating an operating model for permeability3. Consumerization of APIs: Scaling integrations4. Embracing open IT: Enabling the permeable enterprise5. APIs: An architecture for speed6. Tapping value in information7. The rising value of linked information8. The digital indirect channel
    • 9. Getting into the customers context10.Creating a platform11. Users as partners
    • Resurgence of APIs: super-linear scaling in digital ecosystems Message from the editor stations. This is sub-linear scaling. It Successful businesses grow almost by appears to be true in a city context across definition. But what comes with being almost all of a city’s infrastructure. larger? Certainly there are benefits, the most prominent being economies But cities also produce more than of scale. But size has its downside. linear scaling in other domains. West The enterprise R&D function has found that whenever a city doubles been a frequent target of research in in size, many measures of economic academia because of its well-known activity, such as construction spending, pattern of becoming less productive wealth, patents, and bank deposits, (fewer patents) on a per dollar basis as increase by approximately 15 percent it grows larger.1 Creating benefits from per capita.3 In other words, cities scale seems to be automatic in some become more productive as they grow. circumstances, but creating waste from This is called super-linear scaling. scale seems just as automatic in others. West lays this all at the feet of networks. Dr. Geoffrey West and his colleagues at The power of networks can produceTom DeGarmo the Santa Fe Institute have published sublinear scaling and superlinearPrincipal & Technology Leader insightful results on the way many scaling. Neither is inherently better—thomas.p.degarmo@us.pwc.com different domains scale. He charts the some things you want less of, and other relationship between size and metabolic things you want more of as you grow. rate across species to convincingly demonstrate that doubling in size This issue of the Technology Forecast requires only 75 percent more energy examines the question of scaling in rather than a doubling of energy.2 In a the context of four major disruptions totally different domain, West found penetrating enterprise operations a similar pattern with gas stations in simultaneously—social computing, cities—doubling the size of the city mobile computing, advanced analytics, results in only 75 percent more gas and cloud computing (in short, SMAC). 1 Wesley M. Cohen and Steven Klepper, “Firm Size and 2 http://www.ted.com/talks/geoffrey_west_the_ the Nature of Innovation within Industries: The Case of surprising_math_of_cities_and_corporations.html Process and Product R&D,” The Review of Economics and Statistics 78, no. 2 (May 1996): 232–243. 3 http://www.nytimes.com/2010/12/19/ magazine/19Urban_West-t.html?pagewanted=all04 PwC Technology Forecast 2012 Issue 2
    • Our use of the term SMAC includes of digital services will more than This issue also includes interviewsthe four technologies called out double the business value created. with executives at enterprises that arehere as well as related emerging As West would say, it’s because of the leading the practice of tapping value intechnologies that take advantage of network effect. And digital business information, having a digital operatingthem, such as the Internet of Things. ecosystems can grow businesses in model, and enabling permeability: terms of revenue and profits muchIndividually, these disruptions faster than headcount and expenses. • John Donovan, Sanjay Macwan,are themselves about scale. Social and Jacob Feinstein of AT&T detailcomputing scales business collaboration We call it building the permeable how the API program is a driver offrom a few to hundreds or thousands of enterprise, where business capabilities speed in their innovation efforts.others. Mobile computing scales process are abstracted as open programmableand data management into almost any interfaces and scaling integrations in a • David Zanca and Thomas Wicinskibusiness context. Advanced analytics— digital ecosystem is incorporated into of FedEx Services describe howwith big data, terabytes of in-memory strategic thinking so that value scales FedEx taps value in informationdatabases, and visualization—scales in superlinear ways while cost scales with a digital operating model.business intelligence into every in sublinear ways. The reemergence ofaspect of business operations. And application programming interfaces • Mark Noworolski and Peter Leiser ofcloud computing promises more (APIs) in general and the rise of Streetline share how they are trans-compute power than ever before. the RESTful style of integrations forming the parking ecosystem with in particular bring this promise by SMAC technologies using RESTful APIs.These disruptions are all delivered providing an architecture and systematicover digital networks as digital approach to engaging with SMAC • Sam Ramji of Apigee explains why APIsservices, usually from outside the and other emerging technologies. are the first digital indirect channel.enterprise. For many business andIT executives, the potential value of This issue of the Technology Forecast • Devon Biondi of Mashery describesengaging with these four trends is examines how enterprises can engage how APIs allow businesses to engagetransparent. The challenge is scaling with the challenges and opportunities with customers in their context.their integration with traditional IT. stemming from SMAC trends byIn the best of circumstances, internal scaling integrations and participating • Laura Merling and John Musserlegacy systems integrate well with in expanding digital ecosystems. of Alcatel-Lucent share howeach other. But they rarely were creating platforms from existingdesigned to rapidly integrate with The article, “Exploiting the growing assets can unlock new value.digitally delivered external services. value from information,” on page 06 examines how creating open • Brian Katz of Sanofi discusses whyThat’s job one. Job two is recognizing interfaces to engage a growing digital enterprise IT should treat users as partners.that offering digitally delivered services ecosystem will empower enterprisesis a big opportunity, very often through to build a digital operating model Please visit pwc.com/techforecast tothe co-creative efforts of third parties. and progress toward becoming find these articles and other issues ofAlmost certainly these services will a permeable enterprise. the Technology Forecast online. If you wouldforce a rethink of vertical business like to receive future issues of this quarterlyprocesses. Refining tightly coupled end- “Consumerization of APIs” on page 34 publication as a PDF attachment, you canto-end processes into loosely coupled, explains why a new generation of tools sign up at pwc.com/techforecast/subscribe.modular activities creates the building based on RESTful APIs scales the abilityblocks third parties are looking for as to make digital connections by sharply As always, we welcome your feedbackthey build new businesses. But business reducing the cost and complexity of and your ideas for future research andpartners and consumers of those integrations in digital ecosystems. analysis topics to cover.services expect the same rapid, seamlesssetup already demonstrated in web- The article, “Embracing open IT,” oncentric digital ecosystems. Otherwise page 54 examines how, by positioning ITthe services go wanting for customers. capabilities as a platform composed of open, self-describing, modular services,In short, the rise of digital business CIOs can manage challenges from SMACecosystems is creating superlinear and enable the permeable enterprise.scaling effects; doubling the number The business value of APIs 05
    • 06 PwC Technology Forecast 2012 Issue 2
    • Exploiting the growingvalue from information:Creating an operatingmodel for permeabilityCreating open interfaces to engage a growingdigital ecosystem will empower enterprises tosystematically embrace emerging technology trendsand to benefit from the accelerating informationvalue expectations of their customers.By Vinod Baya, Galen Gruman, and Bo ParkerStreetline, a startup based in Foster All three examples (detailed later)City, California, uses mobile sensors, illustrate how leading companies areweb applications, and analytics to capitalizing on digital ecosystems thatcollect, transmit, and analyze data from are expanding due to the confluenceparking meters and parking spaces. of social networks, mobile computing,The company is transforming parking analytics, and cloud computingoperations into digital ecosystems to the (SMAC).1 SMAC challenges enterprisesbenefit of the cities, the drivers, parking to take advantage of the positivelot operators, and local merchants. disruptions it portends, while they operate at the rapid pace of innovationAt FedEx, an evolving digital operating and change that SMAC demands.model allows customers to stay incontinuous contact with their packages SMAC and other emerging technologiesand to initiate changes to their create the possibility for new waysshipments and other orders previously to develop products, interact withviewed as strictly internal operations. customers, partner with others,The operating model also supports the compete, and succeed. More than aefforts of business partners to create strategy for any individual technologynew services using FedEx information. trend or for combining more than one of them, companies need a systematicAnd AT&T is transforming its network approach to engage with theseinto a permeable digital platform with technologies. Companies that havesoftware interfaces that third-party the most success engaging with SMACdevelopers can use to tap into network are, in PwC’s view, rethinking theircapabilities to create applications and business and enterprise architectures andservices that add value for customers, emphasizing three fundamental changes.the third parties themselves, and AT&T. 1 Our use of the term SMAC includes the four technologies called out here as well as related emerging technologies that take advantage of them, such as the Internet of Things. The business value of APIs 07
    • Figure 1: A permeable enterprise exposes modular capabilities with open software interfaces to enable interactions (internally and externally) What is an API? in digital ecosystems. When talking to colleagues in the IT organization or to technology API providers about ways to participate in the digital ecosystem, you’ll hear the term API. It is the acronym for application programming interface, a technology term that means the specifications for how Enterprise software programs are able to Business ecosystem exchange information with each other even if designed and run by different organizations. APIs are everywhere. The Google Maps API, for instance, is an interface used by developers to add content on a map of any region. Businesses can also embed the maps in their applications or services. There are several types of APIs, but the one worth noting to a business audience today is a RESTful API, First, they acknowledge the SMAC digital relationships with customers which stands for representational trends are the strongest signal yet that and partners, and reorganize for speed. state transfer API. Although not business ecosystems are becoming appropriate in all use cases, more digitized, where information Permeability and successful engagement RESTful APIs have changed the content accounts for a rising proportion with SMAC improves overall economics of performing software of the entire value of any product or performance. PwC’s fourth annual integrations by sharply reducing service. Second, they understand that survey of enterprises’ digital IQ—the the associated cost and complexity. successfully tapping the new drivers way companies use digital technology This change creates the potential to of value requires a digital operating and channels to meet customer needs rethink IT architectures for scaling model, a model attuned to participating as well as the needs of employees and integrations and pursuing strategies in or integrating with expanding digital business partners—finds that top- that take advantage of them. ecosystems. And third, successful performing2 US organizations show companies are adjusting their business greater mastery in how they leverage Today, web companies and social and enterprise architectures to become the digital technologies of SMAC to plan, networking providers are heavy what PwC calls the permeable enterprise. innovate, measure results, interact with providers and users of RESTful APIs, customers, and ultimately create value.3 which is how they quickly connect Permeable means the use of open to so many data sources and services software interfaces on modular This issue of the Technology Forecast and let others rely on the data and services they provide. Google, capabilities to allow easy digital describes ways that enterprises can Facebook, and Twitter are examples connections with other capabilities, engage with SMAC trends by using of companies that quickly became the way web-based companies RESTful APIs to become a permeable providers beyond their own services do. (See Figure 1.) Specifically, enterprise and participate in digital through the use of RESTful APIs. leading companies use application ecosystems. The issue details the rise of programming interfaces (APIs)— RESTful API management technology By using and offering APIs, you do not especially RESTful, or representational forgo the ability to control or manage state transfer, APIs (see the sidebar, 2 Top-performing organizations are defined as those users of them. An API may be exposed “What is an API?” on this page)— rated in the highest quartile for annual revenue, growth, internally or externally, and designed as interface-oriented abstractions of profitability, and innovation as well as those that have revenue growth of more than 5 percent in the last so only those with valid credentials enterprise capabilities. In doing so, 12 months. can transact through them. they rethink their assets as platforms 3 Raising your digital IQ, PwC’s 4th annual digital IQ for co-creation, maintain persistent survey, 2012, http://www.pwc.com/us/digitalIQ.08 PwC Technology Forecast 2012 Issue 2
    • Figure 2: The confluence of SMAC trends creates a shift in value drivers,as the value from bits (information content) grows faster than the valuefrom atoms (the physical product or human-delivered service). Social Value Value from atomsCloud Mobile bits Value from Time Atoms: physical product or human-delivered service Bits: information content Analyticsfrom new vendors (see the article, value of the physical product or human-“Consumerization of APIs,” on page delivered analog service (atoms).434) and examines how the CIO should The confluence of SMAC trends isthink about permeability as it impacts driving this shift in business value. PwCthe IT organization (see the article, anticipates that information associated“Embracing open IT,” on page 54). with products and services will increasingly account for a rising shareDigital transformation of in the customer’s experience of valueecosystems: How bits increasingly delivered, as illustrated in Figure 2.complement atomsThe notion of the digital company Streetline uses bits to transformhas been around for years. Gains in a business built on atomsoperational efficiency can be credited to Parking spaces and parking meters havea more expansive use of IT to make the always been part of the atoms world.business run faster and more effectively. One space was available to one car,That’s a powerful benefit of IT. However, and a meter was a simple device withfew companies outside the pure a coin slot, a timer, and sometimes aweb space have become truly digital credit card capability. The user andcompanies in which information and the owner dealt with the meter in athe ability to act on it creates significant one-to-one relationship and had to beeconomic and competitive value. physically present to use or manage it.The examples of Streetline, FedEx, Now, Streetline5 digitally managesand AT&T suggest what a company parking spaces and meters in Loscan do when it starts to realize that Angeles, Indianapolis, and several otherinformation itself is a product or cities. It embeds sensors in parkingservice. Some, including Rob Carter,CIO of FedEx, use bits and atoms as an 4 Rob Carter, CIO of FedEx, keynote address at Locationanalogy to highlight the growing value and Beyond Summit, 2010, http://www.youtube.com/of information (bits) to complement the watch?v=Ljs28Rokwnk. 5 http://www.streetline.com/manage-parking/for-cities/ The business value of APIs 09
    • Today, many everyday products and services, such as shoes, wristbands, Social, mobile, analytics, and cloud golf clubs, appliances, and cars, (SMAC) trends are the strongest signal yet include sensors to collect and transmit information that can enhance the user that business ecosystems are becoming experience in a digital ecosystem. For more digitized, where information content example, Nike augments select running shoes with an embedded sensor—called accounts for a rising proportion of the the Nike+ system7—that allows athletes entire value of any product or service. to track running habits, assess progress against personal goals, collaborate with other runners, and improve performance, thereby enhancing the running experience. A wristband from Basis8 has multiple sensors to track heart rate, physical activity, sleep patterns, and galvanic skin response (throughFigure 3: The Parker app from spaces on the street and in municipal perspiration) for personalized trackingStreetline helps customers and privately owned garages to collect and feedback on physical conditioning.navigate to open parking spots. information about availability and wirelessly transmit the data via a Why new value will be mesh network to Streetline’s servers. increasingly driven from bits “We use this information to create a Where should a company look to create smart parking ecosystem,” says Mark value from information? Figure 4 shows Noworolski, CTO of Streetline. a high-level taxonomy of potential sources of value spanning atoms and The bits bring new value to a formerly bits. A general way to think about atoms-only parking ecosystem. Drivers information value-add is that it directly can use Parker, a mobile application engages the customer’s experience available from app stores, to identify of the product or service by surfacing and navigate to an open spot, get alerts data about that experience. Once data on meter expiration, or reserve spaces. has been collected, it can be used for (See Figure 3.) Parking enforcement multiple purposes by the customer, the officers no longer need to patrol for vendor, or other interested parties. violations; they can go directly to the spot of an expired meter. Cities can implement demand-responsive pricing6 and establish federated “We use this [parking payment systems across jurisdictions. spot availability and Because the information is no longer payment] information trapped in the meter, local businesses can become value-added partners to create a smart by paying to give their customers parking ecosystem.” priority access to nearby meters or by subscribing to the meter data for —Mark Noworolski,Source: Streetline inclusion in navigation services. The app also reduces traffic and pollution Streetline as fewer drivers need to circle for parking. All this new value emanates from the world of bits made possible 6 http://sfpark.org/how-it-works/pricing/ by digitally transforming the parking ecosystem and liberating analog 7 http://nikeplus.nike.com/plus/ information from the atoms world. 8 https://mybasis.com/10 PwC Technology Forecast 2012 Issue 2
    • Figure 4: The emerging domains of value are driven more by bits (information content) than atoms (physical product). Value of experience: product or service Known Emerging Value from Value from domain of value domain of value atoms bits Content Content Communication Form Function (unchanging (related (changing information) information) information) Components, Telemetry Linking Specifications, Non-telemetry integrated (location, contexts performance information system time, etc.) (APIs) (state) Internal External Design Usability Digital to enterprise to enterprise operations use use Permeability Progress toward a permeable enterprise The business value of APIs 11
    • Figure 5: The ability to link information nodes (bits) in an information network means value rises quickly as the numberof nodes increases (Metcalfe’s Law).An impact of SMAC is that more and more processes and activities will create a digital footprint and surface new information.The ability to link this information to create an information network provides the potential to grow new value exponentially. Enterprise Ecosystem des no io n at rm fo in g in nk li m f ro l ue VaThere are many reasons why appliances, cars, homes, and Figure 6.) Such growth manifestsemerging domains of value are based parking meters. This increasing the advantage of Metcalfe’s Law,12more on bits than on atoms. Some instrumentation, connectivity, which recognizes that the value of areasons include the following: and digitization deliver more and network is proportional to the square more bits into the value system.11 of the entities in the network.• Bits are increasing—With a phenomenon such as the Internet of • Bits are fungible and limitless— • Bits persist over time—Whereas Things,9 products become smarter They can be repurposed, reused, a consumer eventually replaces through embedded sensors, which duplicated, or deployed in any a car or shoes, the information produce digital representations number of use cases without being accumulated around that product of the analog activities. Sensors “used up.” This flexibility multiplies will persist beyond the life of the convert any type of analog signal, the options created by bits for ongoing atoms. As new hardware endpoints such as temperature, pressure, or innovation and value extraction. The arrive, bits can be adapted to new acceleration, into electrical signals value of the bits increases the more values and new endpoints. The that digitize that information. that multiple parties exploit them, value accumulates over time. These sensors are increasingly as demonstrated by Streetline. ubiquitous, and their usage grows 9 http://en.wikipedia.org/wiki/Internet_of_Things as they continue to become cheaper • Bits can be linked—As RESTful API 10 Caroline Kazmierski, “Semiconductor Industry Posts and smaller. According to the technologies gain wider adoption, Record-Breaking Revenues Despite 2011 Challenges,” Semiconductor Industry Association, an information network made of Semiconductor Industry Association, February 6, 2012, http://www.sia-online.org/news/2012/02/06/global- sensors and actuators are the smallest information nodes likely will develop sales-report-2012/semiconductor-industry-posts- semiconductor market segment internally and externally to an record-breaking-revenues-despite-2011-challenges/. but showed the highest year-to- enterprise, much like the network of 11 See the article, “Consumerization of APIs,” on page 34 year growth of any segment, at devices on the Internet. (See Figure for more details on sensors. 15.5 percent to $8 billion in 2011.10 5.) ProgrammableWeb, which tracks 12 Although initially defined in relation to telecommunications networks, Metcalfe’s Law today Today, sensors are in a wide range externally published APIs, already applies to all networks, and it states that the value of a of devices and environments, reports more than 6,000 APIs, and network is proportional to the square of the number of nodes in the network. See http://en.wikipedia.org/wiki/ including wristbands, toothbrushes, the number is quickly increasing. (See Metcalfes_law for more details.12 PwC Technology Forecast 2012 Issue 2
    • Figure 6: Use of APIs to interact in digital ecosystems hasbeen growing and has accelerated in the past few years.Growth in number of APIs over time 3 mo6,000 4 mo5,000 6 mo4,000 9 mo3,000 18 months2,000 8 years1,000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Source: ProgrammableWebScaling integrations requires to think about the SMAC technologies Table 1: The interdependent anda digital operating model as an integrated whole from a complementary roles of SMAC inWhile each SMAC technology has its strategic viewpoint. (See Table 1.) doing workown unique impact, the technologiesare complementary in support of work But as a collective whole they also Trend Relationship with workgetting done. The cloud increasingly represent an unusual, perhapscontains more of the information and unprecedented challenge: how to Social Who we work withapplications that people use. Mobile embrace the comprehensive challengedevices give people access to the cloud, they create at a technological level Mobile How we get to workto other data sources, and to each other. without being overwhelmed. LeadingAnalytics help them make actionable companies are overcoming this Analytics What we work on, the meaning of worksense of all that data. Social media helps challenge by adopting what PwC callspeople find colleagues with whom to a digital operating model. This model is Cloud Where we do the workcollaborate and co-create. The collective inspired by the open linking traditionimpact of SMAC on the enterprise evident in the web marketplace that isoperating model is so broad that it helps accelerating, driven by SMAC trends. Despite decades of technology investments, most companies do not have a digital operating model today. The business value of APIs 13
    • Scalable integration strategy: Why most companies don’t have a digital operating model—yet Having adopted IT solutions to drive limited resources—web companies have to as a service-oriented architecture automation and efficiencies for decades, naturally moved to a low-maintenance, (SOA). (See Figure A2.) Adoption of many companies will argue that they self-describing, open communication style SOA can address many of the issues are already digital. Their back-office of integration facilitated by RESTful APIs, surfaced in Figure A1 by conforming to its processes, in particular, are likely to be which are a scalable way to integrate. principles of loose coupling, abstraction highly digital, and they pay increasing of services, modularity, and reusability. attention to digitizing information about Using a loose taxonomy of back-office, While this approach has greatly reduced customers and suppliers. However, at most front-office, and middle-office systems the unintended complexity of the early companies the digital footprint is uneven. and applications, Figure A depicts how, as days of integration, scaling for and integration scales, digitization can spread in coordinating with a digitizing business Extending digitization depends on an enterprise. Historically, the integration ecosystem remains burdensome as SOA making connections digital, which in turn technologies were entirely point to point, has largely remained internally focused. depends on integrating tasks, activities, as shown in Figure A1. These integration and processes. Therefore, the central issue points grew organically without concerns RESTful APIs, an architectural and that keeps IT from meeting the demands or considerations for reuse, consistent programming model that sharply reduces of social, mobile, analytics, and cloud architecture, or agility. They also required the cost and complexity of integrations, (SMAC) or having a digital operating external documentation, demanded a deliver a scalable approach for both model is the long lead time and high cost deep understanding of data types and internal and external use. (See Figure A3.) of integrating one piece of software with logic on both sides of the connection, and Many companies will start by exposing another. IT investments of the past did not moved data in binary form unreadable data and services using RESTful APIs anticipate the need for scaling integrations. to programmers. As the integrations to their external digital ecosystem of proliferated to number in the hundreds, partners and customers. But a RESTful For this reason, lessons from web a new approach became necessary. API approach for internal integration companies are relevant. With business creates many of the same benefits of motivations to integrate with as many other This need led to the emergence of an highly scalable linking and coordinating web companies as possible—and with approach to internal integration that adopts of business processes at very low cost. architectural principles, usually referred Figure A: Despite decades of IT investments, most companies do not have a digital operating model because they could not scale integrations easily, an opportunity possible today with RESTful APIs. A1 A2 A3 Historically, the front, middle, With SOA, enterprises adopted an The new architectural principle and programming and back offices of an enterprise architecture using a service bus for model based on RESTful APIs reduces integration were integrated point to point by integration, creating loose coupling and cost and complexity, so integrations can scale for tight coupling, suitable only for a the potential for reuse and flexibility. The many internal as well as external uses. small number of integrations. complexity of integration meant use remained largely internal to the enterprise. API Front office Enterprise service bus ice Ba (SOA) off ck le off dd ice Mi EDI EDI EDI Business ecosystem Business ecosystem Business ecosystem14 PwC Technology Forecast 2012 Issue 2
    • Companies embracing a digital operating model organize themselves around atoms plus bits as the source of new value.To be successful, web companieshad to solve a fundamental problem:linking to and being linked by otherweb properties at scale. The solution genesis of the SMAC trends. The webwas open, self-describing APIs marketplace has become known forcommunicating over standard HTTP13 constant, unpredictable change, robustprotocols—in short, RESTful APIs. innovation, agility, modular capabilities, and co-creation of value. The webDespite decades of technology is inherently digital and organizedinvestments, most companies do around an architecture that facilitatesnot have a digital operating model these dynamics. With RESTful APIs, alltoday. Many feel overwhelmed by companies have the opportunity to bringthe demands from SMAC trends. these capabilities to their operations.The problem for most companies is And this is the inspiration for a digitalthat they cannot scale their existing operating model, which should haveintegration architecture and methods the following key characteristics:to the demands created by a digitalecosystem. (See the sidebar, “Scalable • Instrumentation to digitizeintegration strategy,” on page 14.) operations—The use of sensors transforms analog activities intoSo far, companies that have acted on digital representations to surfacethe digital ecosystem in a big way and use valuable information.tend to be web-native enterprises,such as Facebook, Google, and several • Loosely coupled modularother companies offering mobile or capabilities—Internal capabilitiessocial apps. Web-native companies and processes are broken intoextend their capabilities and their modular service components thatreach almost as a matter of course by have standard open interfaces.exposing their capabilities via APIs to Loose coupling makes it possibleothers. In many ways, the web is the to change the components without affecting the system, as long as the interface is kept stable.13 HyperText Transport Protocol is the standard for transmitting information on the World Wide Web. The business value of APIs 15
    • Table 2: Key characteristics of the digital operating model contrasted with the way many companies typically operate Characteristic Typical operating model Digital operating model Key source of value Organized around atoms as the source of value Organized around atoms plus bits as the source of new value Extent of Mostly analog activities (except digital native Mostly instrumented, connected, digital activities digitization companies) Asset strategy Assets exist to fulfill a particular function Assets are platforms and therefore extensible and are not extensible by others Architecture Largely closed and monolithic Open, accessible, and modular Responsiveness Static, inflexible, slow to evolve Dynamic, agile, evolving to change Key performance Efficiency-centric: resistance to new value creation Customer-centric: increasing value to customer indicator (KPI) Nature of Tight coupling among systems of coordination Loose coupling among systems of coordination interdependencies Participants in Largely the enterprise itself Co-creation and collaboration with the ecosystem value creation Business creation High barrier to new business creation Low barrier to new business creation potential • Addressable platform with low A culture of valuing information gives interaction costs—The capabilities FedEx a digital operating model“Information about the are available for others to use by FedEx has organized around package helps us run means of stable interfaces that have a information from its inception. “In the low or no barrier to usage. Enabling late 1970s, our founder and CEO Fred our business better. technologies, including RESTful APIs Smith said, ‘The information about That comes from a and API management platforms, the package is just as important as the make addressability efficient. package itself,’” says David Zanca, senior digital operating model vice president of IT, customer access, where all our assets are • The ability to co-create in a and revenue systems at FedEx Services. digital ecosystem—A co-creation “It’s a vision that has given our company connected and surface strategy treats customers, channel a culture that values information, information to increase partners, suppliers, and industry and that uses it in all we do.” ecosystem participants as active agents overall value to us and who have permission to combine the FedEx’s journey to a digital operating the customer.” modular capabilities exposed in a model is decades old. “Information platform to create new experiences. about the package helps us run our —David Zanca, business better. That comes from a There are other characteristics, digital operating model where all FedEx Services and Table 2 contrasts the prevalent our assets are connected and surface traditional operating model to a information to increase overall value digital operating model. Companies to us and the customer,” Zanca says. embracing a digital operating model “Almost every piece of our business organize themselves around atoms is instrumented; it has some degree plus bits as the source of new value. of intelligence and automation on it.16 PwC Technology Forecast 2012 Issue 2
    • Our planes are all intelligent, and they With its new SenseAware producttell us where they are. The trucks, line, FedEx has recently driven the “Not only do ourthe couriers, the knowledge workers, digital operating model deeper intothe hubs—almost everything has the customer’s context. “Not only do customers want moretechnology embedded in it and tells our customers want more information information aboutus where it is or what its state is.” about the packages, but they also now want more interaction with FedEx and the packages, but theyFedEx has used a transportation logistics expect us to react to changes and resolve also now want moreinformation system called COSMOS problems if they occur, ” says Thomas(Customer, Operations, Service Master Wicinski, vice president of digital interaction with FedExOn-line System) since 1979 to keep access marketing for FedEx Services. and expect us to reacttrack of all packages. While it used Customers can request operationalthe information to allow dynamic actions such as return shipment, to changes and resolvemanagement of its delivery system, it reroute, reship, and repackage. Its problems if they occur.”also innovated many times to present digital operating model gives FedEx thean interface to its customers and bring flexibility to adapt to these requests. —Thomas Wicinski,them into the FedEx digital ecosystem. Transformation to a FedEx ServicesIn 1984, before the web, FedEx released permeable enterprisePowerShip (now part of FedEx Ship), The digital operating model enableswhich used modems over circuit- what PwC calls the permeable enterprise,switched telephone lines to allow in which latent capabilities and assetshigh-volume customers to link with inside the enterprise are permittedCOSMOS, so they could place shipping to reach outside and be combinedorders electronically and print air with other assets and capabilities.bills. In 1994, fedex.com was the first External innovators also can reachsite to give customers the ability to into the enterprise and tap into itsmonitor shipments on the web. capabilities to create new value. Both are facilitated by the sharply lower costFedEx also maintains a website for of interactions in a digital ecosystem.developers (FedEx Developer ResourceCenter14), where third parties can A company will need to developtap into FedEx capabilities offered as many new capabilities to adopt amodular web services for shipping, digital operating model and becomeoffice and print services, and other tasks. a permeable enterprise. As Figure 7 shows, these new capabilities addressFedEx layers the customer experience partner strategies, assumptionsservices on top of the enterprise services about the frequency and intensitywith the help of RESTful APIs. of customer engagement, and a business and enterprise architecture built for speed, all while balancing14 http://www.fedex.com/us/developer/ their use internally and externally. The business value of APIs 17
    • Platform for co-creation: The platform approach is a different Scaling integrations way of thinking about value. It requires“If you are going to Until recently, organizational structures a step back from the product or service’s operate at a pace and IT systems were designed to obvious value and an assessment of support the enterprise as the sole how others might add value if they at which the external creator of products and services. In had access to attributes beyond the market is moving, a world of value co-creation, these immediate ones. “The ability to create structures and systems often do not self-service interactions, enable you have to take work well. Too much knowledge about co-creation, and provide a vehicle capabilities, industry how processes work must be acquired where information is flowing from before anything can be added. This a leaf node to every other leaf node specific or not, and barrier can be significant for third radically transforms our ideas about make platforms parties, even if huge latent value is how to organize production, innovation, inside the enterprise. Reducing the and transactions,” says Ted Shelton, from them.” learning curve requires a new strategy. managing director in the PwC Advisory “If you are going to operate at a pace at practice. Product design, development, —John Donovan, AT&T which the external market is moving, and customer service must take into you have to take capabilities, industry account the growing possibilities for specific or not, and make platforms surfacing and using information. from them,” says John Donovan, senior executive vice president of technology In this context, the word platform and network operations at AT&T. By means programmable interfaces or allowing third-party developers to tap APIs. “APIs are the building blocks of the into its network capabilities, AT&T has digital economy,” says Laura Merling, transformed its network into a digital senior vice president of the application platform. (See the sidebar, “APIs: An enablement business unit at Alcatel- architecture for speed,” on page 21.) Lucent. APIs become the language with which interactions and communication occur in a SMAC-driven digital ecosystem, supporting permeability.18 PwC Technology Forecast 2012 Issue 2
    • AT&T seeks to expand the value Figure 7: Enterprises will require a digital operating model to tap into therealized from its telecommunications shift in value drivers that results from SMAC. The digital operating modelnetwork and associated services. on the inside will enable the permeable enterprise on the outside.Jacob Feinstein, executive directorof new technology at AT&T, says SocialAT&T asked itself, “If we architectour network so that it comprises anumber of loosely coupled modulesconnected through open interfaces, Valuecould we expose those interfaces tothird parties to foster openness in Value from atomsa broader sense, leading to greater Cloud Mobileinnovation, and ultimately get more bitsapps on more devices on our network?” Value fromFor example, because AT&T exposed its TimeInternet Protocol telephony capabilitiesto web developers, its users caninitiate an online phone session from Analyticsa restaurant review website to make areservation, potentially driving morebusiness to AT&T’s network. AT&T could requiresprovide access to different quality-of-service levels that provide a range ofservice options for third parties, letting Digital operating modelthem offer, for example, premiumconnections for a higher fee, in whichAT&T might share the extra revenue. Instrumented Modular Addressable Low interaction operations capabilities platform costRethinking the customer relationship:Persistent digital engagement results inBecause of SMAC, a new consumerreality is emerging, defined by an any-where/anytime/any device expectation Permeable enterpriseof accessibility and engagement.Consumers have the ability to beonline all the time and expect whatPwC calls persistent digital engagementwith whomever they conduct business.“To address the new consumer stateof persistent digital engagement,companies will need to develop fluencyin digital product development andsocial technologies, and they will need • Platform for co-creationto create collaboration across groups • Persistent digital engagementthat have often worked separately from • Architecture for speedone another,” PwC’s Shelton advises. The business value of APIs 19
    • Figure 8: The digital operating model promotes a customer-centric approach over a product-centric one. s fu n ct Business functions s in e s io n Bu s The product The customer Customers Product-centric Customer-centric Enterprises must reorganize in a Architecture for speed manner that puts customers at the Speed is essential in the digital“Agility and accessibility center of the digital operating model, ecosystem to meet the pace with which will make the successful instead of thinking of them only the business environment is changing. as end-of-the-chain recipients of Speed was a driving force in AT&T’s organization of the delivered value. Figure 8 shows this RESTful API program, Donovan says. future.” distinction between a product-centric By exposing RESTful APIs, AT&T has and customer-centric enterprise. cut the time it takes developers to place —Ted Shelton, PwC new capabilities on the network from Customers are already altering the months to hours. The API program is a dynamics of their relationships with key pillar in AT&T’s broader innovation providers through their rapid adoption strategy. (See the sidebar, “APIs: An of new technologies that move them architecture for speed,” on page 21.) toward the center. “The customer is able to have a tighter, longer-lasting Establishing a business and IT relationship with the business even architecture around RESTful APIs is though the way they interact with not just about speed. It is the best way that business might change,” says Sam to prepare for future waves of change Ramji, vice president of strategy at API in technologies, products, and business management solution vendor Apigee. strategies. “Agility and accessibility will Bits allow stickier relationships in the make the successful organization of value network because their mutability the future,” Shelton says. “With APIs means they can persist even as they are modularizing every function at the right adapted to new services and use cases. level of granularity, one can enable more agility and more accessibility.”20 PwC Technology Forecast 2012 Issue 2
    • APIs: An architecture for speed at AT&TJohn Donovan, Sanjay Macwan, and Jacob Feinstein of AT&T detail how the API programis a driver of speed in their innovation efforts.Navigating the far-flung functional, than 150 startups. As a result of this care for AT&T, new revenue opportunityorganizational, and technical structure outreach, 40 projects are in the works for SundaySky, and increased satisfactionto bring new ideas to any large company and 11 are deployed commercially, for the customer. AT&T and SundaySkycan be slow and confounding. For a generating revenue for AT&T and co-created a solution facilitated by thecompany the size of AT&T, this had the its collaborators or delivering new transparency and ease of programmingpotential to create lengthy delays for efficiencies that benefit customers. to the billing API. Without that, such andevelopers seeking to test innovations endeavor might have taken too long.against the network. Today, external APIs are the keyinnovators and developers access The underlying enabler to increase the Making AT&T addressable:much of AT&T’s network and other pace of innovation is the company’s Network as a platformcapabilities in a self-service manner, application programming interface AT&T has opened up several categoriesallowing them to bring new offerings to (API) program. By opening up core of RESTful APIs so far and processesmarket three times faster than before. horizontal and vertical capabilities about 4.5 billion API calls every month. through RESTful public APIs, AT&T AT&T has an aggressive road map toThis new speed is central to AT&T’s has established a digital platform that open new APIs across several serviceinnovation strategy. Whether ideas drives an ecosystem of network-centric categories. This plan makes the networkare generated internally or co-created services. “It is an architectural choice an intrinsic part of an innovationwith outside innovators, AT&T wants to one makes for speed,” Donovan says. ecosystem and gives AT&T an opportunitymatch the pace at which the market is for new monetization by servingchanging and innovating—particularly When a company has the size and consumers and business customers.around mobile and cloud technologies. scale of AT&T, speed is not easy or a given. The API program removes Ultimately, the goal of an API program is“If you have infrastructure assets and organizational, functional, and technical to make internal capabilities addressableare going to operate at a pace at which barriers to accessing AT&T’s network by others. “Many people think API equalsthe external market is moving, you and information assets. Extensive open and open equals free; that’s not thehave to take capabilities—industry- documentation, sample code, immediate case at all. What is needed is a thoughtfulspecific or not—and make platforms access to RESTful APIs, and sandboxes architecture that allows you to take layersfrom them. And then make them easy for testing are some of the features above and below your platform, and maketo address,” says John Donovan, senior that reduce the friction for a thriving them modular and addressable,” Donovanexecutive vice president of technology ecosystem of developers and innovators. says. AT&T’s goal is to make its networkand network operations at AT&T. the most addressable network globally. Consider the case of SundaySky, aThe emphasis on speed extends beyond company AT&T chose to work with With APIs making capabilities addressable,technology. Startups participate in “speed after a speed dating session. Telecom the network becomes a platform thatdating” sessions with AT&T executives, bills can be difficult to understand for accrues many advantages. Developersa fast-paced 20 minutes in which they some customers, particularly when they save time and resources and build onhave a deal or an understanding of start or change services. AT&T’s billing top of AT&T’s assets instead of investingwhy not. “We always have some of our system has more than 1,000 elements. in network and telecom equipmenttop decision makers in the room—not Confusion stemming from a bill leads to themselves. A platform approachjust the technology leadership, but our high call volume to customer care. Using positions legacy assets for the futurebusiness unit leaders, chief marketing AT&T’s billing API, SundaySky created a by abstracting and combining them toofficers for enterprise and consumer, service that dynamically builds a custom increase their relevance to emergingand others. Because the key decision video to address customers by name and trends in cloud, mobile, and socialmakers are listening to the pitch at the walk them through their bills. In a trial technologies. “APIs give you the abilitysame time, we can decide whether to of new subscribers for the IPTV service to better manage the legacy environmentmove forward immediately after the (U-verse), the call volume to customer and future-proof them,” Donovan says.speed dating session,” says Sanjay care dropped by 20 percent amongMacwan, assistant vice president in customers who had access to the video A well-executed API program reorganizesthe AT&T chief technology office. review service developed at the AT&T capabilities to establish consistency and innovation center with SundaySky. ease of use. It makes an organization’sIn 2011, AT&T met with more than internal knowledge accessible in a500 startups, and in early 2012, the The result is a three-way win: cost savingscompany already has met with more from fewer or shorter calls into customer continues to next page › The business value of APIs 21
    • semantically consistent manner. “APIs reconstitute their work in a more modular, simplify things architecturally and create fungible, and co-creation–centric manner. a better story and capabilities for the developers by having a common taxonomy,” As a result, APIs are increasingly coming says Jacob Feinstein, executive director from all parts of the organization and not of new technology. “If you have a more just from the API program group. The educated community, they’ll think of new consumer marketing organization, the things that they might do with the network enterprise marketing organization, the that they wouldn’t have thought of doing.” product organization, and the emerging devices organization feed the API pipeline. The platform strategy extends beyond Teams are also proposing APIs out of the network assets. “Our APIs cut across the gate with new solutions, including capabilities such as payment, device teams from AT&T’s network equipment characteristics, location, messaging, speech providers. “APIs are being thought of at recognition, and others,” Macwan says. the outset, and they influence the early “Any developers who want to embed speech ideation around network release and recognition in their services can just call a road map planning. Now we actively speech API to access our speech engine.” look at what the API opportunities are as we roll out each next generation of “Most of the things we do are candidates network technology,” Feinstein says. for the new architecture,” Donovan says. Speed is also a function of an External outreach organization’s operating model. changes internal “We’re pivoting toward thinking about “[The API program] is operating model architecting everything we do in a an architectural choice Donovan cautions against more API-centric way,” Feinstein adds. APIs impose modular thinking on the the common notion that one makes for speed.” APIs are for giving away enterprise. They have allowed AT&T to data free just to be nice. reconstitute its capabilities and assets in —John Donovan, AT&T That thinking limits the modular chunks with stable interfaces. internal potential of APIs. They have digitized the operations that “The use of APIs and take place around the company’s network their impact is not just and the value-added services it delivers. for outreach to the external developer Being digital, these capabilities are easier community. It changes how you operate,” to engage with and now operate at a faster he explains. “You literally put APIs pace with a large number of partners. everywhere. That’s how you do internal development, that’s how the IT shop The single principle: Speed works, that’s how your provider should Despite the size and scale of its do development for you, that’s how your infrastructure and operations, the offshore stuff lands into your environment, architecture changes enabled by API and that’s how you build services.” thinking, API technology, and an API platform strategy can have a real impact AT&T is changing on the inside, too, as a on innovation, growth, and the AT&T result of the API program. The thinking bottom line. “We’re getting faster, and one and architecture the program represents result is that the architecture is shifting to are seeping deeper into company one that allows more partnerships. You’ll operations. Many teams now understand see us do more technology partnerships the change in thinking the API architecture and move faster, both at the pace of requires. “People are applying an API lens the market and in terms of innovating whether they’re in the labs, the network on our own. There will be efficiency teams, or what traditionally have been benefits as well,” Donovan says. finished product groups. They offer an API-centric view of their work,” Feinstein His advice on how to think about APIs: says. As these diverse groups think about “Operate under one principle and then ways to support the API program, they architect around it; ours was speed.”22 PwC Technology Forecast 2012 Issue 2
    • “APIs are the building blocks of the digital economy.” —Laura Merling, Alcatel-LucentConclusion This transformation is possible byThe SMAC trends provide strong signals understanding and using RESTful APIsthat business ecosystems are moving and API management technologies.toward digital ubiquity. As this digital (See the article, “Consumerizationubiquity evolves, information (bits) will of APIs,” on page 34.) Companiesmake up a growing proportion of the that apply modern APIs and PwC’soverall value that customers experience proposed digital operating modelfrom any product or service (atoms). thinking have the opportunity toSuccessful companies are adjusting their gain competitive advantage throughbusiness and enterprise architectures to reduced friction in co-creating newbe more attuned to participating in or value, building persistent digitalintegrating with these expanding digital engagements, and increased agility.ecosystems. Companies leading in theirengagements with SMAC are adopting Leading software companies have longa digital operating model, which known that being the dominant platformsupports the permeable enterprise. for an ecosystem creates direct and indirect demand for their offerings andFew enterprises are completely ignoring long-term competitive advantage. SMACSMAC developments. However, the trends suggest that every companydemands SMAC creates on IT can is, in part (or should try to be), like aoverwhelm CIOs and other business software company in how it createsexecutives. In part, that’s because and engages with a digital ecosystem.business executives are accustomedto viewing technology opportunities Establishing a platform in the centerthrough the old lens of being responsible of a robust digital ecosystem requiresfor all the end-to-end application logic a digital operating model, one thatand performance. This approach does is appropriately permeable to thirdnot scale when engaging with SMAC, parties that can co-create new valueas described in the sidebar “Scalable from what a company and others haveintegration strategy.” They need a new to offer. It means taking advantage ofmodel—one based on lower integration the interconnectedness and the riseand interaction costs—similar to the of empowered customers who willone web companies have been using. engage actively with a company if it lets them. It’s time for more companies toA key transformation is to make a become like a software company withincompany’s value-add capabilities their habitat of the digital ecosystem.addressable in digital ecosystems. And perhaps in some new habitats. The business value of APIs 23
    • PwC: David, how are the mobility,Tapping value cloud, and social technologies trends impacting your world? DZ: What we are seeing is that thesein information trends are making technology much more pervasive than before, and one significant shift is the changingDavid Zanca and Thomas Wicinski of FedEx customer behavior. It’s a behavior shift in how customers interact, whereServices describe how FedEx is a connected they interact, and what they expect.enterprise and provides digital access to During the past decade, the growth in e-commerce has been substantial, but itits services on the customer’s terms. was from a small base of total retail. This past Christmas season we experienced aInterview conducted by Vinod Baya, Bo Parker, and Surajit Kar very different phenomenon. We clearly saw the shift from the consumer doing all the shipping of goods to the e-tailer shipping on behalf of the consumer. This shift suggests that consumers are doing David G. Zanca less driving to a retail store, loading up David G. Zanca is the senior vice president the car, taking it home, and shipping the of IT, customer access, and revenue systems presents to their family. Instead, they at FedEx Services. Zanca is responsible window shop in local stores, go home for bringing market leadership across the and buy online, and the e-tailer ships it. customer-facing domains of all the FedEx operating companies. A primary focus for It’s also very clear that the platform Zanca is the extension of a “connectedness” strategy that embeds FedEx services of choice for consumers has changed. into mobile devices and applications that The access from the mobile platform customers and partners use every day. is showing strong momentum, and shipment tracking from mobile Thomas Wicinski devices exploded this year. The ubiquity and convenience of mobile Thomas Wicinski is vice president of devices is resulting in more frequent digital access marketing for FedEx Services. Wicinski and the digital access marketing lookups, so we have more continual team develop, manage, and launch market- interactions with our customers. leading software, web services, and fedex.com to enable customers and partners PwC: Thomas, you lead digital to access all business services offered access marketing for FedEx. What by FedEx. are you seeing in this regard? TW: From a marketing standpoint, one of the strategic pillars of our digital access program is providing access to FedEx services on customers’ terms. Our capabilities should be accessible where customers are, and we have done that24 PwC Technology Forecast 2012 Issue 2
    • “We keenly seek out new sources of information to increase connectivity and make relevant information available to customers in their context.” —David Zancafrom the very beginning of the company. the hubs—almost everything has to us and the customer. For example,For instance, in the past we have technology embedded in it and tells us over the years we added more anddistributed desktop software, which where it is or what its state is. Without more scans on a package as it movedwould run on the dock at the end of a the connectivity, we would not get the from pickup to delivery, which digitizedfulfillment line to generate a label. That’s information about the package that more locations and increased thea production scenario, and we’re fitting we and our customers value so much. granularity of information we capture.into the customer’s context; in this case, A typical package, over its journey,somebody who’s operating a fulfillment Connectivity is core to our operating gets scanned more than 25 timesoffice and needs to generate a label. model, and we have become good at today, and we make a subset of these enabling, creating, and managing a scans available to our customers.Today it goes to the other extreme. connected world. Also, we keenly seekAs David said, we are becoming more out new sources of information to Other characteristics also push us torelevant on mobile phones. Every increase connectivity and, as Thomas be more and more digital. Althoughpackage that gets sent has a recipient. said, make relevant information most people think of us as transportingIncreasingly for all recipients, the available to customers in their context. documents, the company was foundedmobile device is a device that they live on the notion of the fast cycle timeson, as much as any other. I compare PwC: What are the fundamental necessary for critically needed goods,this to where we were in 1993 and characteristics of having such as equipment and computer spare1994 when we were deeming the web the connectivity DNA? parts, that must be moved quicklyas the next place for FedEx to be. We DZ: We essentially operate two to repair a broken-down machine orare growing in that same way now, networks: the physical network of equipment. So speed and responsivenessas mobile and cloud and social will planes, vehicles, and packages, and are core to our operating model.have some of the same implications. the second network of information about the package. The information PwC: What is an examplePwC: FedEx has a long history network is a digital equivalent of of where you are stretchingof treating information about the physical movements of our the edge of connection?the package with the same assets and packages. Extending and DZ: Looking back, when most otherimportance as the package. combining the two networks is how sites were just rendering content, ourHow does this principle embody we create value for our customers. tracking service was one of the firstitself in your company? functional web applications. Fast-DZ: That’s right. In the late 1970s, our On the surface, you may think of the forward 20 years, and our first iPhonefounder and CEO Fred Smith said, “The information as what we present to app was one of the first functionalinformation about the package is just customers to track their packages. It apps from a business perspective. Ouras important as the package itself.” It’s is much more than that. Indeed, the web applications from 20 years agoa vision that has given our company a customer wants to know where the and our mobile apps from today bothculture that values information and that package is, but the information about stretch the connections between ouruses it in all we do. The vision embodied the package tells us all sorts of things enterprise and our customers. There isitself by seeding a connectivity DNA. about our internal quality, productivity, a lesson in innovation here: the ideasAlmost every piece of our business effectiveness, and operations. for both of these came from somebodyis instrumented; it has some degree Information about the package helps in a cubicle playing with the webof intelligence and automation on it. us run our business better. That comes technology or the iPhone well beforeOur planes are all intelligent and they from a digital operating model where the web or building apps were popular.tell us where they are. The trucks, all our assets are connected and surface We encourage such experimentationthe couriers, the knowledge workers, information to increase overall value with emerging technologies. The business value of APIs 25
    • As I said before, almost every piece of our business has embedded sensors and intelligence. Looking forward, where we haven’t had the intelligence and will be adding it is on the package itself. The bar code provides some intelligence, but one must actively scan the package. This will change over time. One of our solutions, SenseAware, which we now use on a small percentage of our packages, makes the package intelligent. It’s essentially a cell phone that calls home and tells us, “Here’s where I am,” and provides information about location, temperature, velocity, light, vibration, and so on. With SenseAware, we push the edge of connection deeper into our operations, because the product location and sensor “ Our capabilities should be information is available continuously in real time as it moves in our system. accessible where customers are, At the same time, we get deeper in and we have done that from the customers’ contexts, as they are in constant touch with their packages and very beginning of the company.” can take actions if necessary. I think in the next 10 years or so, you could see —Thomas Wicinski some type of intelligence being placed on all packages. It might be sensors, it could be tags, but clearly the technology is going to evolve and improve. TW: That’s right. SenseAware is a continuation of our accessibility strategy. With it, one gets accessibility to the next level of detail that customers are looking for. Tracking information gives great comfort to our customers. The market and competitive dynamic now suggests that not only do our customers want more information about the packages, but they also now want more interaction with FedEx and26 PwC Technology Forecast 2012 Issue 2
    • “With SenseAware, we push the edge of connection deeper into our operations, because the product location and sensor information is available continuously in real time as it moves in our system.” “At the same time, we get deeper in customers’ contexts, as they are in constant touch with their packages.” —David Zancaexpect us to react to changes and resolve medical industry. If a temperature try to have a common code base allproblems if they occur. This is called drops below a certain level, then that across, so you’re not writing customintervention—customers are expecting item could be damaged. The customer software for every channel each time.it. They’re trying to ensure successful can drive an operational change, such Your mobile device may have somedelivery, not just know that something as return, reship, reroute, or any other native apps running, but they are callingwent wrong along the way. That’s one suitable action. From our viewpoint, it’s web services that are the real brainsof the fundamental business shifts that’s an element of being in the customer’s for shipping, tracking, and so on.causing us to need to provide more context by ensuring successful delivery.information than we ever did before. TW: You could say that we have gone PwC: How have the methods from a proprietary specification atPwC: So in some sense, the for making your capabilities the very beginning, distributing acustomer is becoming part of accessible changed over time? piece of software, to now where weyour operating environment, DZ: We have multiple platforms that we are migrating to a pure web servicesand you need to surface more support to interface with our vast pool capability. We’re seeing more of ourinformation to bring that of customers, and our methods have partners move to using the web services,value to the customer? surely evolved over time. We started which basically gives them one lessTW: Absolutely. It allows us to have a in the 1970s, making our systems and piece they need to worry about. We’reclosed-loop system with our customers. information accessible by our customers. definitely seeing a market shift there.A very interesting thing about our As Thomas indicated, the early methodsbusiness is that every transaction is were proprietary, and we gave customers PwC: What are some changeshigh intensity. Customers anxiously software and sometimes hardware you are seeing in termsawait their packages. We recognize to access our transaction systems, of how IT operates?it is the most important thing to the generate shipping labels, and so on. DZ: One change I see is that we in ITperson who’s getting the package, so don’t have to do all the coding anymore.we try to build the experience and our More recently, we are also using web The key role for my group is to be theoperations with that notion in mind. services, and it is by far the fastest- owner, producer, and platform of the growing platform right now. Customers services. Business units, even thirdMore information matters on packages call our APIs [application programming parties, can use the services to developbecause if something occurs, then we interfaces] or web services and access a new capability; they can write theand the customer can do something real-time information. In either case, thin veneer of code around it and weabout it. Right now, SenseAware gets we empower and engage millions of don’t have to do that. It’s a win-winused a lot for perishable items in the customers. Underneath all of that, we situation: less work gets added to an The business value of APIs 27
    • “ We in IT don’t have to do all the coding anymore. The key role for my group is to be the owner, producer, and platform of the services.” —David Zancaalready full IT pipeline, and the new We also have a continuously connected Do you manage APIs as products? Arecapability comes to market quickly. We strategy where we create a thin layer of you thinking in terms of publishingmay be involved in some code review, services, which are independent of end- APIs and making them available?but we’re going to end up concentrating user devices and use cases. We take ouron being a platform of core services. enterprise services and apply that thin PwC: And are you driving layer of customer experience services an ecosystem?And we’re already experiencing this on top, which in turn exposes our DZ: Yes. And how do you managebecause we have third parties that services as RESTful [representational the ecosystem? I think sophisticatedtake our software, couple it with their state transfer] web services. Then we enterprises are starting to thinksoftware, and then sell that as part of have all the different types of end- more like a software company—their capability in the marketplace. user devices flowing across the top. as a platform and an ecosystem.PwC: So you are co-creating So, we’re powering a new multitude of TW: When I talk about the priorities innew capabilities? Is this an customer solutions that do not have to be my digital access group, one of them iseasy change to make? fully developed by my IT shop. Thomas to think and act the way a best-in-classDZ: Indeed, we are co-creating with the and other marketing leaders, as well as software company would, as a companyconstituents we serve. And no, it’s not an third parties, can create new solutions that sells software for its own business.easy change to make. It’s a big change for our customers by using the services We have absolutely been implementingand needs to be part of IT strategy and we expose. This expands the value this. You called it a business model;it takes some leadership. At the highest universe a lot quicker than submitting I call them business processes. Thatlevel, this is an architectural change. the work and adding it to our queue. would be very consistent with whatYou need to architect your platform a company does that sells its wares.and environment for co-creation and PwC: One premise PwC hastreat APIs as products that you publish is that all sizable companies Between David’s group and myand maintain for long periods of time. are becoming software group, we are a pretty big software companies, although it’s not company sitting inside of this bigPwC: What are the technologies their core business. Do you transportation company. Many ofenabling this change? think of yourself as a software our activities are identical to what aDZ: We maintain a FedEx Developer company in some regard? big software company does. WhenResource Center, where third- DZ: As we look at our API strategy, I benchmark our group, I actuallyparty developers from enterprises our web developer center, and how we do it against the leading softwareor commercial developers can find share information with third parties, vendors, long before I look at what ourour web services in a WSDL [Web we are starting to think of it more that transportation competition does. SoServices Definition Language] way. The question is what makes a the idea of having a single platformspecification for shipping, office software company. For us, that means: that will support multiple customerand print, and other capabilities. Are you thinking platforms? Are you interfaces—that’s our mechanism thinking of allowing others to build to do it in an affordable manner. new capability on top of your platform?28 PwC Technology Forecast 2012 Issue 2
    • “ Many of our [IT and digital access group] activities are identical to what a big software company does. When I benchmark our group, I actually do it against the leading software vendors, long before I look at what our transportation competition does.” —Thomas Wicinski The business value of APIs 29
    • PwC: Mark, can you tell usThe rising value of about your company? MN: Sure. Streetline was founded about six years ago with the vision of applyinglinked information wireless sensor technology to compelling problems. We were very excited about low-power mesh networking and allMark Noworolski and Peter Leiser of Streetline the applications it makes possible with region-wide connectivity and sensors.detail how they are transforming the We explored many applications andparking ecosystem with cloud, mobility, and chose to transform parking first. What excited us about parking was thatanalytics technologies using RESTful APIs. it’s an activity that occurs in a dense urban environment and with a largeInterview conducted by Vinod Baya, Bo Parker, and Bud Mathaisel number of transactions. We often asked ourselves, “Where can I derive some value from the bits of information that I’m able to squeeze through a wireless mesh network?” We were looking for Mark Noworolski something where we can assign a value Mark Noworolski is the CTO of Streetline. to each one of those bits of information. He has been working with low-power sensing technology for more than 15 years, and he At a high level, parking raises many co-founded Streetline to leverage low-power challenges in almost every city. A sensor design, mesh networking, and web one-year study of a 15-block area in technology to deliver valuable applications Los Angeles found that about 30 percent to cities. of the traffic in the city is people looking for parking. That’s almost 1 million miles of driving and about 50,000 gallons of wasted fuel. Peter Leiser Peter Leiser is vice president of engineering, We have digitized the process of parking platforms, and applications at Streetline. and created new value for consumers, parking garage operators, and local governments concerned about parking enforcement and the impact that parking-seekers have on the quality of life in cities. We get two pieces of information from the field in real time: occupancy and payment information. We use this information to transform the parking process and create a smart parking ecosystem. [See Figure 1.]30 PwC Technology Forecast 2012 Issue 2
    • Figure 1: Smart parking ecosystem enabledfrom Streetline’s technologies and solutions Consumers & motorists Private parking Merchants providers New sources of data City & department of System integrators transportation New insight for action Sensors & apps Meters & smart parking Revenue management & parking operationsSource: StreetlinePwC: What’s possible now that time with messages such as, “I have awas not possible before? special on parking right now near yourMN: In our system, we address several location.” There’s also the ability to “We often asked ourselves,use cases. The first innovation is to offer reserved parking. For example, ‘Where can I deriveguide consumers to available parking if OpenTable1 is integrated with thespots. Parker is our consumer guidance ParkEdge platform, a restaurant could some value from theapplication, available on iPhone and offer a reserved parking space with bits of informationAndroid platforms. Parker takes the dinner reservations. Similarly, if you’reparking availability, policy, and pricing a merchant, you could validate parking that I’m able to squeezedata, and displays it to drivers in real for consumers shopping at your store. through a wirelesstime so they can find parking quickly. Many such use cases are now possible.We also have a mobile payment mesh network?’ Wecapability inside the Parker app, so PwC: How does the system work? were looking foryou can set reminders for yourself to PL: On the street, we have sensorsadd new payment before the parking in each parking spot and meter something where wemeter expires, thereby avoiding a fine. monitors, as well as wide area network can assign a value toYou can even take a picture of where gateway devices on lampposts.you parked, and that picture will be Everything is connected to everything. each one of those bits ofmarked with GPS. Then when you’re Information flows from the field information.”done shopping, for example, and need and is posted to our data center. Ourto find your car, just pop up the picture detection engine generates arrival —Mark Noworolskiand it will show you where to go. and departure information in real time. This information is publishedOne of our other solutions is ParkEdge, onto a messaging queue to update thewhich is a parking management appropriate systems. We also aggregateplatform that is a self-service solution information about payments fromfor private garage operators. Now meters. We have a meter paymenta parking garage operator who has API [application programmingexcess inventory in the middle of the interface] to aggregate informationday can access parking-seekers in real from different meter vendors that all have their own data semantics.1 OpenTable is a real-time online restaurant reservation network, www.opentable.com. The business value of APIs 31
    • openness applies to the sources from which we will consume data and to “  If I were starting a company now, or the way we share data via robust APIs. doing an application that had a mobile From relatively early in our company’s history, we’ve taken the position that and web component at any enterprise, we don’t need to limit ourselves to I can’t think of any way to do it other using only our own sensors. It does not matter where the data comes than focusing on the platform that from; the value comes from how you provides the RESTful APIs that the aggregate and link data together. mobile and web client consumes from.” PwC: What are some benefits you are seeing with an API- —Mark Noworolski driven approach? MN: One of the interesting things about our APIs is that the core data is the same. What changes is how the data gets used. Different use cases want parking data presented in different ways. For example, in Parker, if you’reMN: Also, through our ParkEdge but there’s also a lot of value to the trying to do real-time guidance toproduct, garage operators can enter historical aspect of the data. This is empty parking spaces, you’re not aftertheir inventory into our system and where analytics comes in. It turns out historical data; you’re after what’sindicate that some amount of capacity that occupancy varies from day to happening right now or what’s likely tocould be reserved. They can handle day. The advantage of having sensors be happening by the time you get there.it any way they want: publish their and real-time meter information ischarges, change pricing dynamically, that you can then feed that into a Whereas if you’re sitting in the parkingoffer valet parking, and so on. back end that will allow you to look department office and need to see at historical trends over time. You can what’s going on out on the streets,PwC: So you instrumented compare one city street to another, that’s a different API on the same data.parking spaces, surfaced new and if you have a true global reach to In Los Angeles, we will cover closeinformation, and digitized the that data, then you can also compare to a third of the city’s entire meteredparking process so that it can be how your city is doing to other cities. parking spaces. A parking controltransformed with cloud, mobile, officer now has a global view that showsand analytics technologies? PwC: You are using RESTful how many violations there are in eachMN: Indeed, that is what we have [representational state transfer] individual city block and can be guideddone. The key for us, as I said before, APIs to publish and share data. by that information to specific blocks.has been to find information that we What is the strategy behind that? The officer can zoom in, and it showscould assign value to. It was clear to MN: We’ve had an open business where the parking violations are onus that real-time information about strategy from the beginning, and that individual block. As the officeroccupancy and payments is valuable to we’ve come to see RESTful APIs as a gets out and writes that ticket, it sendslots of constituents. You can probably key enabler of that. We use them in information back to the server, andappreciate that there’s a lot of value our internal development as well as that information then gets republishedto the real-time aspect of the data, in how we interface externally. The to all the other officers in the city.32 PwC Technology Forecast 2012 Issue 2
    • “  If you use this loosely coupled RESTful API approach, you accumulate less technical debt for every new piece of functionality created.” —Peter LeiserPwC: Are there benefits outside of know the entire stack and understand debt.” The longer you’re in businessparking to what you are doing? all the interdependencies. Just because and the more things you’ve built, theMN: Indeed, a key benefit we plan of that, you need to do something like more technical debt you have. Thatfor is the extensibility of our platform. this. You need to become more API technical debt is really like financialAn example that we’ve considered driven, because if you don’t, you’re debt, where sometimes just servicing itthat’s not directly related to parking is going to have intricate dependencies. ends up eating all your time and capital.to open up our sensor mesh network I would advise CIOs to not be afraidto collect other types of information PL: In the past, we ended up with big to start over. If you use this looselyfrom the environment. The idea pieces of software. When you looked coupled RESTful API approach, youbeing that you could then spur open at it, you could determine what was accumulate less technical debt for everydevelopment of different sensors. shared and what had been added new piece of functionality created. specifically for another application,Consider pollution sensors, for example. but it’s all one big soup. That becomes With loose coupling, it’s a lot easier toLet’s say we weren’t sure whether a maintenance nightmare, because replace modules one by one, piece bythere was a market for those, but we there’s always this problem where you piece. When you have an API contract,opened up the APIs and we allowed change one thing over here and you’ve those systems that talk to your API don’tsomebody to build hardware that just broken something over there. need to worry about what goes on undercould use our already-deployed mesh the hood. What is important is to keepnetwork infrastructure to move pollution Now we have multi-tenant, system-of- the API stable, so it needs to be manageddata from highly distributed sensors record APIs. There are APIs for each like a product that would be maintained,back to pollution control officers. Or use case: a parking status API, a meter supported, and evolved with goodbecause the APIs are open, we could payment API, a payment status API, change management practices.get information from some other and so on. It makes it much easierinfrastructure entirely. That data can to organize and run engineering MN: Strategically, you need to take anbe published to our servers, and then it development and much, much easier educated guess about what informationcan be mashed up or brought into the to integrate with external code bases. and APIs will add to business value.Parker app. Anybody could use the open We think API first now. We think, Technically, if I were starting a companyAPIs to extend the parking experience “What is the API contract based on the now, or doing an application that hadto include pollution information or use cases?” and that helps us establish a mobile and web component at anyother environmental information. clear boundaries. Even with an internal enterprise, I can’t think of any way to do application, the question is, “What data it other than focusing on the platformPwC: How has the transition does that application need?” So you that provides the RESTful APIs thatto RESTful APIs affected drive that through this API framing, the mobile and web client consumesyour software engineering which has the added benefit of not from. This way, you can actually get topractices, enterprise constraining other potential use cases. market fastest because you can havearchitecture consideration, one built in parallel with the other.and that side of things? PwC: Based on your experience,MN: If you think of everything you code what would be your advice toas a module that has an API, it’s much CIOs considering a move to moreeasier to run development. As a small openness and more focus onstartup company you have a few people linking to other sources of valuewho know the full software stack and both internally and externally?all the interdependencies in that stack. PL: Internally, we talk about our olderInevitably as you grow, fewer people practices as having created “technical The business value of APIs 33
    • 34 PwC Technology Forecast 2012 Issue 2
    • Consumerizationof APIs: ScalingintegrationsA new generation of tools based on RESTfulAPIs will help enterprise IT embrace theopportunities and challenges from social,mobile, analytics, and cloud computing(SMAC) and consumerization of IT (CoIT).By Carol Hildebrand, Patrick Shankland, and Vinod BayaThe confluence of social networking, code-based programming specificationsmobile computing, analytics, and cloud that allow software components tocomputing (SMAC) creates a perfect communicate with each other in astorm of challenges for enterprise IT distributed system. A relatively newgroups. Generational changes in the way style of APIs, called representational statepeople adopt and use technology further transfer (RESTful) APIs, and emergingexacerbate this disruption. A parallel solutions to manage them, calledsubtrend called the consumerization of API management platforms, provideIT (CoIT) is driving the convergence of mechanisms so enterprises can engagethese technologies in ways that contradict with SMAC in a strategic and systematicthe traditional IT management methods manner to assist the fulfillment ofof command and control, locked-down their digital ambitions. Together, theysystems, systematic rollouts, and long power the consumerization of APIs.cycle-time application development. Previous issues of the Technology ForecastOver time, SMAC and CoIT will expand have covered the individual impact ofand deepen the digital operating social,1 mobile,2 analytics,3 and cloud.4model explored in the previous article, RESTful APIs and API management“Exploiting the growing value from platforms are the key technologies thatinformation,” on page 06. But these abstract above these individual piecestwo trends present challenges that and support the integration of SMAC,will require significant changes in how thus making them the key tools forenterprise IT operates and enables participating in the digital economy.business, which are issues examinedin the next article, “Embracing open 1 “Transforming collaboration with social tools,”IT,” on page 54. Fortunately, evolving PwC Technology Forecast 2011, Issue 3.approaches supported by emerging 2 “Unleashing enterprise mobility,”technologies can help achieve this PwC Technology Forecast 2011, Issue 1.transition to a permeable enterprise. 3 “The third wave of customer analytics,” PwC Technology Forecast 2012, Issue 1.These emerging technologies represent 4 “Driving growth with cloud computing,” PwC Technology Forecast 2010, Issue 4.a new generation of applicationprogramming interfaces (APIs), or The business value of APIs 35
    • Figure 1: A conceptual view of the relative trends in complexity of integration andthe nature of coupling, in the evolution of software integration technologies over timeComplexity Hi EDI electronic data interchangeof integration gh RPC remote procedure call e os Lo CORBA Common Object Request Broker Architecture EAI enterprise application integration SOA service-oriented architecture SOAP Simple Object Access Protocol REST representational state transfer Low Nature of Tight coupling 1960s Now EDI RPC CORBA EAI Web services REST (SOA/SOAP) RESTful APIs enable what PwC calls the The rise of RESTful APIs permeable enterprise, in which capabilities APIs have been used as a mechanism“When we step back to see and assets inside the enterprise are easily for linking programs since the early what the big revolution combined with assets and capabilities days of software. However, API creation outside the enterprise. Once the sole and design have significantly changed. is, we see that APIs are province of highly experienced software Early methods were proprietary and the first serious digital developers with deep knowledge of the created interdependent coupling among enterprise context, APIs are becoming pieces of code and systems. If one indirect channel.” the basis for creating digital value chains side of the coupling required a code that access and act on information from change, the other side was affected. —Sam Ramji, Apigee traditional data stores, humans, and an Over time, APIs evolved to reduce the increasing number of physical objects that interdependency of tightly coupled contain digital content; in short, we’re interfaces, generally lowering the witnessing the consumerization of APIs. complexity of integration. (See Figure 1.) Table 1 describes the evolution of integration and interface technologies to create distributed systems.36 PwC Technology Forecast 2012 Issue 2
    • Table 1: The evolution of integration and interface technologies in distributed systems Electronic data interchange (EDI): In use before the 1970s, EDI is an electronic exchange of business information (such as invoices) in a standardized format. EDI connections are point to point and often use proprietary protocols. Remote procedure call (RPC) or remote method invocation (RMI): In use since around 1980, RPC is an interprocess communication that allows a computer program to request a procedure to execute on a remote computer. In object-oriented software, RPC is called RMI. The details of the remote computer and procedure were hard-coded into the software and were platform dependent. Common Object Request Broker Architecture (CORBA): Created around 1991, the CORBA standard was defined by the Object Management Group (OMG). It uses interface definition language (IDL) to enable distributed components to work together. IDL provides platform independence. CORBA is complex and requires an Object Request Broker (ORB) to facilitate communications. Enterprise application integration (EAI): Gaining popularity in the mid-1990s, EAI is a mechanism to integrate applications within an enterprise. Integrations are complex, often point to point, and mediated by middleware. Integrations are tightly coupled and often need to be re-done with each upgrade of the application(s). Service-oriented architecture (SOA)/web services: Gaining popularity since the late 1990s, SOA uses a service-based architectural approach in which software is developed as a collection of services that can be reused in multiple applications. Although SOA can be implemented using any integration technology, including RPC and CORBA, broad industry acceptance increased with the use of web services standards such as Simple Object Access Protocol (SOAP). Business functions or processes are rendered as web services software components. SOA use has been largely internal to the enterprise. Representational state transfer (REST): In rising use since 2005, REST architecture builds from existing web protocols, allowing large pools of developers to easily and quickly build loosely coupled, accessible basic web services. Resource based rather than task based, REST tipped the balance from internal integration to external integration.Within the last decade, enterprises began However, the use of a REST architecture,to expose APIs to allow external parties along with associated technologies suchto build new functionality, something as JavaScript Object Notation (JSON),software companies did in the past. is accelerating the development andProgrammableWeb maintains a catalog use of APIs. Some of the most popularof these publicly facing APIs. (See Figure services such as Twitter, Netflix, and2.) Its directory has topped 6,000 APIs, Facebook are now processing API calls onand RESTful interfaces far outpace other the order of billions per day or month.styles, such as Simple Object AccessProtocol (SOAP).5 (See Figure 3.) Today, APIs are becoming the basis for creatingcommunication on the web has evolved digital value chains, including digitalfrom the early days of using SOAP indirect channels previously establishedstandards to using features of RESTful mainly by software companies and purelymethods, making REST-compliant web-based companies. “When we stepAPIs a major class of web services. back to see what the big revolution is, we see that APIs are the first seriousService-oriented architecture (SOA), digital indirect channel,” says Samwhich gained wide acceptance using web Ramji, vice president of strategy atservices built on SOAP, has been popular Apigee, an API management vendor.within organizations as a mechanism for “Although physical indirect channelssharing information across the enterprise. have supported businesses for a long time, the equivalent in the digital domain has been unclear so far.”5 According to Wikipedia (http://en.wikipedia.org/ wiki/SOAP): “SOAP is a protocol specification for exchanging structured information in the implementation of Web Services in computer networks.” The business value of APIs 37
    • Figure 2: Adoption of externally facing APIs is accelerating. Growth in number of APIs over time 3 mo 6,000 4 mo 5,000 6 mo 4,000 9 mo 3,000 18 months 2,000 8 years 1,000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: ProgrammableWeb One big reason behind the successful scalable and undeniably simpler, but adoption of RESTful APIs is developers’ depending on the protocols, clients, or“ In the past, everything ability to build modular capabilities servers used, it may have performance was a heavy integration. with lightweight interfaces that don’t inferior to other integration styles, require heavy integration. “RESTful such as CORBA. Therefore, a cost- This meant that if interfaces create a level of simplicity that benefit analysis of specific IT use cases there was a seemingly didn’t exist previously, and simplicity will determine the optimal integration always speeds things up, making style that must be implemented. small need, the cost integrations cost-effective,” says John of integration was a Musser, founder of ProgrammableWeb. More about REST As noted earlier, REST stands for barrier to fulfilling The potential to lower cost expands the representational state transfer, meaning that need.” opportunities to integrate. “In the past, that a client communicates with a everything was a heavy integration. server—not directly with the source of —Devon Biondi, Mashery This meant that if there was a seemingly information on that server. This transfer small need, the cost of integration was a is done through representations of barrier to fulfilling that need,” says Devon the state of that resource. The REST Biondi, vice president of strategy services architectural style for distributed systems at Mashery, an API management vendor. was developed around 2000, and it is patterned after the HTTP6/1.1 Protocol. Despite rising adoption, integration via In RESTful designs, the client does not RESTful APIs is best regarded as a tool need to know about the implementation in the integration toolkit, and is not the on the server. The server is free to store right solution in all use cases. Each of the data as it likes, and the client can store integration approaches in Table 1 have the same information differently. This their advantages and disadvantages. loose coupling means that as long as the For example, a REST architecture has interface is stable, the implementation on added benefits such as being highly 6 HTTP is Hypertext Transport Protocol, the protocol used for communications on the World Wide Web.38 PwC Technology Forecast 2012 Issue 2
    • Figure 3: RESTful APIs have been a driver of growth in API adoption.3,5003,000 REST2,500 Distribution of API SOAP protocols and styles JavaScript2,000 XML-RPC Other1,5001,000 500 0 2005 2006 2007 2008 2009 2010 2011Source: ProgrammableWebthe client or the server can independently • Layering—Servers do not knowchange. This independence creates whether there are layers of abstractionflexibility in distributed software systems. between themselves and the end “ RESTful interfaces client; for example, whether they create a level ofThe REST architectural style requires that are passed through multiple securitythe following six constraints be met: policies, APIs, and so forth. simplicity that didn’t exist previously, and• Client/server loose coupling—A • Code on demand—Servers are clean separation of duty exists able to temporarily send custom simplicity always between client and server. The type functions as executable code to speeds things up, of data storage does not matter to the clients for them to execute. client, and the client interface or client making integrations state does not matter to the server. • Uniform interface—Servers cost-effective.” With a stable interface, the client and clients can interact, change, and server may be developed and and be modified independently —John Musser, replaced independently of each other. as long as the interface that binds them remains the same. ProgrammableWeb• Stateless—The interface that dictates how the client and server An API implemented using the interact does not allow client states to preceding principles of REST and be stored on the server. Information using standard HTTP communications about client states is embedded in the protocols is a RESTful API, sometimes messages the clients send to servers. called a RESTful web service. Like any resource on the web, the RESTful API• Cacheable—Clients can have the will need a Uniform Resource Identifier ability (and must let the server know (URI), such as an http:// address. whether they do or not) to temporarily store data received from the server. The business value of APIs 39
    • RESTful API developers are increasingly eventually all large enterprises with using REST in conjunction with considerable data and information assets JSON, a resource-based data transfer will use this technology internally and mechanism, to further simplify the externally. Although SMAC applications process of communication between the motivate RESTful integration today, it information seeker (the client), and is typically useful for any application- the system containing the information to-application integration. to be consumed (the server). JSON is derived from the JavaScript scripting Comparing REST and SOAP language, which is widely used in web For many enterprises, the path to web browsers to enhance interfaces and services begins with the adoption of a build dynamic websites. Like REST, service-oriented architecture (SOA), JSON is noted for its simplicity and which uses SOAP as a method for usability. For instance, data is sent in exchanging information. In today’s plain text, which makes it easy to read web service world, both SOAP and understand. Because so many web and REST are used as methods of client programs are written in JavaScript, communication. There are several JSON data arrives ready to be consumed factors behind the popularity of without needing further manipulation. REST when contrasted with SOAP. At the same time, JSON lacks display capabilities and has a limited amount of Simplicity. REST uses simple HTTP development tool support. Hence, the and therefore standard commands— decision to use JSON in an organization such as GET, PUT, POST, and DELETE— should depend on its intended use. to coordinate communication between clients and servers. SOAP has no widely accepted methods corresponding to GET, PUT, POST, and DELETE, which “When you get an order of magnitude leaves developers free to define their own semantics. But the result can be shift in the number of developers who complex, proprietary mechanisms to have the skill and talent to be able to connect components. Any programmer unfamiliar with these proprietary use something, then you end up with semantics will need time to learn them, outsize network effects.” slowing development. (See Figure 4.) Familiarity. Since REST is closely —Sam Ramji, Apigee related to web design, web developers do not face a steep learning curve. REST is also language and platform agnostic. On the other hand, SOAP requires a significant skill set in SOA-specific The early use of RESTful APIs has development and delivery tools. This been concentrated in web companies, impact can be substantial, as Ramji of in companies active in mobile, in Apigee explains: “When you get an order social applications, and in large of magnitude shift in the number of enterprises leading the adoption of developers who have the skill and talent SMAC technologies. However, PwC to be able to use something, then you expects this concentration to change; end up with outsize network effects.”40 PwC Technology Forecast 2012 Issue 2
    • Figure 4: Contrasting SOAP and RESTful mechanisms for web services communicationREST uses HTTP commands—such as GET, PUT, POST, and DELETE—to communicate content between clients and servers,and it uses HTTP for transport. In contrast, SOAP separates the content (data for transmission) and the protocol (SOAP),resulting in complex and proprietary mechanisms to connect components. SOAP RESTHow Directory HTTP packetcommunicationhappens Service description in Web Services HTTP command RESTXML payload Definition Language (WSDL) GET, PUT, POST, DELETE data representation http:// http:// </> </> SOAP SOAP HTTP client HTTP server XML Services provider Services consumer REST-aware client SSL and HTTP authorization REST-aware applicationHow message SOAP HTTPis structured SOAP GET PUT envelope header REST Requests the Uploads the packet representation of representation of Message Application SOAP body a source of data the specified data contents specification Message- Data for specific trans- POST DELETE Message Submits data Deletes the data mission processing back to specified source instructions the source of dataEfficient with bandwidth. The Managing the APIsuse of the existing web infrastructure As simple as RESTful APIs are to build,eliminates the need for an additional they still require management andmessaging layer in RESTful APIs. Coupled maintenance. And although it is easy towith the fact that REST uses those manage a single API, all enterprises willshort request and response sequences, inevitably have several APIs that internalthese APIs consume considerably less developers, strategic partners, and publicbandwidth than SOAP-based APIs. developers use to build applications across diverse platforms. This increaseScalability. With simpler component in APIs has led to the need for tools andimplementations and reduced services that help companies create,complexity in the connection semantics, publish, manage, operate, and analyzeRESTful services can scale—as APIs. Such solutions, often called APIevident from several services that management platforms, are now offeredregister more than 1 billion API calls by several vendors, including 3Scale,each month.Although REST has Apigee, Layer 7 Technologies, Mashery,many benefits, in some situations— and others. Alcatel-Lucent also providessuch as stateful operations where API management solutions but with astate needs to be continued, or for focus on the telecommunications vertical,applications expecting a guaranteed enabling service providers to makelevel of security or reliability, or their networks addressable by others.requiring formal contracts with rigidspecification of the interaction— API management platforms bring a wealthSOAP would be a more appropriate of new functionality to API publishingchoice over REST, as it has standards to and operations. The following paragraphsensure certain requirements are met. describe their key characteristics. The business value of APIs 41
    • Developer community engagement. give visibility into the API platform to Engaging with the developer community improve efficiency. Customers can use is a significant first step to building an such tools to troubleshoot problems, API ecosystem; internal and external improve or maintain service quality, developers must be aware of exposed measure latency, analyze load statistics, services and the APIs to use them. monitor transaction data and traffic flow, Some API management platforms are or identify underlying API problems. free tools for those just getting started, while others are complete developer Traffic control. For companies that portals that support easy access to APIs maintain their API platform in house, and accompanying documentation, traffic control is important to protect such as wikis, blogs, and discussion back-end systems from overload. API forums, to promote developer collab- traffic control tools can set platform- oration. Some companies also offer wide rate limits, set limits by other rules outreach and marketing programs such as client or IP [Internet Protocol] designed to make the development address, or create tiered systems to allow community aware of their APIs. priority customers to consume more API data. With API traffic control tools, Security. API management platforms companies can define and enforce levels offer several facets of security, starting of partner access to data consumption. with new developer approvals and developer authorization to access specific Performance and scalability. APIs. Many companies support the open API management platforms address security standards or OAuth 2.0 for performance and scalability issues authentication and key management. associated with API platform growth. More sophisticated API management They also can manage scalability platforms support multi-tier access issues and limit lag time and latency control methods that specify which when a large number of developers, developers can access which APIs. applications, devices, or end users Usage monitoring is also part of this concurrently use the APIs. multi-tier access control capability. API management platforms should be able to API optimization. Although the use integrate with existing enterprise security of RESTful APIs is on the rise, sometimes systems and protect against external companies must support other methods. security threats by using encryption, Companies can help drive API adoption threat detection, and analysis. by offering APIs that use protocols the partner or developer prefers, and API Analytics and reporting. Analytics management platforms provide protocol help companies understand and translators to streamline the process. improve the value of their APIs. Value- They can optimize API content and driven analytics gauge API adoption format to fit the requirements of specific by measuring traffic, purchases, and mobile platforms or devices, and then registrations. Partner-focused analytics institute and enforce API version control. help companies better understand who is using their APIs and via which partner Platform outsourcing. Companies can channel they are accessing it, informing offload the entire API management task an appropriate response. For example, to external service providers via cloud- companies might segment audiences by based services or global API networks. top developers and applications, or they They can also tap these solution providers might analyze usage by API method. to take over API management when Operational analytics and reporting tools traffic must remain on the premises.42 PwC Technology Forecast 2012 Issue 2
    • Table 2: Capabilities of API management platforms Capabilities expected from all vendors Capabilities available from leading vendors Capabilities to expect in the future Free developer tools and tutorials Developer community portals— Face-to-face or personalized proactive community building through developer outreach—for example, wikis and forums organized hackathons Tools for developer access Analytical tools for usage trends, API/business strategy analysis management and authorization customer analysis, and brand awareness Traffic control and management External threat management SOA governance aligned with API management for private enterprise APIs Operational reporting tools Performance/scalability protection Data hosting, monetization, and management Version control API optimization Data and API marketplaces Protocol mediation/translation Partner portals On-premises and SaaS solutionTable 2 shows the broader group of Figure 5: Life cycle for adopting and benefiting from APIscapabilities and how they are evolving.Life cycle of API use Drive developer adoptionAs discussed in the article, “Exploitingthe growing value from information,” on Understand API usagepage 06, the adoption of RESTful APIscreates significant new opportunities Secure and protectfor enterprises to transform internallyto a digital operating model and to Control traffic flowengage externally with the evolvingdigital ecosystems. Strategically, any Scale and performanceAPI program will start by analyzingan enterprise’s opportunities to take Expand API channelsadvantage of data and informationassets, turning them into platforms, andfacilitating their extension by internal or Source: Apigeeexternal developers. Once under way,the program must recognize that theuse of APIs is like all other programs entire life cycle. One best practice isin that they will have a life cycle of to treat APIs like products and stafftheir own. This API life cycle must be them with the roles and infrastructureunderstood and managed, so ongoing typically put in place for any otherchanges and refinements can be made. product. “It is important to keep the API stable, so it should be managed likeA typical life cycle of an API program a product that would be maintained,moves from driving developer adoption supported, and evolved with good changeto using APIs to expand channels, as management practices,” says Markillustrated in Figure 5. API management Noworolski, CTO of Streetline, a globalplatforms provide support along the provider of smart parking solutions. The business value of APIs 43
    • Table 3: A sampling of services that illustrate the use of sensors and smartphones to digitize activities Company name Activity How it works What is the digital transformation? Fitbit Health and This wireless device tracks calories burned, Digitizes fitness information and tracks personal care steps taken, distance traveled, and sleep activity continuously, and correlates with quality and uploads reports to a website. outcomes such as weight and BMI A Wi-Fi–based smart scale tracks weight, body mass index (BMI), and percentage of body fat. Ginger.io Healthcare This mobile app collects data from a Digitizes health information, including smartphone sensor and analyzes the psychosocial state, with automated and data for subtle signals of behavior change self-reported data that could signal changes in health status. GreenGoose Internet of Things Users apply sensors to everyday things such Finds value in everyday activities through as a toothbrush or garden rake. The company a sensor embedded in data collection analyzes the data for behavior patterns. The and analysis data translates into points, which then can be used in games on the GreenGoose website. Jawbone Health and A sensor embedded in a wristband measures Records actions automatically; provides personal care physical activity and sleep patterns and sends the ability for users to also self-report data to the user’s iPhone. some information SenseAwareSM— Shipping and Multiple sensors in a package give near- Facilitates finer control of sensitive shipments powered by transportation real-time data such as location, temperature, by using sensor-driven data collection FedEx light exposure, relative humidity, and barometric pressure about a particular shipment via integration with a collaborative web-based application. Shopkick Retail shopping With this sensor-driven mobile commerce Creates a digital record of customer app, users collect “kick” rewards for walking shopping behavior in a brick-and-mortar store into participating stores or for scanning product bar codes. Kicks can be redeemed for rewards. Streetline Public sector The app uses sensors and a real-time parking Creates an entirely new field of data data feed to collect and distribute real-time collection, as it would be prohibitively labor parking availability information to drivers via intensive to manually collect such data text and smartphone apps. The app also uses real-time data analytics to adjust meter and garage prices to reflect supply and demand.44 PwC Technology Forecast 2012 Issue 2
    • The confluence of social, mobile, analytics, and cloud technologies is disrupting the business environment to an extent not seen since the early days of the Internet.API opportunity in digital APIs then make it possible to access Conclusiontransformation and monitor that data in a standard The confluence of social, mobile,Thus far, this article has discussed APIs way. Companies such as Cosm and analytics, and cloud (SMAC) technologiesas a mechanism to link capabilities ThingSpeak provide open source is disrupting the business environment toprovided in distributed software platforms for real-time access, for an extent not seen since the early days ofcomponents to RESTful web services in the sharing and manipulation of the Internet. SMAC represents a pace andtraditional computing environments. information, and for the development degree of change that is overwhelmingHowever, the use of APIs extends of applications that take advantage of to the current IT approach of owning thebeyond that. “The homogeneous IoT. Typical applications automate the end-to-end experience. Today’s methodsworld of PCs, Macs, or web browsers is everyday environment, such as turning do not scale to address the challengestransitioning to a heterogeneous world off the HVAC system or lights when a that SMAC presents: too many variationswhere almost anything can have an IP person leaves the home. Applications in use cases and too many endpoints. Inaddress and be open to collaboration,” are also used in enterprise contexts. For addition to understanding and havingsays Ramji of Apigee. Coordination example, FedEx SenseAware collects a strategies for these individual SMACacross such a diverse and pervasive wide range of information as a shipment technologies, enterprises should look atsystem requires an easy mechanism moves from its origin to delivery. abstractions that bring together theseto connect and communicate. “That technologies where they intersect.is why APIs are important. They While IoT may focus on inanimate objects,provide such a mechanism in a digital the growing use of smartphones and the RESTful APIs and API managementecosystem,” Ramji continues. role they can play in collecting data from platforms are just such an abstraction sensors creates opportunities to further and should be added to the existingRamji is referring to what is called digitize human actions without active integration toolkit. The best way tothe Internet of Things (IoT), a term attention from the individual. (See Table manage the upcoming challengesfirst used by Kevin Ashton in 1999, 3.) For example, UP from Jawbone uses stemming from the confluence of SMAC isreferring to the growing tendency to an iPhone app and a sensor embedded to use emerging IT tools around RESTfulbuild inanimate objects that have the in a wristband to track meals, physical APIs. Combining these tools presentscapability to generate digital information activity, and sleep patterns to later a model where central IT provides awithout human intermediation. display it to the user to promote healthy platform for participation with the digital habits. Smartphones today have sensors ecosystem. “In the future, the way toIoT is seeding an analog-to-digital for location, acceleration, orientation, increase the barrier to competition willtransformation of everyday activities and so on. Many services that collect, be to lower the barrier to participation,”by making a greater portion of a link, and analyze this new data are suggests Biondi of Mashery.person’s environment more digital. emerging; Table 3 lists a sample of them.Today it is becoming possible to capture The collective impact of these tech-information from data points as diverse nologies makes the pursuit of aas a toothbrush, home appliances, a permeable enterprise an imperative.thermostat, a car, or a home. Every With the rise of RESTful APIs and APIobject can be equipped with sensors that management platforms comes thedigitize the information about the object’s opportunity for enterprises to extendstate, location, and other relevant data. and deepen their digital footprint by making it possible to easily access and combine data from many more sources than previously possible. The business value of APIs 45
    • PwC: APIs [applicationThe digital indirect programming interfaces] are something the software industry has known and usedchannel since their inception. Why are they more important now? SR: A key challenge to business alwaysSam Ramji of Apigee explains why APIs are has been how to build bigger and bigger systems of coordination, because theof strategic importance to all businesses. bigger the system, the greater the power and the more things it can do. ThisInterview conducted by Vinod Baya and Ted Shelton led me to be interested in distributed computing. What is well known is that to create distributed intelligence, one needs to collaborate. Over the years, the barrier to collaboration has Sam Ramji decreased dramatically with Internet Sam Ramji is vice president of strategy at and digital technologies, which is a Apigee. Prior to Apigee, Ramji led open significant change. More recently is source strategy across Microsoft. He was this Cambrian explosion of devices. a founding member of BEA’s AquaLogic It’s not just a mobile device, but it’s a product team. He also led the Ofoto TV, a car, or an appliance, and almost engineering team through its acquisition anything when you look at what is being by Kodak. He holds positions on the boards of the Outercurve Foundation for open called the Internet of Things. Industry source and the Open Cloud Initiative, and estimates forecast 15 billion mobile he is a contributing editor to the ACM’s Internet-connected devices by 2015 journal Ubiquity. and orders of magnitude more non- mobile Internet-connected devices. Another change is that the homogeneous world of PCs, Macs, or web browsers is transitioning to a heterogeneous world where almost anything can have an IP address and be open to collaboration. How will such a large system be coordinated? To collaborate, they all need an easy mechanism to connect and communicate. That is why APIs are important. They provide such a mechanism in a digital ecosystem.46 PwC Technology Forecast 2012 Issue 2
    • The winners in the current digital indirect platform era zeroare those who can take the interaction costs to zero. costPwC: Why is that interface—the way you engaged withimportant to business? the customer—that was OK, because “What is happeningSR: What is happening is that we have the customer would adapt. In thisstarted to expand the software supply digital indirect world, the actor at is that we havechain. Today, a third party—sometimes the other end is not that smart. It’s a started to expandmultiple third parties—is involved in piece of software, it can be brittle, it’sgetting your signal all the way to the as it was written. Now if you change the software supplyedge where the customer is. If you want the interface, you break the software, which raises the need for companies chain. Today, a thirdto get your signal to an end consumerwho is using an Android tablet, you’ll to manage the interfaces—the APIs. party—sometimesneed to expose digital signals from PwC: The focus on the developer multiple third parties—your business in a way that a thirdparty with the expertise in designing community seems different is involved in gettinga really satisfying experience for that from before. Why is that? SR: One impact of the proliferation your signal all the waymarket niche can include your signal. of devices is that it results in so many to the edge where theWhen we step back to see what the big use cases that enterprise developers can’t possibly build fast enough to keep customer is.”revolution is, we see that APIs are thefirst serious digital indirect channel. up with the demands of businessesAlthough physical indirect channels and consumers. It helps to look athave supported businesses for a long the numbers. Today there are abouttime, the equivalent in the digital half a million enterprise developers.domain has been unclear so far. With modern-day methods based on RESTful [representational statePwC: How is this different transfer] and JSON [JavaScript Objectfrom the web so far? Notation] interfaces that are easy toSR: The winners in the current use, loosely coupled, and coarselydigital indirect platform era are those grained, there is an addressablewho can take the interaction costs audience of about 5 million developers.to zero. Interaction costs becamemuch lower with the web, but the When you get a step function likereason they were low is because a that—an order of magnitude shiftvery smart actor—a human—was in the number of developers whoon the far side of the browser. have the requisite skill and talent— you end up with outsize networkHumans are adaptable, and that created effects, capable of meeting thea couple of issues. For example, if for demand created by the proliferationcompetitive reasons the marketing of devices and the Internet of Things.department changed the website The business value of APIs 47
    • “ The API game is about unlocking latent value in data and information assets by combining them with other internal or external assets.” All of this feeds back directly to the the devices from which you are able question, what is the economic basis? It to access them. The company did not is unlike the web, where 1 billion web- need to perform all the R&D to learn connected humans were mediated by how to build the software for each of half a million developers. In the future, those different devices. Instead, Netflix probably 5 billion device-connected said, “Here are our APIs, here are the humans will be mediated by about 5 metadata APIs where people can log in million developers. The value of each and discover content, here is the Netflix- developer just went up by a factor of branded partner-restricted media, 20 to 50, and those developers are able and here is the codec to do license to build many apps in their lifetime. management.” Netflix was in the role of being QA; no engineering required. PwC: Much of REST and JSON adoption seems to be among So API use shifts not just the cost but digital-native and Internet it also changes the agility, because businesses. What is the relevance the ecosystem has changed from a to non-digital-native businesses? vertically integrated monolithic business SR: The API game is about unlocking concept to a distributed business latent value in data and information where winners and losers can establish assets by combining them with other themselves in the market without you internal or external assets. The winners over-investing in any single one. in the API game overall are going to be the smartest legacy businesses, PwC: How do trends we have because they have an unfair advantage talked about impact the IT of decades of transaction data as well organization of any enterprise? as other information and data assets. SR: There is clearly an impact at the They may have only a decade that’s edge of the IT organization. The web worthwhile, but they have that. In this taught business self-service. By making market, if companies can overcome information and transactions open their organizational inertia, incumbents and accessible, businesses found that actually have every opportunity to be the customers could serve themselves. big winners in each industry with APIs. The next level of self-service is self- PwC: What is the impact on service on the data, both for internal the software engineering and external use. It is about opening practices of organizations that data. For example, let’s say a marketing need to adopt and offer their professional has $150,000 at the end capabilities via RESTful APIs? of the quarter and gets an ad agency SR: Since APIs really promote to build a mobile app to influence co-creation dynamics, where you create the competitive dynamics in the new value directly or indirectly with marketplace. How will they enable third parties, the engineering and it to get access to corporate data and R&D burden is shared with the digital transactions? How can they do anything supply chain. For instance, Netflix uses with it if access to corporate data is not APIs to get its services quickly on all easy? How long will it take? When an IT48 PwC Technology Forecast 2012 Issue 2
    • department is closed and its whole focusis on securing and locking everything,then that opportunity doesn’t exist.Going forward, it will be an imperativeto be able to do self-service on the data,because modern enterprises need to bemuch more permeable than they areaccustomed to being. Protecting the dataappropriately is essential while allowingself-service. So IT will increasinglyfocus on security, availability, andreliability. IT organizations mustget away from feeling like they areresponsible for building all the thingsthe business wants and insteadenable the organization to be agileby providing self-service on data.PwC: What should CIOsof enterprises do to takeadvantage of APIs?SR: The real opportunity for CIOs isto develop the strategy for how theenterprise participates in the digital “Going forward, it will beindirect channel. The fact that they’rea CIO at a major enterprise means an imperative to be able tothey already understand and have the do self-service on the data,capability to conduct channel-basedbusiness. They need to get the channel because modern enterprisesleadership, marketing leadership, need to be much moreand technology leaders in one roomand say, “We have a new channel.” permeable than they are accustomed to being.”The new channel is a capability, usuallyan app, built by third-party developers.Understand the channel, segment it,and figure out which segment pointsmost effectively to the markets moststrategic or the most under threat.Together develop an ecosystemmodel that can be supported with atechnology and business platform.It’s a strategy for a new channel. The business value of APIs 49
    • PwC: Devon, what are someGetting into the of the trends you’re seeing? DB: An important trend is how ubiquitous connectivity is becoming.customer’s context The latest research suggests that 30 countries now have 100 percent ubiquitous connectivity; that is,Devon Biondi of Mashery details how there’s at least more than one Internet connection at any given time forAPIs allow businesses to engage with every person in that country. Andcustomers in their context. more countries are following. We’re certainly far from the days where youInterview conducted by Vinod Baya and Bo Parker had to wait to get to your hotel room and plug in to the connection; now you’re just connected everywhere. Related to this trend is the diversity Devon Biondi of devices, which is driving the requirements for significantly faster Devon Biondi is vice president of strategy development of digital services. services at Mashery. She helps e-commerce, Previously, companies had a corporate media, and technology companies align their API programs with broader business mandate that they would support strategies. Prior to Mashery, Biondi served PCs and a brand of smartphones, as executive strategist to the CEO at but now in almost all enterprise Tibco Software. environments, IT departments need to support non-sanctioned devices. PwC: Why is that important to business? DB: If you look at the history of business, the competitive dynamics have been changing. James Governor of RedMonk has said, “20th-century IT was about raising barriers to entry for competitors. 21st-century IT is about lowering barriers to participation.” In the future, the way to increase the barrier to competition will be to lower the barrier to participation. Digital data and digital interactions are becoming the next fertile ground for competing, creating, and growing companies. This impacts all companies, whether they are digital or not.50 PwC Technology Forecast 2012 Issue 2
    • “In the future, the way to increase the barrier to competition will be to lower the barrier to participation.”PwC: Mashery offers API PwC: How are APIs impacting[application programming customer relationships?interface] management DB: Previously, the interaction betweensolutions. Why are APIs companies and customers almostimportant to businesses now? always took place in the context of theDB: I think it helps to understand business—in the store, at the website,the analogy of APIs to the evolution or in the service. Now the customer isof the distribution of hard goods. taking control of the context, and theOne hundred years ago, if you were a business must get into that context.manufacturer, you probably also hada store and a relationship with the In fact, customers are creating newcustomer, and that was the way you context. For example, Best Buy is onesold goods. Over time, new channels of the point redemption partners fordeveloped and intermediation the Citi rewards program throughhappened. Then manufacturers could Citibank. If I’m standing in Best Buy,distribute their goods through their which is part of my context, and I scanown stores, through co-branded the bar code of a product, the appexperiences inside another store, or will tell me how many Citi rewardsthrough third-party retail stores. points I need to buy that product. Since I am a Citi rewards member, itToday, apps [as on mobile devices is looking up my Citi rewards accountand tablets] are creating a new role in and letting me know if I have enough.between the business and customer.There always have been new channels Because Best Buy had an API to itsin between the business and the catalog, it was easy for Citibank tocustomer, and now apps are the new just link to it and be in the in-storeones. Some of those apps will be built shopping context. Also, from theby you, some of those apps will be built Citibank rewards website, customersby your strategic partners, and some can look up the inventory at the Bestof those apps will be built by people Buy store near them without going toyou have no relationship with at all. the physical store—all through the API. By exposing APIs, Best Buy gets into theThe API is a recognition of the reality customer’s context in other experiences.that there are just too many nichesand too many ways that customersneed to be served. No business willbe able to do all of the scenarios. In adigital world, an API is your interfaceto enable other distributors. The business value of APIs 51
    • Reduction in call volume that Bluefly experienced byintegrating order status information to an IVR systemusing RESTful API integration. 20% PwC: How has integration Statistics we have collected suggest that changed? using APIs reduces the development DB: One of our customers tells us time by 50 to 75 percent or more. What that they are being forced to create previously took six to eight months to compelling user experiences that must integrate can now require hours or days. be drawn on assets and services across many groups in their company. In the PwC: What are some adoption past, these types of integrations took patterns you have seen with APIs? six to eight months. The integrations DB: We see a wide spectrum of were custom and rarely reusable adoption patterns. Some companies later. They essentially performed a have remnants of APIs from prior project specification and then the efforts, because certain things are close integration. Then they would perform to being exposed and they just aren’t the next project specification, and so documented. Technically they are APIs, on. That is six to eight months every and the company just needs to clean time. That approach doesn’t scale, things up. So they can reuse past efforts and the reality is that businesses and refresh them with new methods. fall behind on integrations. Companies can have big API Another difference is that everything initiatives or they can start as seeds was a heavy integration. If there was based on a particular application. a seemingly small need, the cost of One of our customers, USA Today, integration could not be justified. For came to us when the iPad was to be example, one of our customers, Bluefly, released. The publication wanted its an e-commerce discount store, has content on the device when it was an API program. For a long time the launched. USA Today didn’t have the company saw that its call centers needed necessary capabilities and identified to answer a lot of questions about a development firm to help. order status, because customers had no way to get updates on their orders. The mobile team needed to get Bluefly built an API for order status so motivated and run really quickly. it could be called by the company’s IVR To provide access to its assets and [interactive voice response] system, capabilities, USA Today exposed a and Bluefly cut its call volume by 20 few APIs to this development firm. percent overnight. It would have been The result was that the publication’s difficult for Bluefly to justify a multi- content was then on the iPad when month project, but a lightweight it launched. The USA Today app approach addressed the need squarely. became the No. 1 news app from the beginning, and the publication’s overall digital presence, its Alexa ranking,1 went from 40 to 19 over time. 1 Alexa Internet (www.alexa.com), a subsidiary of Amazon.com, provides traffic data, global rankings, and other information on thousands of websites.52 PwC Technology Forecast 2012 Issue 2
    • “The best designed APIs are designed for a public audience, even though the most value in terms of consumption will be with strategic partners. You want to design with the broadest audience in mind so you can still get value among the long tail of developers.” “Another best practice is to look at APIs as products and at your own developers, your strategic partners, and long tail developers as customers.”Use of APIs started with an iPad was in place, they realized they could PwC: Many companies fearproject, and now all the publication’s expose it to the next development, opening up capabilities. Howmobile efforts are being driven by APIs and then it spread from there. should they handle the risk?because the organization has seen DB: I too hear many times from clients,how it can develop quickly with APIs. PwC: What are some best “There’s no way I’ll let my brand beAlso, APIs do not need to be public practices in using APIs exposed in that way.” My view is thatat first. For USA Today, it started as a that you are learning? all companies are already open to somesmall project for an internal use case, DB: The best designed APIs are extent; some of their data is already outand now the organization has since designed for a public audience, even there. Someone can scrape their websitereleased a number of public APIs. though the most value in terms of for publicly available data, and there is consumption will be with strategic a lot there. On a website, a lot of peoplePwC: Are customers changing partners. You want to design with are getting data through means that aretheir development practices? the broadest audience in mind not doing a service to your company.DB: A key change is that those who so you can still get value among However, if you expose it as you wouldare actually building the end-user the long tail of developers. with an API program, with terms ofexperience will first ask, where’s the service and controls on ways of use,API? Developers are increasingly Another best practice is to look at you can start to build much healthierexpecting APIs in more and more places. APIs as products and at your own relationships. There is mitigation developers, your strategic partners, of some risk in being proactive andAlso, we see that the API culture spreads and long tail developers as customers. exposing information assets withgradually and virally. Someone doesn’t So companies don’t just release an appropriate terms and controls.need to start with aligning a lot of API; they release a product line ofpeople to the API way of doing things. In APIs with different methods, accessmany cases, two or three people decided controls, service level agreements, termsto expose a private API on a few methods of use, and so on that addresses theto one development partner. Once this varying needs of this customer base. The business value of APIs 53
    • 54 PwC Technology Forecast 2012 Issue 2
    • Embracing openIT: Enabling thepermeable enterpriseBy positioning IT capabilities as a platformcomposed of open, self-describing, modularservices with reliable interfaces, CIOs canenable the permeable enterprise and createnew strategic options in digital ecosystems.By Bud Mathaisel, Patrick Shankland, and Vinod BayaIf CIOs are going to be successful in the ecosystems, CIOs are tapping intonew world of social, mobile, analytics, these value drivers, seeding a digitaland cloud (SMAC) trends, they need to operating model and creating newthink differently. Legacy ways do not strategic options for their organizations.scale well to the possibilities of digitalecosystems. To increase the speed of RESTful APIs are the catalytic enablersdevelopment and co-create their futures for the open digital ecosystem. They arewith internal and external third parties, the self-describing interfaces and dataCIOs need to adopt a new mantra: go packages organized in business-relevantopen. This co-creation mandates a and logical hierarchies, accessible vianew open platform enabled through HTTP.1 They define the idea of open,application programming interfaces accessible, self-service interfaces, which(APIs), especially representational are also important for engaging with thestate transfer (RESTful) APIs. More consumerization of IT trends. By makingthan a technology purchase, “go open” an organization more permeable,is an architectural transformation RESTful APIs establish a universalnecessary to create and participate shared architecture and collaborationin digital ecosystems and to enable model for linking software and systemspermeable enterprises. (See the as networks, bringing the benefits ofarticle, “Exploiting the growing value Metcalfe’s Law2 to software components.from information,” on page 06.) 1 HyperText Transport ProtocolAs business ecosystems become more 2 Although initially defined in relation to tele-digital, the value drivers increasingly communications networks, Metcalfe’s Lawcome from the information (bits) today applies to all networks and states that the value of a network is proportionalaugmenting the physical product to the square of the number of nodes inor service (atoms) it represents. the network. See more details at http://en.wikipedia.org/wiki/Metcalfes_law.By engaging with emerging digital The business value of APIs 55
    • Figure 1: Open IT builds on prior or ongoing SOA efforts and reorganizes IT capabilities in modular chunks to allow co-creation with internal and external partners. Co-create Not much value Open IT (internally and externally) Who creates new services Traditional IT SOA efforts Only IT creates Low Modularity of capabilities High IT can take a quantum step to deliver on The open IT transformation the promised value of information for Open IT delivers information services“  Statistics we have both internal and external users. The that internal and external audiences collected suggest that key to delivering this value is RESTful build on rather than passively accept APIs, which provide the technical as the endpoint in an information using [RESTful] APIs underpinnings for loose coupling as supply chain. It requires a change from reduces development detailed in the article, “Consumerization delivering and maintaining full, end-to- of APIs,” on page 34. Without end applications to delivering a platform time by 50 to 75 percent.” this loose coupling, the complex with modular capabilities expressed interdependencies of traditional systems as reliable interfaces. (See Figure 1.) —Devon Biondi, Mashery integration generally lead to steep This change is now possible due to the learning curves for programmers, less sharply lower cost and complexity of reliable software components, the integration during the development possibility of very long development of new capabilities. “Statistics we have times, and user frustration over what collected suggest that using [RESTful] is delivered. RESTful APIs are the APIs reduces development time by 50 major ingredients that have made the to 75 percent. What used to take six to new digital ecosystem possible over eight months to integrate now requires the past five years. “It’s a confluence hours or days,” says Devon Biondi, of many things,” says John Donovan, vice president of strategy services at senior executive vice president of Mashery, an API management vendor. technology and network operations at AT&T. “It’s the quality of the APIs; it’s The combination of self-describing the skill set of the API developers; it’s interfaces (RESTful APIs), identifiers the evolution of the JavaScript; it’s the (Uniform Resource Identifiers [URIs]),3 evolution of how code is developed.” and standard access methods (HTTP) helps mitigate the long lead times for The time is right to take advantage development and high costs created by of this confluence. 3 In computing, a Uniform Resource Identifier (URI) is a string of characters used to identify a name or a resource. See Wikipedia: http://en.wikipedia.org/wiki/URI56 PwC Technology Forecast 2012 Issue 2
    • tightly coupled, proprietary integration CIOs must make these investments. “Ifmethods. AT&T, for instance, now the CIO’s team doesn’t understand thisexposes a growing catalog of RESTful market and is waiting for technologiesAPIs—such as billing, subscriber to mature or standards to emerge,profiles, device characteristics, and competitors are going to eat your lunchmessaging—that cut the time developers by being more nimble,” warns Johnrequire to deploy their applications on Musser, founder of ProgrammableWeb.AT&T’s network from months to days. The good news is that the broadIT organizations typically have long outlines of how to open IT are amplylists of projects proposed by internal demonstrated on the consumercustomers—lists that seem to grow web, and enterprise-class toolslonger over time. SMAC trends are and supportive infrastructure arelikely to exacerbate this issue, leaving becoming available. “CIOs historicallybusiness units even more frustrated. haven’t had the toolkit to provide“When they take a request to IT, the open services,” says Sam Ramji, viceanswer is often ‘no’,” says Brian Katz, president of strategy at Apigee, providerhead of mobility industrialization of an API management platform. APIand engineering at Sanofi, a global management solutions allow enterprisesdiversified healthcare leader. Such to take their existing IT assets and turndynamics prevail where the IT function them into platforms that bring thecontinues to operate as the sole provider enterprise into the digital ecosystem.of end-to-end application functionality.However, the world outside IT has API interfaces: A new boundary “ A lot of employeeschanged. “A lot of employees today are to link IT with businesssavvier with IT, as they have grown today are savvier with At many enterprises, a typical ITup with the Internet and associated stack for applications might look like IT, as they have growntechnologies and services. They want the example in Figure 2, composedto be able to get their work done up with the Internet of three layers. The core, enterpriseand have the capability to build or resource planning (ERP), and other and associatedprocure IT services,” Katz says. large enterprise-wide applications technologies and and associated data warehousesThe central IT function is clearly remain the foundation, and they are services. They wantresponsible for delivering core systems the source and repository for dataand services. The distribution of to be able to get their for transactions. These data are theresponsibilities is shifting, however. most precious enterprise assets. The work done and have“We in IT don’t have to do all the coding middle layer contains the functionalanymore,” says David Zanca, senior vice the capability to build applications that use these datapresident of IT, customer access, and assets and support functions, such as or procure IT services.”revenue systems at FedEx Services. “The pricing, inventory, finance, web retailkey role for my group is to be the owner, store, and others. The third layer is —Brian Katz, Sanofiproducer, and platform of the services.” at the edge, closer to engagementWith a RESTful-inspired architecture, with employees and customers, andIT can deliver robust and reliable builds on the other two layers tointerfaces against the core systems. provide role-specific solutions such asBusiness unit leaders and their business- collaboration, reporting, and so on.unit IT staff can take advantage of theseinterfaces by combining them with self- In traditional end-to-end ownershipgenerated or sourced functionality to of IT, the information flows from thecreate new capabilities. Through this core systems to the edge applicationsco-creation process, marketing, sales, accessed by employees and customers.and other internal groups can become The flow could be mediated byfull partners with the IT organization. middleware, proprietary or internal The business value of APIs 57
    • Figure 2: The IT application stack in traditional IT and open IT and highlights of some of the changes necessary Traditional IT application stack What changes Open IT application stack Edge applications Edge applications are no longer within Edge applications Social, mobile, analytics, cloud IT’s end-to-end control. IT engages Social, mobile, analytics, cloud (SMAC) applications with internal and external developers. (SMAC) applications Edge security services The security focus expands from an Edge security services intrusion prevention orientation to rights management (certificate for a specific user for a specific element of data for a specific Edge APIs period of time). (RESTful, SOAP, and other flavors) Middleware (enterprise service bus) A new edge represented by APIs reaches Middleware deeper into the IT stack and enterprise (brokering, orchestration, capabilities. Brokering, orchestration, and API gateway) API gateway take on new importance. Functional applications and Functional applications and databases likely Functional applications and databases (finance, pricing, already have been rewritten to expose data databases (finance, pricing, inventory, web retail store, to the web and provide real-time processing inventory, web retail store, sales, etc.) of transactions. Prepare for a higher sales, etc.) frequency of processing from API adoption. Core security services API adoption will invoke a higher frequency Core security services of transactions. Optimize for higher Core applications and databases transaction loads. The highest level of Core applications and databases (ERP, CRM, transactional engines) protection is mandated for this layer. (ERP, CRM, transactional engines) IT owned Degree of change: High Medium LowAPIs, service-oriented architecture also highlights other key changes in each president of engineering, platforms,(SOA) efforts, or other mechanisms. of the layers when transitioning from a and applications at Streetline, a globalBut central IT maintains full control and traditional stack to an open IT stack. provider of smart parking solutions.responsibility for the full stack from thecore to the edge. In contrast, in open RESTful APIs enhance the commercial Reorganizing and energizing the ITIT, the information flows between the value of enterprise data and information function for open IT is a key to the digitalcore systems and the RESTful APIs and assets in a digital ecosystem. These future. To realize the full potential of aopen APIs. These APIs, which represent interfaces even make it easier to digital operating model, there are foura new edge or boundary, expose the organize IT in a manner synergistic leadership opportunities for the CIO:capabilities across the IT stack of the with business, a challenge IT has facedenterprise and the related information all along. Streetline, for example, • Embrace a new architecture.assets as services, becoming the building defines business requirements and APIblock for new services. Central IT does logic together as the company builds • Address a new audience: internalnot have responsibility for the end- out its digital ecosystem for parking and external developers.user application at the edge, but has operations. “There are APIs for eachthe responsibility to support the level of use case: a parking status API, a meter • Overcome new challengestraffic and the service level agreement payment API, a payment status API, from openness.that API usage might entail. Figure 2 and so on,” says Peter Leiser, vice • Upgrade organizational skills.58 PwC Technology Forecast 2012 Issue 2
    • A new architectureA good layered IT architecture—distributed, client/server, object- “At the highest level, thisoriented—has been important for morethan 30 years, but not until today, is an architectural change.with the emergence of web-based You need to architect yourservices and consumerization of IT,have enterprises had such a compelling platform and environmentreason to revisit their IT architecture. for co-creation and treatOpen IT, based on RESTful APIs, will APIs as products that yourequire changes inspired by platform publish and maintain forthinking and loosely coupled, self-describing, modular capabilities. “At long periods of time.”the highest level, this is an architectural —David Zanca, FedEx Serviceschange. You need to architect yourplatform and environment forco-creation and treat APIs as productsthat you publish and maintain forlong periods of time,” advises Zancaof FedEx. The goal is an architecturedesigned for compatibility withemerging digital ecosystems. Onecharacteristic of RESTful APIs consistentwith this architecture is their readinessfor a pull-centric world, where usersinvoke existing services and createnew services, versus the traditionalnotion of IT pushing services.Traditional architectures are optimizedfor batch calls against the core, usuallyhigh-volume electronic data interchange(EDI) or Extensible Markup Language(XML) format interchanges. Thisrequirement is unlikely to changein the digital ecosystem. What willchange is access calls through APIsthat will put additional stress on thecore. The new architecture shouldharden the core while providing morepermeable binding for API requests.Also influencing this architecturalchange is a higher pace of newapplication adoption in the enterprisecaused by SMAC technologies. Thisadoption cycle lies in stark contrast tohow fast core systems can or shouldbe changed. An architecture that takesthe core capabilities and makes theminto platforms with modular interfaces The business value of APIs 59
    • Figure 3: Stages of maturity in developing an internal- or external-facing developer program Third-party products treated as critical feature sets, not optional add-ons Support for developers from testing through Proactive developer marketing products Basic developer recruitment and capabilities: documentation community and supportallows a faster pace of application An API-friendly architecture shift “[CIOs] need to get the channel leader,evolution at the edge. AT&T organized also has implications for IT security marketing leaders, and technologyits API program to match this pace. “It at two general levels. Security for the leaders in one room and say, ‘Weis an architectural choice one makes core is intrusion prevention oriented, have a new channel,’” Ramji adds.for speed,” says Donovan, explaining and it may also be optimized aroundwhy AT&T created an API program. batch movement of data. Security To expedite the adoption of open in support of an API strategy is both platforms, some IT organizationsIn addition to publishing services for intrusion prevention oriented and establish a developers’ resource centerothers to consume, most enterprises rights managed—a certificate issued or an API program by productizingwill also consume external services to a specific user for a specific data the chosen capabilities and features asto enable their business. Also, all element for a specific period of time. modular services with stable interfaces.major enterprises do operate a large Although AT&T has had a developerpool of vendor-bought solutions. New channel, new audience program for years, the company hasThe CIO organization therefore will Open IT positions enterprise IT assets accelerated its use of RESTful interfacesbecome an orchestrator of services— to engage with the digital ecosystem and related open architecture during theacross vendor capabilities, published internally and externally. For many IT past two years. This transition allowsservices, and consumed services—a groups, this engagement will require AT&T and the developers to surfacerole that the new architecture will a new competency—to work with a new opportunities to monetize AT&T’sneed to acknowledge and enable. developer community outside the IT network assets. The intent is to make all organization. With published APIs, of the network capabilities addressableThe growing number of devices used third parties are encouraged to, and by enterprise or commercial developers.by employees and customers to access will, develop capabilities that will “Where do you put APIs? You literallyenterprise IT is also a consideration in benefit the enterprise and the third put them everywhere. That’s how you dothe new architecture. “We also have parties. “The real opportunity for CIOs internal development; that’s how the ITa continuously connected strategy is to develop the strategy for how the shop works; that’s how your outsourcerwhere we create a thin layer of services, enterprise participates in the digital does development for you; that’s howwhich are independent of end-user indirect channel,” says Ramji. For you build services,” suggests Donovan.devices and use cases,” describes Ramji, the digital indirect channel isZanca. FedEx created this thin layer what APIs make possible by giving Such an undertaking is akin to shiftingof customer experience services on access to a large and growing pool the role of the CIO to be more like thetop of its enterprise services to expose of internal and external developers. CEO of a software product company,them as RESTful web services. one that provides the APIs and software60 PwC Technology Forecast 2012 Issue 2
    • Figure 4: A successful developer program has many elements to achieve market objectives. Proactive outreach is needed to attract developers and help them understand how they can Developer outreach be successful with the developer program. Code examples, documentationDevelopers can and will help Technical forums, paid support options, and Community supporteach other. This help can be other content or service elementsfacilitated with the right online may be necessary to helpforums and event creation. API program developers build great applications.Ultimately, developers want to Tools will be needed for testingearn money, and helping them Testing applications under conditions Go to similar to those in real customerreach customers is a crucial part market andof a successful program. certification environments. Some industries may require certification processes for companies or applications.as part of a proprietary package for Successful developer programs include most enterprise IT organizations havecustomers and developers. “When I numerous elements that complement little experience with them. Moreover,talk about the priorities in my digital each other to achieve market objectives. APIs span a wide range of past andaccess group, one of them is to think (See Figure 4.) As they develop their present technologies, as detailedand act the way a best-in-class software programs, organizations will analyze in the article, “Consumerization ofcompany would,” says Thomas Wicinski, and consider many features, such as APIs,” on page 34. Going forward,vice president of digital access marketing program fees, API access fees, and enterprises need to evolve approachesfor FedEx Services. In addition to developer or app certification in their for consuming and offering RESTfulprocuring and implementing vendor go-to-market strategies. They will gauge APIs that address several challenges.solutions, CIOs also need to design and success by analyzing measures sucharchitect a platform and interfaces that as the number of engaged developers Challenges in consuming APIs:remain reliable over generations of use. (internal or external), the quality and • Diverse API technologies— quantity of third-party applications, Although an enterprise may preferAs an IT organization works to empower the volume of API calls, end-customer RESTful APIs, API architectures,external developers, it may follow a engagement, and monetization of protocols, and interfaces maymaturity path as illustrated in Figure the service. Measures also extend to vary across publishers of APIs.3. The journey starts with exposing internal activities. “Another measure This diversity complicates thesome basic capabilities and associated [for the API program] that we’re using development of enterprise and mobiledocumentation. As a company matures, is how many new APIs we are releasing applications that serve or utilizeit will attract more developers and as a cadence around our progress in services from multiple providers.make more comprehensive capabilities opening up more of the network,”available, creating a partnership- shares Jacob Feinstein, executive • Reliance on provideroriented business model. “We’re director of new technology at AT&T. capabilities—The quality ofgetting faster, and one result is that interfaces may be inconsistent, andthe architecture is shifting to allow Addressing API adoption they may have poor definitionsmore partnerships,” says AT&T’s challenges regarding contracts and serviceDonovan. AT&T today exposes APIs While the RESTful API programming schemas. Variations in qualityfor location, messaging, speech, device model and integration architecture are of service and independent APIcapabilities, and billing, and many fairly well established and scalable to versioning schedules acrossother APIs are in the future road map. accommodate large enterprise services, APIs can cause disruptions. The business value of APIs 61
    • Table 1: Mitigation approach to the key challenges in consuming and providing RESTful APIs Diverse API technologies: • Loosely couple or hide the underlying API technologies of providers through Reduce the complexity of using an enterprise service interface or gateway to create a consistent service multiple services developed with architecture, transport mechanism, and data encapsulation method as is varying technologies from providers. the case with RESTful APIs. Reliance on provider capabilities: • Expose the service to enterprise applications through generic internal contracts. Mitigate the impact of provider changes to service functionality and availability • Divide API functionality into multiple granular services to reduce reliance on to applications. a single service. • Allow the orchestration layer to manage exceptions and maintain consistent error messaging. Asset vulnerability: • Encrypt messages sent to RESTful APIs and data that will be stored outside Reduce the risk of exposing internal enterprise boundaries. assets while still taking advantage of third-party RESTful APIs. • Centralize API keys and control access to allow API use by only authorized devices. • Encrypt traffic between client applications and the enterprise to secure the transmission of data. Performance delivery: • Cache responses to reduce the time required for clients to complete round-trip Accommodate the additional hops vendor API requests. for RESTful API use while maintaining performance. • Use enterprise resources for heavy processing and API mashups. • Preprocess API responses prior to client delivery to reduce the payload and processing required by the client. Challenges in offering APIs: Upgrading the IT organization • Asset vulnerability—API adoption for the digital ecosystem“ The real opportunity introduces enterprise assets to new Moving into the new digital ecosystem is for CIOs is to develop vulnerabilities. Interaction with third- an organizational challenge for the CIO. party providers exposes applications First, if the enterprise IT group (and the strategy for how the to message manipulation and injection outside service providers) historically enterprise participates attacks from external sources. has been optimized around the design, deployment, and operation of core in the digital indirect • Performance delivery—The use of systems, it is unlikely the organization channel.” third-party functionality introduces has many of the new skills needed. additional hops and can increase —Sam Ramji, Apigee the length of round-trip requests. Second, the traditional structure Restricted capacity and processing of formal, separate organizations performance limit devices’ ability to for development, infrastructure, efficiently develop, consume, and security, and so forth are unlikely to utilize large service messages. enable the flexible invention that is the pulse of the digital ecosystem. As providers and consumers gain experience with RESTful APIs, some Third, the methodologies employed best practices for addressing these by most IT organizations, including challenges are emerging. Table 1 capability maturity models, the IT organizes some of these methods. Infrastructure Library (ITIL), and the methodologies that come with large62 PwC Technology Forecast 2012 Issue 2
    • systems, such as ERP, are inconsistent incubator groups, centers of excellence An open platform does not call for awith the fast development cycles needed for SMAC and/or RESTful development frontier mind-set, where fragmented APIto pioneer the new capabilities. that sometimes are located off the main generation replaces a carefully managed campus. These groups focus on building applications portfolio that CIOs striveRecognizing such impediments, up a competency in a given area and to maintain. CIO leadership must keepCIOs can use the digital ecosystem acting as evangelists for the methods, a balance in this evolution and manageopportunity to perform a current state tools, and so forth that will be used in IT assets in new ways. The advice toassessment of their organization’s the future. In addition, the members CIOs is to approach the evolution incapabilities. This exercise will allow of these centers might begin to plan, four dimensions: business need orthem to establish the future state execute, and gain experience building purpose, an enterprise architecture fororganization design, skill sets, and the future state architecture that has a digital operating model, developermethodologies for development and been laid out by the CIO. The great community management, and gapsdeployment. If IT wants to perform the news is that many in the IT organization in organizational capabilities.role of a software company, much more today are anxious to upgrade theiremphasis must be placed on platform skills, and they would welcome the First, recognize the hidden potentialarchitecture, on technical openness, opportunity to learn new skills and created by unlocking the enterprise’sand on marketing, sales, packaging, technologies. Additionally, the digital information assets, and identifyand support than is normally the case. ecosystem job opportunities are what specifically which data would be attract the people who have the skills exposed for what business purpose.The IT organization must assess its skills needed for the evolving IT group.and tools in light of the new context. Second, devise the new architectureMany IT organizations have not updated Conclusion inspired by RESTful APIs andtheir skills, especially in the economic Many CIOs are concerned about the platform thinking. RESTful APIsdownturn. One major constraint can chaos that could be caused by the are pull-centric, not the traditionalbe the lack of understanding about accelerating disruptions associated push model. The new architectureRESTful API capabilities. The CIO’s with SMAC trends. For some, however, hardens the core while thoughtfullyteam needs RESTful API literacy. it’s a blessing in disguise. These exposing the valuable assets“RESTful API ignorance is a risk that CIOs are learning to proactively captured by the core—information—no CIO wants to be accused of a couple engage with SMAC by adopting a via RESTful API connections.of years from now,” says Musser. digital operating model, powered by RESTful APIs and supported by Third, approach the digital ecosystemMany job descriptions still feature API management platforms. In the opportunities by targeting an audienceexperience with decades-old process, they also open up new business of developers who can create newtechnology. Many IT organizations have opportunities for their enterprises business value based, in part, byoutsourced custom development— in permeable digital ecosystems. extending your capabilities. You canperhaps all development—and have start with existing mobile projectsno insight into the details of the job As SMAC trends accelerate, PwC that can benefit most from APIs, andskills contracted for. A move to open expects that most enterprises will let the momentum build from thereIT would be an opportunity to offer increasingly incorporate features of toward a platform and API program.attractive career growth to staff who information (bits), even if they are stillhave the skills the organization needs in a physical business (atoms) such as Fourth, use the digital ecosystemto participate in a digital ecosystem. retail, distribution, manufacturing, and opportunity to upgrade your healthcare. To successfully navigate this organizational structure and skillsThe CIO needs to focus on building a transition, enterprise IT organizations in the context of the inexorable shiftweb-, mobile-, and cloud-competent must adopt many core competencies toward a new operating model. ApplyIT organization. To achieve such an of software companies; in particular, new leadership approaches to recruitorganization, CIOs are separating web they must create platforms the way and manage these new skills. Letdevelopment and deployment teams that software companies do. Just as the organization learn and developfrom those that develop and deploy the software companies build successful around early trials. Partnering withcore, placing them under leadership platforms, enterprise IT will build outside experts is a valuable way toseparate from the applications and manage APIs in a manner that prime these internal capabilities.development organization. Some opens up IT for the co-creation of newdigital ecosystem CIOs are establishing services internally and externally. The business value of APIs 63
    • PwC: Laura, can you talkCreating a platform about your organization and the efforts that you are leading at Alcatel-Lucent?Laura Merling and John Musser of LM: Sure. I lead the application enablement organization. TheAlcatel-Lucent share how enterprises function of this organization is tocan use APIs to create platforms from drive the adoption of the network as a platform. If you could turn theexisting assets to unlock new value. network into a Facebook-like platform, how would you do that? This goalInterview conducted by Vinod Baya, Bo Parker, and Christopher Isaac has a couple of dimensions: the API [application programming interface] dimension and the cloud dimension. My group does all the software and Laura Merling technology development to expose capabilities of the network as APIs. Laura Merling is senior vice president of the application enablement business unit The capabilities could range from the at Alcatel-Lucent. She leads strategy and ability to select what cell you run on, execution for Alcatel-Lucent’s company- to functionality to route calls or access wide push to transform the network into a information such as call history. We software platform. Merling’s most recent also provide mechanisms to manage experience has been as a strategist in the use of these APIs; we put controls transforming companies to API and cloud- and rate limits on these APIs, normalize driven businesses. Her more than 20-year career spans leadership roles in executive the data, establish business rules— management, business development, and including related business models— product management in the software and on the data or service, and analyze the corporate IT sectors. data related to the API itself. We are also tightly integrated with our cloud John Musser offering, CloudBand, to provide API management as an embedded service. John Musser is the founder of ProgrammableWeb, the online resource for CloudBand combines dynamic network mashups, APIs, and the web as platform. He availability with cross-cloud access. is a Seattle-based technology consultant, writer, and teacher. During his 20-year career PwC: Why is creating and offering in software development, he has shipped five APIs to others important now? award-winning software products in three LM: In many ways, APIs are the building industries, working with companies that blocks of the digital economy. They include Electronic Arts, Credit Suisse, MTV, and Bell Labs. make existing capabilities fungible, so that it is possible to use them in new ways, quickly and easily, thereby64 PwC Technology Forecast 2012 Issue 2
    • “ To fully capitalize on existing assets, other businesses must shift to platform-oriented business models that allow others to extend their capabilities in innovative ways by enabling new applications.” —Laura Merlingspurring innovation and new value they are available and accessible same time, the goals of modularity,creation. All carriers have extremely over the public Internet. One of the reuse, ease of integration, andvaluable assets that are effectively previous methods, SOA [service- flexibility apply to both approaches.locked up in their own networks. Such oriented architecture], generally wasassets include network capabilities, behind-the-firewall web services PwC: Is this largely a changedata about QoS [quality of service], within a corporation—or sometimes about how you deliver the servicesubscriber profile information, and call across partners, but classic SOA is or does it influence the businesscontrol. These assets can be used to interdepartmental and within a single models in the industry?make existing services better or build enterprise. The phenomena growing LM: I see this as a disruptive change.completely new offerings, to drive for the last few years is really about You can view APIs as a toolkit toincremental revenues, and to enhance APIs being open and accessible to all co-create value, so they have ana third party or an enterprise brand. over the public Internet as the Twitter, impact on how value is distributed in Facebook, or Google Maps APIs are. an industry ecosystem. All providersLeading telecom service providers need new ways of thinking aboutare aggressively using these assets Another differentiator is that an API is their businesses. Now it is possibleto build deep, broad value chains not an SDK [software development kit], to see network capabilities digitizedacross previously unconnected market which typically is at either an operating and modularized, and thereforesegments. For instance, Facebook system level or a platform level, such as open to access and manipulation byrecently announced a relationship an ERP [enterprise resource planning] programming code. The networkwith AT&T, Softbank, Mobile Corp., system or database. SDKs used a becomes a platform for development.Telefonica, and others to provide in- very traditional behind-the-firewall It becomes capable of servingapplication purchases using carrier programmer interface into a layer of exponentially more use cases. Inpayment services. We already have the software. The difference now is emerging markets where greenfield LTEcustomers around the globe who that the layer of software is a website. [Long Term Evolution] infrastructurehave demanded that in the next two Typically over HTTP, you access a web is being installed, we see providersyears, all of our products should service endpoint that belongs to another wanting their entire network tohave web-based services or RESTful company. This is a lot easier to do. be API enabled out the door for a[representational state transfer] APIs nationwide broadband network andin and out of them. That request is RESTful interfaces create a level of differentiated value to the ecosystem.not just for our software solutions but simplicity that didn’t exist previously,for the hardware solutions as well. and simplicity always speeds things PwC: Are these messages up, making integrations cost-effective. relevant to industries otherPwC: John, you have tracked One of the challenges with SOA was than telecom providers?the growth of APIs for years. that it was over-engineered for the LM: Absolutely. Broadly speaking, allAPIs have been a part of complex case, which was only about major enterprises have underutilizedcomputing as long as people 20 percent of the use cases. Owing to assets; that is, the existing businesshave been connecting one the complexity, it cannot adapt easily models are not tapping into the fullpiece of software with another. to 80 percent of the simpler cases. APIs inherent value. For telecom serviceWhy the new interest now? today, using RESTful interfaces, make providers, networks are such assetsJM: There are a couple of primary it possible to easily serve 80 percent that can create a lot more value if thedifferentiators with APIs now. First, of the most common use cases. At the providers open them up with APIs. The business value of APIs 65
    • “ [Internal and external] developers expect to use their time efficiently. The easier it is for them to tap into your assets, the more they focus on creating value-added capability and bringing it to market quickly.” —Laura MerlingSimilarly, to fully capitalize on existing the auction marketplace. Not so. The developers expect to use their timeassets, other businesses must shift to company’s first API was to add listings efficiently. The easier it is for them toplatform-oriented business models that to the marketplace, because that was tap into your assets, the more they focusallow others to extend their capabilities what was strategic. The winner in the on creating value-added capabilityin innovative ways by enabling new auction universe would be the provider and bringing it to market quickly.applications. This cannot be possible with the biggest marketplace, so toif tapping into the capabilities is eBay, success meant the ability to grow PwC: Are there any guidelinesexpensive, time-consuming, or complex. that catalog as quickly as possible. for where CIOs can focus first? JM: One easy way is to look at yourPwC: What should enterprises PwC: What should organizations existing portfolio: what’s on the plateknow about using APIs? know to start on this journey? now, and how can any of those high-LM: One common misconception I see LM: Organizations need to establish a priority projects that are either inin how enterprises define ecosystems vision of the ecosystem that they will development or about to get underis targeting the long tail developers create or be a part of and what role they way benefit from an API? In today’sonly. However, platforms that have would play. This vision is dependent marketplace, anything to do with mobileused APIs successfully, such as Twitter on the existing business model and is a natural candidate. Who doesn’t haveor Facebook, have a small number of the assets that organizations can tap a mobile strategy right now? Nobody.API users in the ecosystem that drive to create new value. They also should CIOs should take anything to do withthe bulk of their traffic. Twitter actually look for opportunities where they can mobile and make sure it is integratedacquired the four top companies that digitize existing processes, because with a platform strategy, becausewere driving all its traffic. Businesses those processes create the opportunities they’re such a perfect and natural fit.need to also look for B2B2C [business- to expose APIs. Also, any organizationto-business-to-consumer] opportunities that succeeds with an API has a vibrant Also, CIOs should understand that usingthat are real and can scale quickly. developer ecosystem. There are many APIs is an architectural choice and not best practices on how to attract and a technology choice. OrganizationsJM: Indeed, the long tail of developers foster a developer ecosystem, and can build a platform using whateveris an option but not a requirement. organizations need to learn and their core technologies are. If they areThe requirement is that your audience adopt some of the best practices. It a Java or Microsoft shop or somethingfor APIs could be anything from your is important to understand that a else, there’s no need to change the core.own department by transforming your developer isn’t always the guy in the The concepts are neutral regardingprior SOA efforts to something more garage building the next Angry Birds. language and implementationsystematic, cost-effective, and flexible. platform. Organizations can useYou don’t need to bend over backward We have done studies and learned whatever stack the enterprise prefersjust to have an API; you need to think a great deal about what makes a and may have a mix of them as well.about that strategically. One of my developer ecosystem—one that spansfavorite examples is eBay. Back in 1999 casual hobbyists to professionals in PwC: Are there any risksor 2000, eBay opened what really was other large firms—tick. APIs have been to be aware of?the first API in this class of APIs. Of all with us for a long time, but in the past JM: For CIOs right now, it’s morethe things eBay could have an API for, they always took a lot of time to use and important to be API literate than to bewhat do you think it did first? Most make work. Now, thanks to emerging API ignorant. In the future, you’re notpeople think eBay had an API to search practices with RESTful interfaces, just going to produce APIs, you’re going66 PwC Technology Forecast 2012 Issue 2
    • to consume them. If you use a singlecloud service, just one, your team needsAPI literacy, period. API ignorance isa risk that no CIO wants to be accusedof a couple of years from now.CIOs are going to need to know how tointegrate services in the cloud. They’llneed to understand how to deployusing APIs, because there will be someproject that they must run on the VPN[virtual private network] version ofAWS [Amazon Web Services]. If theCIO’s team doesn’t understand thismarket and it’s waiting for things tosettle down, good luck in your newjob because it’s not going to be here.Your competitors are going to eat yourlunch by being more nimble and agileand not necessarily waiting for thingsto mature or standards to emerge.PwC: Where do things standwith respect to the use of APIsinternally or externally?JM: Most of the action today is inexternal use, but I think it’s going to bebigger inside the enterprise. I feel there’sa much larger universe of private APIsand their usage than there is of public “CIOs should understand that usingAPI usage. The two flavors of private APIs is an architectural choice and notAPI—for internal companies or for acompany’s partners—constitute the part a technology choice. Organizationsof the iceberg that’s under the water can build a platform using whateverand the tip of the iceberg represents thepublic APIs. The real body and meat their core technologies are.”of the API universe is hidden. This is —John Musserwhere a lot of the value is, because youcan be more adept and agile and getbetter ROI [return on investment]. The business value of APIs 67
    • PwC: Brian, you are an activeUsers as partners blogger, and you also lead mobility engineering at Sanofi. A key impact of cloud, mobility, andBrian Katz of Sanofi discusses how social technologies on IT is what is being called consumerizationconsumerization of IT means enterprise of IT [CoIT]. What is the trendIT should treat users as partners. and why is it important? BK: Indeed, there is a lot of talk aboutInterview conducted by Vinod Baya and Galen Gruman consumerization of IT these days. It is often equated to bringing your own device [BYOD], in that no longer are devices (phone or tablet or personal computer) only what is sanctioned by the IT function. Rather, employees can Brian Katz bring the device of their choice and Brian Katz is a director and head of the access enterprise services on that device. mobility industrialization and engineering When I look at the statistics, such as 87 group at Sanofi. He manages mobile percent of companies are doing BYOD, initiatives and enables the organization to probably 60 percent to 70 percent of make advance-ments in mobile services, such as mobilizing the salesforce, handling BYOD those companies are enabling e-mail on initiatives, and enabling new devices and the device. I don’t think enabling e-mail form factors for business success. He has on any device is enough to qualify to be more than 20 years’ experience in managing doing BYOD. That device needs to access and implementing IT processes at global the company’s IT ecosystem and the multinational corporations. services it represents. Until a company does that, it’s not truly doing BYOD. On the other hand, CoIT is a big deal. A lot of employees today are savvier with IT, as they have grown up with the Internet and associated technologies and services. They want to be able to get their work done and have the capability to build or procure IT services. CoIT brings that dynamic more to the forefront.68 PwC Technology Forecast 2012 Issue 2
    • “ The change necessary is to treat the users as partners. Successful enterprises today are starting to embrace the fact that they have users who can assist in handling many of their own IT issues, because they have already waded through them in the home environment.”PwC: How does that Does it make sense to design an app APIs to interact with the informationimpact IT operations? with 270 features, where the use case repositories, and to read, input, orBK: The popular opinion of the last 8 occurs less than 20 percent of the time? manipulate the data, they enable newto 10 years is that the goal of IT is to Maybe you build another app for when services that can get someone’s job done.enable the business. Yet, there’s not you have that use case or maybe youa place you can turn where people accommodate that need a different way. In reality, they’re building a workflowaren’t talking about “IT means no,” based upon modular chunks of whatin that when they take a request The change necessary is to treat the the user is doing. Most of the time,to IT, the answer is often “no.” users as partners. Successful enterprises users want to do work in small, focused today are starting to embrace the fact chunks. When companies do work inCoIT means it is much harder to say that they have users who can assist in such a modular way, it’s much easier to“no” now, because people are going handling many of their own IT issues, be more productive in everything else.to work their way around it. If IT is because they have already wadednonresponsive, employees today can through them in the home environment. PwC: With APIs, in some senseuse their know-how to find better and This is the vital transformation that IT opens up its capabilities andeasier-to-use tools to perform certain IT organizations must go through to allows employees to partner withaspects of their jobs. If that happens, IT continue to help their enterprises be IT to co-create new functionality.organizations can have a big problem successful. If they keep treating their Should IT encourage this?on their hands, because they will have employees as users, they will end up BK: That is what should happen inlittle to no control over these tools and stuck in their legacy thinking that values the long term. However, today it’s alimited visibility into the data used process over partnership with their big leap of faith and not everybodyand stored. So IT’s challenge becomes own internal customers. I would say is ready to do that yet. For example, Ihow not to say no, and to have a role in such thinking has led to the exodus of recently visited a very large companyenabling new capabilities and services IT talent from many large enterprises that has been transforming IT to makein partnership with the employees. that don’t see the morale-boosting, users into partners. A member of the efficiency-granting value in CoIT. IT team said, “Somebody requestedPwC: What changes should to put an app in our internal appIT make? PwC: Companies increasingly store the other day. They looked atBK: Most IT organizations spend way are becoming digital, and our APIs; they want to try designingtoo much time building applications there is the trend to use APIs something that they could use. Theyand not focusing on the user. The reason [application programming built this great app that a group ofthis happens and takes up a lot of IT’s interfaces] to share and co-create other people also thought was a greattime is scope creep on any project. It in a digital ecosystem. How is app, and they’re using it based uponhappens incrementally with people that impacting IT operations? capabilities made accessible by APIs.”saying IT really should be able to do this BK: If you think about it, informationone other piece, and then before you’re wants to be free, at least within Non-IT employees created a newdone, you have an application that the company. This is new for most app using the APIs. Now IT’s role ishas 300 features. The reality is that 80 companies; most companies lock up different. Perhaps IT just puts it in thepercent of the users only use 30 features; their information and don’t like to share internal app store and nothing else.what do you do with the other 270? it. However, when enterprises build Or IT adds security to it, or maybe IT The business value of APIs 69
    • “If you think about it, information wants to be free, at least within the company. This is new for most companies; most companies lock up their information and don’t like to share it.” “However, when enterprises build APIs to interact with the information repositories, and to read, input, or manipulate the data, they enable new services that can get someone’s job done.” looks at it and says, “You know, we On the other hand, they should avoid could help you make it even better building a platform that becomes so it scales to all employees.” IT may so unwieldy that they cannot make also get new ideas for opening up changes to it without much expense or other APIs that would prompt more disruption. I’ve lived through that. If co-creation. This is a good partnership. you talk to anybody who did any IT from 1995 to 2005, they will recall platforms PwC: To use APIs across the that people just kept adding to. They enterprise, do you think IT added to the point where, when they organizations need to reorganize need to update a piece, they have 27 their assets as platforms with other pieces that depend on it, so they addressable interfaces? can’t update because it’s locked. The BK: It depends on how they design and platform is complex and unwieldy. architect the platform. If a platform is building APIs to access data and make IT organizations should build the it available, whether on the premises or platforms so capabilities are modular in a private or a public cloud, then yes, I and interchangeable, and so modules agree that a platform is what they need. can be upgraded without disturbing the system. It depends on how they architect a platform. They need to have principles that define how they’re going to build their platform to avoid becoming complex and unwieldy.70 PwC Technology Forecast 2012 Issue 2
    • Exploiting the growingvalue from information:Creating an operatingmodel for permeabilityCreating open interfaces to engage a growingdigital ecosystem will empower enterprises tosystematically embrace emerging technology trendsand to benefit from the accelerating informationvalue expectations of their customers.By Vinod Baya, Galen Gruman, and Bo ParkerStreetline, a startup based in Foster All three examples (detailed later)City, California, uses mobile sensors, illustrate how leading companies areweb applications, and analytics to capitalizing on digital ecosystems thatcollect, transmit, and analyze data from are expanding due to the confluenceparking meters and parking spaces. of social networks, mobile computing,The company is transforming parking analytics, and cloud computingoperations into digital ecosystems to the (SMAC).1 SMAC challenges enterprisesbenefit of the cities, the drivers, parking to take advantage of the positivelot operators, and local merchants. disruptions it portends, while they operate at the rapid pace of innovationAt FedEx, an evolving digital operating and change that SMAC demands.model allows customers to stay incontinuous contact with their packages SMAC and other emerging technologiesand to initiate changes to their create the possibility for new waysshipments and other orders previously to develop products, interact withviewed as strictly internal operations. customers, partner with others,The operating model also supports the compete, and succeed. More than aefforts of business partners to create strategy for any individual technologynew services using FedEx information. trend or for combining more than one of them, companies need a systematicAnd AT&T is transforming its network approach to engage with theseinto a permeable digital platform with technologies. Companies that havesoftware interfaces that third-party the most success engaging with SMACdevelopers can use to tap into network are, in PwC’s view, rethinking theircapabilities to create applications and business and enterprise architectures andservices that add value for customers, emphasizing three fundamental changes.the third parties themselves, and AT&T. 1 Our use of the term SMAC includes the four technologies called out here as well as related emerging technologies that take advantage of them, such as the Internet of Things. The business value of APIs 07
    • Figure 1: A permeable enterprise exposes modular capabilities with open software interfaces to enable interactions (internally and externally) What is an API? in digital ecosystems. When talking to colleagues in the IT organization or to technology API providers about ways to participate in the digital ecosystem, you’ll hear the term API. It is the acronym for application programming interface, a technology term that means the specifications for how Enterprise software programs are able to Business ecosystem exchange information with each other even if designed and run by different organizations. APIs are everywhere. The Google Maps API, for instance, is an interface used by developers to add content on a map of any region. Businesses can also embed the maps in their applications or services. There are several types of APIs, but the one worth noting to a business audience today is a RESTful API, First, they acknowledge the SMAC digital relationships with customers which stands for representational trends are the strongest signal yet that and partners, and reorganize for speed. state transfer API. Although not business ecosystems are becoming appropriate in all use cases, more digitized, where information Permeability and successful engagement RESTful APIs have changed the content accounts for a rising proportion with SMAC improves overall economics of performing software of the entire value of any product or performance. PwC’s fourth annual integrations by sharply reducing service. Second, they understand that survey of enterprises’ digital IQ—the the associated cost and complexity. successfully tapping the new drivers way companies use digital technology This change creates the potential to of value requires a digital operating and channels to meet customer needs rethink IT architectures for scaling model, a model attuned to participating as well as the needs of employees and integrations and pursuing strategies in or integrating with expanding digital business partners—finds that top- that take advantage of them. ecosystems. And third, successful performing2 US organizations show companies are adjusting their business greater mastery in how they leverage Today, web companies and social and enterprise architectures to become the digital technologies of SMAC to plan, networking providers are heavy what PwC calls the permeable enterprise. innovate, measure results, interact with providers and users of RESTful APIs, customers, and ultimately create value.3 which is how they quickly connect Permeable means the use of open to so many data sources and services software interfaces on modular This issue of the Technology Forecast and let others rely on the data and services they provide. Google, capabilities to allow easy digital describes ways that enterprises can Facebook, and Twitter are examples connections with other capabilities, engage with SMAC trends by using of companies that quickly became the way web-based companies RESTful APIs to become a permeable providers beyond their own services do. (See Figure 1.) Specifically, enterprise and participate in digital through the use of RESTful APIs. leading companies use application ecosystems. The issue details the rise of programming interfaces (APIs)— RESTful API management technology By using and offering APIs, you do not especially RESTful, or representational forgo the ability to control or manage state transfer, APIs (see the sidebar, 2 Top-performing organizations are defined as those users of them. An API may be exposed “What is an API?” on this page)— rated in the highest quartile for annual revenue, growth, internally or externally, and designed as interface-oriented abstractions of profitability, and innovation as well as those that have revenue growth of more than 5 percent in the last so only those with valid credentials enterprise capabilities. In doing so, 12 months. can transact through them. they rethink their assets as platforms 3 Raising your digital IQ, PwC’s 4th annual digital IQ for co-creation, maintain persistent survey, 2012, http://www.pwc.com/us/digitalIQ.08 PwC Technology Forecast 2012 Issue 2
    • Figure 2: The confluence of SMAC trends creates a shift in value drivers,as the value from bits (information content) grows faster than the valuefrom atoms (the physical product or human-delivered service). Social Value Value from atomsCloud Mobile bits Value from Time Atoms: physical product or human-delivered service Bits: information content Analyticsfrom new vendors (see the article, value of the physical product or human-“Consumerization of APIs,” on page delivered analog service (atoms).434) and examines how the CIO should The confluence of SMAC trends isthink about permeability as it impacts driving this shift in business value. PwCthe IT organization (see the article, anticipates that information associated“Embracing open IT,” on page 54). with products and services will increasingly account for a rising shareDigital transformation of in the customer’s experience of valueecosystems: How bits increasingly delivered, as illustrated in Figure 2.complement atomsThe notion of the digital company Streetline uses bits to transformhas been around for years. Gains in a business built on atomsoperational efficiency can be credited to Parking spaces and parking meters havea more expansive use of IT to make the always been part of the atoms world.business run faster and more effectively. One space was available to one car,That’s a powerful benefit of IT. However, and a meter was a simple device withfew companies outside the pure a coin slot, a timer, and sometimes aweb space have become truly digital credit card capability. The user andcompanies in which information and the owner dealt with the meter in athe ability to act on it creates significant one-to-one relationship and had to beeconomic and competitive value. physically present to use or manage it.The examples of Streetline, FedEx, Now, Streetline5 digitally managesand AT&T suggest what a company parking spaces and meters in Loscan do when it starts to realize that Angeles, Indianapolis, and several otherinformation itself is a product or cities. It embeds sensors in parkingservice. Some, including Rob Carter,CIO of FedEx, use bits and atoms as an 4 Rob Carter, CIO of FedEx, keynote address at Locationanalogy to highlight the growing value and Beyond Summit, 2010, http://www.youtube.com/of information (bits) to complement the watch?v=Ljs28Rokwnk. 5 http://www.streetline.com/manage-parking/for-cities/ The business value of APIs 09
    • Today, many everyday products and services, such as shoes, wristbands, Social, mobile, analytics, and cloud golf clubs, appliances, and cars, (SMAC) trends are the strongest signal yet include sensors to collect and transmit information that can enhance the user that business ecosystems are becoming experience in a digital ecosystem. For more digitized, where information content example, Nike augments select running shoes with an embedded sensor—called accounts for a rising proportion of the the Nike+ system7—that allows athletes entire value of any product or service. to track running habits, assess progress against personal goals, collaborate with other runners, and improve performance, thereby enhancing the running experience. A wristband from Basis8 has multiple sensors to track heart rate, physical activity, sleep patterns, and galvanic skin response (throughFigure 3: The Parker app from spaces on the street and in municipal perspiration) for personalized trackingStreetline helps customers and privately owned garages to collect and feedback on physical conditioning.navigate to open parking spots. information about availability and wirelessly transmit the data via a Why new value will be mesh network to Streetline’s servers. increasingly driven from bits “We use this information to create a Where should a company look to create smart parking ecosystem,” says Mark value from information? Figure 4 shows Noworolski, CTO of Streetline. a high-level taxonomy of potential sources of value spanning atoms and The bits bring new value to a formerly bits. A general way to think about atoms-only parking ecosystem. Drivers information value-add is that it directly can use Parker, a mobile application engages the customer’s experience available from app stores, to identify of the product or service by surfacing and navigate to an open spot, get alerts data about that experience. Once data on meter expiration, or reserve spaces. has been collected, it can be used for (See Figure 3.) Parking enforcement multiple purposes by the customer, the officers no longer need to patrol for vendor, or other interested parties. violations; they can go directly to the spot of an expired meter. Cities can implement demand-responsive pricing6 and establish federated “We use this [parking payment systems across jurisdictions. spot availability and Because the information is no longer payment] information trapped in the meter, local businesses can become value-added partners to create a smart by paying to give their customers parking ecosystem.” priority access to nearby meters or by subscribing to the meter data for —Mark Noworolski,Source: Streetline inclusion in navigation services. The app also reduces traffic and pollution Streetline as fewer drivers need to circle for parking. All this new value emanates from the world of bits made possible 6 http://sfpark.org/how-it-works/pricing/ by digitally transforming the parking ecosystem and liberating analog 7 http://nikeplus.nike.com/plus/ information from the atoms world. 8 https://mybasis.com/10 PwC Technology Forecast 2012 Issue 2
    • Figure 4: The emerging domains of value are driven more by bits (information content) than atoms (physical product). Value of experience: product or service Known Emerging Value from Value from domain of value domain of value atoms bits Content Content Communication Form Function (unchanging (related (changing information) information) information) Components, Telemetry Linking Specifications, Non-telemetry integrated (location, contexts performance information system time, etc.) (APIs) (state) Internal External Design Usability Digital to enterprise to enterprise operations use use Permeability Progress toward a permeable enterprise The business value of APIs 11
    • Figure 5: The ability to link information nodes (bits) in an information network means value rises quickly as the numberof nodes increases (Metcalfe’s Law).An impact of SMAC is that more and more processes and activities will create a digital footprint and surface new information.The ability to link this information to create an information network provides the potential to grow new value exponentially. Enterprise Ecosystem des no io n at rm fo in g in nk li m f ro l ue VaThere are many reasons why appliances, cars, homes, and Figure 6.) Such growth manifestsemerging domains of value are based parking meters. This increasing the advantage of Metcalfe’s Law,12more on bits than on atoms. Some instrumentation, connectivity, which recognizes that the value of areasons include the following: and digitization deliver more and network is proportional to the square more bits into the value system.11 of the entities in the network.• Bits are increasing—With a phenomenon such as the Internet of • Bits are fungible and limitless— • Bits persist over time—Whereas Things,9 products become smarter They can be repurposed, reused, a consumer eventually replaces through embedded sensors, which duplicated, or deployed in any a car or shoes, the information produce digital representations number of use cases without being accumulated around that product of the analog activities. Sensors “used up.” This flexibility multiplies will persist beyond the life of the convert any type of analog signal, the options created by bits for ongoing atoms. As new hardware endpoints such as temperature, pressure, or innovation and value extraction. The arrive, bits can be adapted to new acceleration, into electrical signals value of the bits increases the more values and new endpoints. The that digitize that information. that multiple parties exploit them, value accumulates over time. These sensors are increasingly as demonstrated by Streetline. ubiquitous, and their usage grows 9 http://en.wikipedia.org/wiki/Internet_of_Things as they continue to become cheaper • Bits can be linked—As RESTful API 10 Caroline Kazmierski, “Semiconductor Industry Posts and smaller. According to the technologies gain wider adoption, Record-Breaking Revenues Despite 2011 Challenges,” Semiconductor Industry Association, an information network made of Semiconductor Industry Association, February 6, 2012, http://www.sia-online.org/news/2012/02/06/global- sensors and actuators are the smallest information nodes likely will develop sales-report-2012/semiconductor-industry-posts- semiconductor market segment internally and externally to an record-breaking-revenues-despite-2011-challenges/. but showed the highest year-to- enterprise, much like the network of 11 See the article, “Consumerization of APIs,” on page 34 year growth of any segment, at devices on the Internet. (See Figure for more details on sensors. 15.5 percent to $8 billion in 2011.10 5.) ProgrammableWeb, which tracks 12 Although initially defined in relation to telecommunications networks, Metcalfe’s Law today Today, sensors are in a wide range externally published APIs, already applies to all networks, and it states that the value of a of devices and environments, reports more than 6,000 APIs, and network is proportional to the square of the number of nodes in the network. See http://en.wikipedia.org/wiki/ including wristbands, toothbrushes, the number is quickly increasing. (See Metcalfes_law for more details.12 PwC Technology Forecast 2012 Issue 2
    • Figure 6: Use of APIs to interact in digital ecosystems hasbeen growing and has accelerated in the past few years.Growth in number of APIs over time 3 mo6,000 4 mo5,000 6 mo4,000 9 mo3,000 18 months2,000 8 years1,000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Source: ProgrammableWebScaling integrations requires to think about the SMAC technologies Table 1: The interdependent anda digital operating model as an integrated whole from a complementary roles of SMAC inWhile each SMAC technology has its strategic viewpoint. (See Table 1.) doing workown unique impact, the technologiesare complementary in support of work But as a collective whole they also Trend Relationship with workgetting done. The cloud increasingly represent an unusual, perhapscontains more of the information and unprecedented challenge: how to Social Who we work withapplications that people use. Mobile embrace the comprehensive challengedevices give people access to the cloud, they create at a technological level Mobile How we get to workto other data sources, and to each other. without being overwhelmed. LeadingAnalytics help them make actionable companies are overcoming this Analytics What we work on, the meaning of worksense of all that data. Social media helps challenge by adopting what PwC callspeople find colleagues with whom to a digital operating model. This model is Cloud Where we do the workcollaborate and co-create. The collective inspired by the open linking traditionimpact of SMAC on the enterprise evident in the web marketplace that isoperating model is so broad that it helps accelerating, driven by SMAC trends. Despite decades of technology investments, most companies do not have a digital operating model today. The business value of APIs 13
    • Scalable integration strategy: Why most companies don’t have a digital operating model—yet Having adopted IT solutions to drive limited resources—web companies have to as a service-oriented architecture automation and efficiencies for decades, naturally moved to a low-maintenance, (SOA). (See Figure A2.) Adoption of many companies will argue that they self-describing, open communication style SOA can address many of the issues are already digital. Their back-office of integration facilitated by RESTful APIs, surfaced in Figure A1 by conforming to its processes, in particular, are likely to be which are a scalable way to integrate. principles of loose coupling, abstraction highly digital, and they pay increasing of services, modularity, and reusability. attention to digitizing information about Using a loose taxonomy of back-office, While this approach has greatly reduced customers and suppliers. However, at most front-office, and middle-office systems the unintended complexity of the early companies the digital footprint is uneven. and applications, Figure A depicts how, as days of integration, scaling for and integration scales, digitization can spread in coordinating with a digitizing business Extending digitization depends on an enterprise. Historically, the integration ecosystem remains burdensome as SOA making connections digital, which in turn technologies were entirely point to point, has largely remained internally focused. depends on integrating tasks, activities, as shown in Figure A1. These integration and processes. Therefore, the central issue points grew organically without concerns RESTful APIs, an architectural and that keeps IT from meeting the demands or considerations for reuse, consistent programming model that sharply reduces of social, mobile, analytics, and cloud architecture, or agility. They also required the cost and complexity of integrations, (SMAC) or having a digital operating external documentation, demanded a deliver a scalable approach for both model is the long lead time and high cost deep understanding of data types and internal and external use. (See Figure A3.) of integrating one piece of software with logic on both sides of the connection, and Many companies will start by exposing another. IT investments of the past did not moved data in binary form unreadable data and services using RESTful APIs anticipate the need for scaling integrations. to programmers. As the integrations to their external digital ecosystem of proliferated to number in the hundreds, partners and customers. But a RESTful For this reason, lessons from web a new approach became necessary. API approach for internal integration companies are relevant. With business creates many of the same benefits of motivations to integrate with as many other This need led to the emergence of an highly scalable linking and coordinating web companies as possible—and with approach to internal integration that adopts of business processes at very low cost. architectural principles, usually referred Figure A: Despite decades of IT investments, most companies do not have a digital operating model because they could not scale integrations easily, an opportunity possible today with RESTful APIs. A1 A2 A3 Historically, the front, middle, With SOA, enterprises adopted an The new architectural principle and programming and back offices of an enterprise architecture using a service bus for model based on RESTful APIs reduces integration were integrated point to point by integration, creating loose coupling and cost and complexity, so integrations can scale for tight coupling, suitable only for a the potential for reuse and flexibility. The many internal as well as external uses. small number of integrations. complexity of integration meant use remained largely internal to the enterprise. API Front office Enterprise service bus ice Ba (SOA) off ck le off dd ice Mi EDI EDI EDI Business ecosystem Business ecosystem Business ecosystem14 PwC Technology Forecast 2012 Issue 2
    • Companies embracing a digital operating model organize themselves around atoms plus bits as the source of new value.To be successful, web companieshad to solve a fundamental problem:linking to and being linked by otherweb properties at scale. The solution genesis of the SMAC trends. The webwas open, self-describing APIs marketplace has become known forcommunicating over standard HTTP13 constant, unpredictable change, robustprotocols—in short, RESTful APIs. innovation, agility, modular capabilities, and co-creation of value. The webDespite decades of technology is inherently digital and organizedinvestments, most companies do around an architecture that facilitatesnot have a digital operating model these dynamics. With RESTful APIs, alltoday. Many feel overwhelmed by companies have the opportunity to bringthe demands from SMAC trends. these capabilities to their operations.The problem for most companies is And this is the inspiration for a digitalthat they cannot scale their existing operating model, which should haveintegration architecture and methods the following key characteristics:to the demands created by a digitalecosystem. (See the sidebar, “Scalable • Instrumentation to digitizeintegration strategy,” on page 14.) operations—The use of sensors transforms analog activities intoSo far, companies that have acted on digital representations to surfacethe digital ecosystem in a big way and use valuable information.tend to be web-native enterprises,such as Facebook, Google, and several • Loosely coupled modularother companies offering mobile or capabilities—Internal capabilitiessocial apps. Web-native companies and processes are broken intoextend their capabilities and their modular service components thatreach almost as a matter of course by have standard open interfaces.exposing their capabilities via APIs to Loose coupling makes it possibleothers. In many ways, the web is the to change the components without affecting the system, as long as the interface is kept stable.13 HyperText Transport Protocol is the standard for transmitting information on the World Wide Web. The business value of APIs 15
    • Table 2: Key characteristics of the digital operating model contrasted with the way many companies typically operate Characteristic Typical operating model Digital operating model Key source of value Organized around atoms as the source of value Organized around atoms plus bits as the source of new value Extent of Mostly analog activities (except digital native Mostly instrumented, connected, digital activities digitization companies) Asset strategy Assets exist to fulfill a particular function Assets are platforms and therefore extensible and are not extensible by others Architecture Largely closed and monolithic Open, accessible, and modular Responsiveness Static, inflexible, slow to evolve Dynamic, agile, evolving to change Key performance Efficiency-centric: resistance to new value creation Customer-centric: increasing value to customer indicator (KPI) Nature of Tight coupling among systems of coordination Loose coupling among systems of coordination interdependencies Participants in Largely the enterprise itself Co-creation and collaboration with the ecosystem value creation Business creation High barrier to new business creation Low barrier to new business creation potential • Addressable platform with low A culture of valuing information gives interaction costs—The capabilities FedEx a digital operating model“Information about the are available for others to use by FedEx has organized around package helps us run means of stable interfaces that have a information from its inception. “In the low or no barrier to usage. Enabling late 1970s, our founder and CEO Fred our business better. technologies, including RESTful APIs Smith said, ‘The information about That comes from a and API management platforms, the package is just as important as the make addressability efficient. package itself,’” says David Zanca, senior digital operating model vice president of IT, customer access, where all our assets are • The ability to co-create in a and revenue systems at FedEx Services. digital ecosystem—A co-creation “It’s a vision that has given our company connected and surface strategy treats customers, channel a culture that values information, information to increase partners, suppliers, and industry and that uses it in all we do.” ecosystem participants as active agents overall value to us and who have permission to combine the FedEx’s journey to a digital operating the customer.” modular capabilities exposed in a model is decades old. “Information platform to create new experiences. about the package helps us run our —David Zanca, business better. That comes from a There are other characteristics, digital operating model where all FedEx Services and Table 2 contrasts the prevalent our assets are connected and surface traditional operating model to a information to increase overall value digital operating model. Companies to us and the customer,” Zanca says. embracing a digital operating model “Almost every piece of our business organize themselves around atoms is instrumented; it has some degree plus bits as the source of new value. of intelligence and automation on it.16 PwC Technology Forecast 2012 Issue 2
    • Our planes are all intelligent, and they With its new SenseAware producttell us where they are. The trucks, line, FedEx has recently driven the “Not only do ourthe couriers, the knowledge workers, digital operating model deeper intothe hubs—almost everything has the customer’s context. “Not only do customers want moretechnology embedded in it and tells our customers want more information information aboutus where it is or what its state is.” about the packages, but they also now want more interaction with FedEx and the packages, but theyFedEx has used a transportation logistics expect us to react to changes and resolve also now want moreinformation system called COSMOS problems if they occur, ” says Thomas(Customer, Operations, Service Master Wicinski, vice president of digital interaction with FedExOn-line System) since 1979 to keep access marketing for FedEx Services. and expect us to reacttrack of all packages. While it used Customers can request operationalthe information to allow dynamic actions such as return shipment, to changes and resolvemanagement of its delivery system, it reroute, reship, and repackage. Its problems if they occur.”also innovated many times to present digital operating model gives FedEx thean interface to its customers and bring flexibility to adapt to these requests. —Thomas Wicinski,them into the FedEx digital ecosystem. Transformation to a FedEx ServicesIn 1984, before the web, FedEx released permeable enterprisePowerShip (now part of FedEx Ship), The digital operating model enableswhich used modems over circuit- what PwC calls the permeable enterprise,switched telephone lines to allow in which latent capabilities and assetshigh-volume customers to link with inside the enterprise are permittedCOSMOS, so they could place shipping to reach outside and be combinedorders electronically and print air with other assets and capabilities.bills. In 1994, fedex.com was the first External innovators also can reachsite to give customers the ability to into the enterprise and tap into itsmonitor shipments on the web. capabilities to create new value. Both are facilitated by the sharply lower costFedEx also maintains a website for of interactions in a digital ecosystem.developers (FedEx Developer ResourceCenter14), where third parties can A company will need to developtap into FedEx capabilities offered as many new capabilities to adopt amodular web services for shipping, digital operating model and becomeoffice and print services, and other tasks. a permeable enterprise. As Figure 7 shows, these new capabilities addressFedEx layers the customer experience partner strategies, assumptionsservices on top of the enterprise services about the frequency and intensitywith the help of RESTful APIs. of customer engagement, and a business and enterprise architecture built for speed, all while balancing14 http://www.fedex.com/us/developer/ their use internally and externally. The business value of APIs 17
    • Platform for co-creation: The platform approach is a different Scaling integrations way of thinking about value. It requires“If you are going to Until recently, organizational structures a step back from the product or service’s operate at a pace and IT systems were designed to obvious value and an assessment of support the enterprise as the sole how others might add value if they at which the external creator of products and services. In had access to attributes beyond the market is moving, a world of value co-creation, these immediate ones. “The ability to create structures and systems often do not self-service interactions, enable you have to take work well. Too much knowledge about co-creation, and provide a vehicle capabilities, industry how processes work must be acquired where information is flowing from before anything can be added. This a leaf node to every other leaf node specific or not, and barrier can be significant for third radically transforms our ideas about make platforms parties, even if huge latent value is how to organize production, innovation, inside the enterprise. Reducing the and transactions,” says Ted Shelton, from them.” learning curve requires a new strategy. managing director in the PwC Advisory “If you are going to operate at a pace at practice. Product design, development, —John Donovan, AT&T which the external market is moving, and customer service must take into you have to take capabilities, industry account the growing possibilities for specific or not, and make platforms surfacing and using information. from them,” says John Donovan, senior executive vice president of technology In this context, the word platform and network operations at AT&T. By means programmable interfaces or allowing third-party developers to tap APIs. “APIs are the building blocks of the into its network capabilities, AT&T has digital economy,” says Laura Merling, transformed its network into a digital senior vice president of the application platform. (See the sidebar, “APIs: An enablement business unit at Alcatel- architecture for speed,” on page 21.) Lucent. APIs become the language with which interactions and communication occur in a SMAC-driven digital ecosystem, supporting permeability.18 PwC Technology Forecast 2012 Issue 2
    • AT&T seeks to expand the value Figure 7: Enterprises will require a digital operating model to tap into therealized from its telecommunications shift in value drivers that results from SMAC. The digital operating modelnetwork and associated services. on the inside will enable the permeable enterprise on the outside.Jacob Feinstein, executive directorof new technology at AT&T, says SocialAT&T asked itself, “If we architectour network so that it comprises anumber of loosely coupled modulesconnected through open interfaces, Valuecould we expose those interfaces tothird parties to foster openness in Value from atomsa broader sense, leading to greater Cloud Mobileinnovation, and ultimately get more bitsapps on more devices on our network?” Value fromFor example, because AT&T exposed its TimeInternet Protocol telephony capabilitiesto web developers, its users caninitiate an online phone session from Analyticsa restaurant review website to make areservation, potentially driving morebusiness to AT&T’s network. AT&T could requiresprovide access to different quality-of-service levels that provide a range ofservice options for third parties, letting Digital operating modelthem offer, for example, premiumconnections for a higher fee, in whichAT&T might share the extra revenue. Instrumented Modular Addressable Low interaction operations capabilities platform costRethinking the customer relationship:Persistent digital engagement results inBecause of SMAC, a new consumerreality is emerging, defined by an any-where/anytime/any device expectation Permeable enterpriseof accessibility and engagement.Consumers have the ability to beonline all the time and expect whatPwC calls persistent digital engagementwith whomever they conduct business.“To address the new consumer stateof persistent digital engagement,companies will need to develop fluencyin digital product development andsocial technologies, and they will need • Platform for co-creationto create collaboration across groups • Persistent digital engagementthat have often worked separately from • Architecture for speedone another,” PwC’s Shelton advises. The business value of APIs 19
    • Figure 8: The digital operating model promotes a customer-centric approach over a product-centric one. s fu n ct Business functions s in e s io n Bu s The product The customer Customers Product-centric Customer-centric Enterprises must reorganize in a Architecture for speed manner that puts customers at the Speed is essential in the digital“Agility and accessibility center of the digital operating model, ecosystem to meet the pace with which will make the successful instead of thinking of them only the business environment is changing. as end-of-the-chain recipients of Speed was a driving force in AT&T’s organization of the delivered value. Figure 8 shows this RESTful API program, Donovan says. future.” distinction between a product-centric By exposing RESTful APIs, AT&T has and customer-centric enterprise. cut the time it takes developers to place —Ted Shelton, PwC new capabilities on the network from Customers are already altering the months to hours. The API program is a dynamics of their relationships with key pillar in AT&T’s broader innovation providers through their rapid adoption strategy. (See the sidebar, “APIs: An of new technologies that move them architecture for speed,” on page 21.) toward the center. “The customer is able to have a tighter, longer-lasting Establishing a business and IT relationship with the business even architecture around RESTful APIs is though the way they interact with not just about speed. It is the best way that business might change,” says Sam to prepare for future waves of change Ramji, vice president of strategy at API in technologies, products, and business management solution vendor Apigee. strategies. “Agility and accessibility will Bits allow stickier relationships in the make the successful organization of value network because their mutability the future,” Shelton says. “With APIs means they can persist even as they are modularizing every function at the right adapted to new services and use cases. level of granularity, one can enable more agility and more accessibility.”20 PwC Technology Forecast 2012 Issue 2
    • “APIs are the building blocks of the digital economy.” —Laura Merling, Alcatel-LucentConclusion This transformation is possible byThe SMAC trends provide strong signals understanding and using RESTful APIsthat business ecosystems are moving and API management technologies.toward digital ubiquity. As this digital (See the article, “Consumerizationubiquity evolves, information (bits) will of APIs,” on page 34.) Companiesmake up a growing proportion of the that apply modern APIs and PwC’soverall value that customers experience proposed digital operating modelfrom any product or service (atoms). thinking have the opportunity toSuccessful companies are adjusting their gain competitive advantage throughbusiness and enterprise architectures to reduced friction in co-creating newbe more attuned to participating in or value, building persistent digitalintegrating with these expanding digital engagements, and increased agility.ecosystems. Companies leading in theirengagements with SMAC are adopting Leading software companies have longa digital operating model, which known that being the dominant platformsupports the permeable enterprise. for an ecosystem creates direct and indirect demand for their offerings andFew enterprises are completely ignoring long-term competitive advantage. SMACSMAC developments. However, the trends suggest that every companydemands SMAC creates on IT can is, in part (or should try to be), like aoverwhelm CIOs and other business software company in how it createsexecutives. In part, that’s because and engages with a digital ecosystem.business executives are accustomedto viewing technology opportunities Establishing a platform in the centerthrough the old lens of being responsible of a robust digital ecosystem requiresfor all the end-to-end application logic a digital operating model, one thatand performance. This approach does is appropriately permeable to thirdnot scale when engaging with SMAC, parties that can co-create new valueas described in the sidebar “Scalable from what a company and others haveintegration strategy.” They need a new to offer. It means taking advantage ofmodel—one based on lower integration the interconnectedness and the riseand interaction costs—similar to the of empowered customers who willone web companies have been using. engage actively with a company if it lets them. It’s time for more companies toA key transformation is to make a become like a software company withincompany’s value-add capabilities their habitat of the digital ecosystem.addressable in digital ecosystems. And perhaps in some new habitats. The business value of APIs 23
    • Consumerizationof APIs: ScalingintegrationsA new generation of tools based on RESTfulAPIs will help enterprise IT embrace theopportunities and challenges from social,mobile, analytics, and cloud computing(SMAC) and consumerization of IT (CoIT).By Carol Hildebrand, Patrick Shankland, and Vinod BayaThe confluence of social networking, code-based programming specificationsmobile computing, analytics, and cloud that allow software components tocomputing (SMAC) creates a perfect communicate with each other in astorm of challenges for enterprise IT distributed system. A relatively newgroups. Generational changes in the way style of APIs, called representational statepeople adopt and use technology further transfer (RESTful) APIs, and emergingexacerbate this disruption. A parallel solutions to manage them, calledsubtrend called the consumerization of API management platforms, provideIT (CoIT) is driving the convergence of mechanisms so enterprises can engagethese technologies in ways that contradict with SMAC in a strategic and systematicthe traditional IT management methods manner to assist the fulfillment ofof command and control, locked-down their digital ambitions. Together, theysystems, systematic rollouts, and long power the consumerization of APIs.cycle-time application development. Previous issues of the Technology ForecastOver time, SMAC and CoIT will expand have covered the individual impact ofand deepen the digital operating social,1 mobile,2 analytics,3 and cloud.4model explored in the previous article, RESTful APIs and API management“Exploiting the growing value from platforms are the key technologies thatinformation,” on page 06. But these abstract above these individual piecestwo trends present challenges that and support the integration of SMAC,will require significant changes in how thus making them the key tools forenterprise IT operates and enables participating in the digital economy.business, which are issues examinedin the next article, “Embracing open 1 “Transforming collaboration with social tools,”IT,” on page 54. Fortunately, evolving PwC Technology Forecast 2011, Issue 3.approaches supported by emerging 2 “Unleashing enterprise mobility,”technologies can help achieve this PwC Technology Forecast 2011, Issue 1.transition to a permeable enterprise. 3 “The third wave of customer analytics,” PwC Technology Forecast 2012, Issue 1.These emerging technologies represent 4 “Driving growth with cloud computing,” PwC Technology Forecast 2010, Issue 4.a new generation of applicationprogramming interfaces (APIs), or The business value of APIs 35
    • Figure 1: A conceptual view of the relative trends in complexity of integration andthe nature of coupling, in the evolution of software integration technologies over timeComplexity Hi EDI electronic data interchangeof integration gh RPC remote procedure call e os Lo CORBA Common Object Request Broker Architecture EAI enterprise application integration SOA service-oriented architecture SOAP Simple Object Access Protocol REST representational state transfer Low Nature of Tight coupling 1960s Now EDI RPC CORBA EAI Web services REST (SOA/SOAP) RESTful APIs enable what PwC calls the The rise of RESTful APIs permeable enterprise, in which capabilities APIs have been used as a mechanism“When we step back to see and assets inside the enterprise are easily for linking programs since the early what the big revolution combined with assets and capabilities days of software. However, API creation outside the enterprise. Once the sole and design have significantly changed. is, we see that APIs are province of highly experienced software Early methods were proprietary and the first serious digital developers with deep knowledge of the created interdependent coupling among enterprise context, APIs are becoming pieces of code and systems. If one indirect channel.” the basis for creating digital value chains side of the coupling required a code that access and act on information from change, the other side was affected. —Sam Ramji, Apigee traditional data stores, humans, and an Over time, APIs evolved to reduce the increasing number of physical objects that interdependency of tightly coupled contain digital content; in short, we’re interfaces, generally lowering the witnessing the consumerization of APIs. complexity of integration. (See Figure 1.) Table 1 describes the evolution of integration and interface technologies to create distributed systems.36 PwC Technology Forecast 2012 Issue 2
    • Table 1: The evolution of integration and interface technologies in distributed systems Electronic data interchange (EDI): In use before the 1970s, EDI is an electronic exchange of business information (such as invoices) in a standardized format. EDI connections are point to point and often use proprietary protocols. Remote procedure call (RPC) or remote method invocation (RMI): In use since around 1980, RPC is an interprocess communication that allows a computer program to request a procedure to execute on a remote computer. In object-oriented software, RPC is called RMI. The details of the remote computer and procedure were hard-coded into the software and were platform dependent. Common Object Request Broker Architecture (CORBA): Created around 1991, the CORBA standard was defined by the Object Management Group (OMG). It uses interface definition language (IDL) to enable distributed components to work together. IDL provides platform independence. CORBA is complex and requires an Object Request Broker (ORB) to facilitate communications. Enterprise application integration (EAI): Gaining popularity in the mid-1990s, EAI is a mechanism to integrate applications within an enterprise. Integrations are complex, often point to point, and mediated by middleware. Integrations are tightly coupled and often need to be re-done with each upgrade of the application(s). Service-oriented architecture (SOA)/web services: Gaining popularity since the late 1990s, SOA uses a service-based architectural approach in which software is developed as a collection of services that can be reused in multiple applications. Although SOA can be implemented using any integration technology, including RPC and CORBA, broad industry acceptance increased with the use of web services standards such as Simple Object Access Protocol (SOAP). Business functions or processes are rendered as web services software components. SOA use has been largely internal to the enterprise. Representational state transfer (REST): In rising use since 2005, REST architecture builds from existing web protocols, allowing large pools of developers to easily and quickly build loosely coupled, accessible basic web services. Resource based rather than task based, REST tipped the balance from internal integration to external integration.Within the last decade, enterprises began However, the use of a REST architecture,to expose APIs to allow external parties along with associated technologies suchto build new functionality, something as JavaScript Object Notation (JSON),software companies did in the past. is accelerating the development andProgrammableWeb maintains a catalog use of APIs. Some of the most popularof these publicly facing APIs. (See Figure services such as Twitter, Netflix, and2.) Its directory has topped 6,000 APIs, Facebook are now processing API calls onand RESTful interfaces far outpace other the order of billions per day or month.styles, such as Simple Object AccessProtocol (SOAP).5 (See Figure 3.) Today, APIs are becoming the basis for creatingcommunication on the web has evolved digital value chains, including digitalfrom the early days of using SOAP indirect channels previously establishedstandards to using features of RESTful mainly by software companies and purelymethods, making REST-compliant web-based companies. “When we stepAPIs a major class of web services. back to see what the big revolution is, we see that APIs are the first seriousService-oriented architecture (SOA), digital indirect channel,” says Samwhich gained wide acceptance using web Ramji, vice president of strategy atservices built on SOAP, has been popular Apigee, an API management vendor.within organizations as a mechanism for “Although physical indirect channelssharing information across the enterprise. have supported businesses for a long time, the equivalent in the digital domain has been unclear so far.”5 According to Wikipedia (http://en.wikipedia.org/ wiki/SOAP): “SOAP is a protocol specification for exchanging structured information in the implementation of Web Services in computer networks.” The business value of APIs 37
    • Figure 2: Adoption of externally facing APIs is accelerating. Growth in number of APIs over time 3 mo 6,000 4 mo 5,000 6 mo 4,000 9 mo 3,000 18 months 2,000 8 years 1,000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: ProgrammableWeb One big reason behind the successful scalable and undeniably simpler, but adoption of RESTful APIs is developers’ depending on the protocols, clients, or“ In the past, everything ability to build modular capabilities servers used, it may have performance was a heavy integration. with lightweight interfaces that don’t inferior to other integration styles, require heavy integration. “RESTful such as CORBA. Therefore, a cost- This meant that if interfaces create a level of simplicity that benefit analysis of specific IT use cases there was a seemingly didn’t exist previously, and simplicity will determine the optimal integration always speeds things up, making style that must be implemented. small need, the cost integrations cost-effective,” says John of integration was a Musser, founder of ProgrammableWeb. More about REST As noted earlier, REST stands for barrier to fulfilling The potential to lower cost expands the representational state transfer, meaning that need.” opportunities to integrate. “In the past, that a client communicates with a everything was a heavy integration. server—not directly with the source of —Devon Biondi, Mashery This meant that if there was a seemingly information on that server. This transfer small need, the cost of integration was a is done through representations of barrier to fulfilling that need,” says Devon the state of that resource. The REST Biondi, vice president of strategy services architectural style for distributed systems at Mashery, an API management vendor. was developed around 2000, and it is patterned after the HTTP6/1.1 Protocol. Despite rising adoption, integration via In RESTful designs, the client does not RESTful APIs is best regarded as a tool need to know about the implementation in the integration toolkit, and is not the on the server. The server is free to store right solution in all use cases. Each of the data as it likes, and the client can store integration approaches in Table 1 have the same information differently. This their advantages and disadvantages. loose coupling means that as long as the For example, a REST architecture has interface is stable, the implementation on added benefits such as being highly 6 HTTP is Hypertext Transport Protocol, the protocol used for communications on the World Wide Web.38 PwC Technology Forecast 2012 Issue 2
    • Figure 3: RESTful APIs have been a driver of growth in API adoption.3,5003,000 REST2,500 Distribution of API SOAP protocols and styles JavaScript2,000 XML-RPC Other1,5001,000 500 0 2005 2006 2007 2008 2009 2010 2011Source: ProgrammableWebthe client or the server can independently • Layering—Servers do not knowchange. This independence creates whether there are layers of abstractionflexibility in distributed software systems. between themselves and the end “ RESTful interfaces client; for example, whether they create a level ofThe REST architectural style requires that are passed through multiple securitythe following six constraints be met: policies, APIs, and so forth. simplicity that didn’t exist previously, and• Client/server loose coupling—A • Code on demand—Servers are clean separation of duty exists able to temporarily send custom simplicity always between client and server. The type functions as executable code to speeds things up, of data storage does not matter to the clients for them to execute. client, and the client interface or client making integrations state does not matter to the server. • Uniform interface—Servers cost-effective.” With a stable interface, the client and clients can interact, change, and server may be developed and and be modified independently —John Musser, replaced independently of each other. as long as the interface that binds them remains the same. ProgrammableWeb• Stateless—The interface that dictates how the client and server An API implemented using the interact does not allow client states to preceding principles of REST and be stored on the server. Information using standard HTTP communications about client states is embedded in the protocols is a RESTful API, sometimes messages the clients send to servers. called a RESTful web service. Like any resource on the web, the RESTful API• Cacheable—Clients can have the will need a Uniform Resource Identifier ability (and must let the server know (URI), such as an http:// address. whether they do or not) to temporarily store data received from the server. The business value of APIs 39
    • RESTful API developers are increasingly eventually all large enterprises with using REST in conjunction with considerable data and information assets JSON, a resource-based data transfer will use this technology internally and mechanism, to further simplify the externally. Although SMAC applications process of communication between the motivate RESTful integration today, it information seeker (the client), and is typically useful for any application- the system containing the information to-application integration. to be consumed (the server). JSON is derived from the JavaScript scripting Comparing REST and SOAP language, which is widely used in web For many enterprises, the path to web browsers to enhance interfaces and services begins with the adoption of a build dynamic websites. Like REST, service-oriented architecture (SOA), JSON is noted for its simplicity and which uses SOAP as a method for usability. For instance, data is sent in exchanging information. In today’s plain text, which makes it easy to read web service world, both SOAP and understand. Because so many web and REST are used as methods of client programs are written in JavaScript, communication. There are several JSON data arrives ready to be consumed factors behind the popularity of without needing further manipulation. REST when contrasted with SOAP. At the same time, JSON lacks display capabilities and has a limited amount of Simplicity. REST uses simple HTTP development tool support. Hence, the and therefore standard commands— decision to use JSON in an organization such as GET, PUT, POST, and DELETE— should depend on its intended use. to coordinate communication between clients and servers. SOAP has no widely accepted methods corresponding to GET, PUT, POST, and DELETE, which “When you get an order of magnitude leaves developers free to define their own semantics. But the result can be shift in the number of developers who complex, proprietary mechanisms to have the skill and talent to be able to connect components. Any programmer unfamiliar with these proprietary use something, then you end up with semantics will need time to learn them, outsize network effects.” slowing development. (See Figure 4.) Familiarity. Since REST is closely —Sam Ramji, Apigee related to web design, web developers do not face a steep learning curve. REST is also language and platform agnostic. On the other hand, SOAP requires a significant skill set in SOA-specific The early use of RESTful APIs has development and delivery tools. This been concentrated in web companies, impact can be substantial, as Ramji of in companies active in mobile, in Apigee explains: “When you get an order social applications, and in large of magnitude shift in the number of enterprises leading the adoption of developers who have the skill and talent SMAC technologies. However, PwC to be able to use something, then you expects this concentration to change; end up with outsize network effects.”40 PwC Technology Forecast 2012 Issue 2
    • Figure 4: Contrasting SOAP and RESTful mechanisms for web services communicationREST uses HTTP commands—such as GET, PUT, POST, and DELETE—to communicate content between clients and servers,and it uses HTTP for transport. In contrast, SOAP separates the content (data for transmission) and the protocol (SOAP),resulting in complex and proprietary mechanisms to connect components. SOAP RESTHow Directory HTTP packetcommunicationhappens Service description in Web Services HTTP command RESTXML payload Definition Language (WSDL) GET, PUT, POST, DELETE data representation http:// http:// </> </> SOAP SOAP HTTP client HTTP server XML Services provider Services consumer REST-aware client SSL and HTTP authorization REST-aware applicationHow message SOAP HTTPis structured SOAP GET PUT envelope header REST Requests the Uploads the packet representation of representation of Message Application SOAP body a source of data the specified data contents specification Message- Data for specific trans- POST DELETE Message Submits data Deletes the data mission processing back to specified source instructions the source of dataEfficient with bandwidth. The Managing the APIsuse of the existing web infrastructure As simple as RESTful APIs are to build,eliminates the need for an additional they still require management andmessaging layer in RESTful APIs. Coupled maintenance. And although it is easy towith the fact that REST uses those manage a single API, all enterprises willshort request and response sequences, inevitably have several APIs that internalthese APIs consume considerably less developers, strategic partners, and publicbandwidth than SOAP-based APIs. developers use to build applications across diverse platforms. This increaseScalability. With simpler component in APIs has led to the need for tools andimplementations and reduced services that help companies create,complexity in the connection semantics, publish, manage, operate, and analyzeRESTful services can scale—as APIs. Such solutions, often called APIevident from several services that management platforms, are now offeredregister more than 1 billion API calls by several vendors, including 3Scale,each month.Although REST has Apigee, Layer 7 Technologies, Mashery,many benefits, in some situations— and others. Alcatel-Lucent also providessuch as stateful operations where API management solutions but with astate needs to be continued, or for focus on the telecommunications vertical,applications expecting a guaranteed enabling service providers to makelevel of security or reliability, or their networks addressable by others.requiring formal contracts with rigidspecification of the interaction— API management platforms bring a wealthSOAP would be a more appropriate of new functionality to API publishingchoice over REST, as it has standards to and operations. The following paragraphsensure certain requirements are met. describe their key characteristics. The business value of APIs 41
    • Developer community engagement. give visibility into the API platform to Engaging with the developer community improve efficiency. Customers can use is a significant first step to building an such tools to troubleshoot problems, API ecosystem; internal and external improve or maintain service quality, developers must be aware of exposed measure latency, analyze load statistics, services and the APIs to use them. monitor transaction data and traffic flow, Some API management platforms are or identify underlying API problems. free tools for those just getting started, while others are complete developer Traffic control. For companies that portals that support easy access to APIs maintain their API platform in house, and accompanying documentation, traffic control is important to protect such as wikis, blogs, and discussion back-end systems from overload. API forums, to promote developer collab- traffic control tools can set platform- oration. Some companies also offer wide rate limits, set limits by other rules outreach and marketing programs such as client or IP [Internet Protocol] designed to make the development address, or create tiered systems to allow community aware of their APIs. priority customers to consume more API data. With API traffic control tools, Security. API management platforms companies can define and enforce levels offer several facets of security, starting of partner access to data consumption. with new developer approvals and developer authorization to access specific Performance and scalability. APIs. Many companies support the open API management platforms address security standards or OAuth 2.0 for performance and scalability issues authentication and key management. associated with API platform growth. More sophisticated API management They also can manage scalability platforms support multi-tier access issues and limit lag time and latency control methods that specify which when a large number of developers, developers can access which APIs. applications, devices, or end users Usage monitoring is also part of this concurrently use the APIs. multi-tier access control capability. API management platforms should be able to API optimization. Although the use integrate with existing enterprise security of RESTful APIs is on the rise, sometimes systems and protect against external companies must support other methods. security threats by using encryption, Companies can help drive API adoption threat detection, and analysis. by offering APIs that use protocols the partner or developer prefers, and API Analytics and reporting. Analytics management platforms provide protocol help companies understand and translators to streamline the process. improve the value of their APIs. Value- They can optimize API content and driven analytics gauge API adoption format to fit the requirements of specific by measuring traffic, purchases, and mobile platforms or devices, and then registrations. Partner-focused analytics institute and enforce API version control. help companies better understand who is using their APIs and via which partner Platform outsourcing. Companies can channel they are accessing it, informing offload the entire API management task an appropriate response. For example, to external service providers via cloud- companies might segment audiences by based services or global API networks. top developers and applications, or they They can also tap these solution providers might analyze usage by API method. to take over API management when Operational analytics and reporting tools traffic must remain on the premises.42 PwC Technology Forecast 2012 Issue 2
    • Table 2: Capabilities of API management platforms Capabilities expected from all vendors Capabilities available from leading vendors Capabilities to expect in the future Free developer tools and tutorials Developer community portals— Face-to-face or personalized proactive community building through developer outreach—for example, wikis and forums organized hackathons Tools for developer access Analytical tools for usage trends, API/business strategy analysis management and authorization customer analysis, and brand awareness Traffic control and management External threat management SOA governance aligned with API management for private enterprise APIs Operational reporting tools Performance/scalability protection Data hosting, monetization, and management Version control API optimization Data and API marketplaces Protocol mediation/translation Partner portals On-premises and SaaS solutionTable 2 shows the broader group of Figure 5: Life cycle for adopting and benefiting from APIscapabilities and how they are evolving.Life cycle of API use Drive developer adoptionAs discussed in the article, “Exploitingthe growing value from information,” on Understand API usagepage 06, the adoption of RESTful APIscreates significant new opportunities Secure and protectfor enterprises to transform internallyto a digital operating model and to Control traffic flowengage externally with the evolvingdigital ecosystems. Strategically, any Scale and performanceAPI program will start by analyzingan enterprise’s opportunities to take Expand API channelsadvantage of data and informationassets, turning them into platforms, andfacilitating their extension by internal or Source: Apigeeexternal developers. Once under way,the program must recognize that theuse of APIs is like all other programs entire life cycle. One best practice isin that they will have a life cycle of to treat APIs like products and stafftheir own. This API life cycle must be them with the roles and infrastructureunderstood and managed, so ongoing typically put in place for any otherchanges and refinements can be made. product. “It is important to keep the API stable, so it should be managed likeA typical life cycle of an API program a product that would be maintained,moves from driving developer adoption supported, and evolved with good changeto using APIs to expand channels, as management practices,” says Markillustrated in Figure 5. API management Noworolski, CTO of Streetline, a globalplatforms provide support along the provider of smart parking solutions. The business value of APIs 43
    • Table 3: A sampling of services that illustrate the use of sensors and smartphones to digitize activities Company name Activity How it works What is the digital transformation? Fitbit Health and This wireless device tracks calories burned, Digitizes fitness information and tracks personal care steps taken, distance traveled, and sleep activity continuously, and correlates with quality and uploads reports to a website. outcomes such as weight and BMI A Wi-Fi–based smart scale tracks weight, body mass index (BMI), and percentage of body fat. Ginger.io Healthcare This mobile app collects data from a Digitizes health information, including smartphone sensor and analyzes the psychosocial state, with automated and data for subtle signals of behavior change self-reported data that could signal changes in health status. GreenGoose Internet of Things Users apply sensors to everyday things such Finds value in everyday activities through as a toothbrush or garden rake. The company a sensor embedded in data collection analyzes the data for behavior patterns. The and analysis data translates into points, which then can be used in games on the GreenGoose website. Jawbone Health and A sensor embedded in a wristband measures Records actions automatically; provides personal care physical activity and sleep patterns and sends the ability for users to also self-report data to the user’s iPhone. some information SenseAwareSM— Shipping and Multiple sensors in a package give near- Facilitates finer control of sensitive shipments powered by transportation real-time data such as location, temperature, by using sensor-driven data collection FedEx light exposure, relative humidity, and barometric pressure about a particular shipment via integration with a collaborative web-based application. Shopkick Retail shopping With this sensor-driven mobile commerce Creates a digital record of customer app, users collect “kick” rewards for walking shopping behavior in a brick-and-mortar store into participating stores or for scanning product bar codes. Kicks can be redeemed for rewards. Streetline Public sector The app uses sensors and a real-time parking Creates an entirely new field of data data feed to collect and distribute real-time collection, as it would be prohibitively labor parking availability information to drivers via intensive to manually collect such data text and smartphone apps. The app also uses real-time data analytics to adjust meter and garage prices to reflect supply and demand.44 PwC Technology Forecast 2012 Issue 2
    • The confluence of social, mobile, analytics, and cloud technologies is disrupting the business environment to an extent not seen since the early days of the Internet.API opportunity in digital APIs then make it possible to access Conclusiontransformation and monitor that data in a standard The confluence of social, mobile,Thus far, this article has discussed APIs way. Companies such as Cosm and analytics, and cloud (SMAC) technologiesas a mechanism to link capabilities ThingSpeak provide open source is disrupting the business environment toprovided in distributed software platforms for real-time access, for an extent not seen since the early days ofcomponents to RESTful web services in the sharing and manipulation of the Internet. SMAC represents a pace andtraditional computing environments. information, and for the development degree of change that is overwhelmingHowever, the use of APIs extends of applications that take advantage of to the current IT approach of owning thebeyond that. “The homogeneous IoT. Typical applications automate the end-to-end experience. Today’s methodsworld of PCs, Macs, or web browsers is everyday environment, such as turning do not scale to address the challengestransitioning to a heterogeneous world off the HVAC system or lights when a that SMAC presents: too many variationswhere almost anything can have an IP person leaves the home. Applications in use cases and too many endpoints. Inaddress and be open to collaboration,” are also used in enterprise contexts. For addition to understanding and havingsays Ramji of Apigee. Coordination example, FedEx SenseAware collects a strategies for these individual SMACacross such a diverse and pervasive wide range of information as a shipment technologies, enterprises should look atsystem requires an easy mechanism moves from its origin to delivery. abstractions that bring together theseto connect and communicate. “That technologies where they intersect.is why APIs are important. They While IoT may focus on inanimate objects,provide such a mechanism in a digital the growing use of smartphones and the RESTful APIs and API managementecosystem,” Ramji continues. role they can play in collecting data from platforms are just such an abstraction sensors creates opportunities to further and should be added to the existingRamji is referring to what is called digitize human actions without active integration toolkit. The best way tothe Internet of Things (IoT), a term attention from the individual. (See Table manage the upcoming challengesfirst used by Kevin Ashton in 1999, 3.) For example, UP from Jawbone uses stemming from the confluence of SMAC isreferring to the growing tendency to an iPhone app and a sensor embedded to use emerging IT tools around RESTfulbuild inanimate objects that have the in a wristband to track meals, physical APIs. Combining these tools presentscapability to generate digital information activity, and sleep patterns to later a model where central IT provides awithout human intermediation. display it to the user to promote healthy platform for participation with the digital habits. Smartphones today have sensors ecosystem. “In the future, the way toIoT is seeding an analog-to-digital for location, acceleration, orientation, increase the barrier to competition willtransformation of everyday activities and so on. Many services that collect, be to lower the barrier to participation,”by making a greater portion of a link, and analyze this new data are suggests Biondi of Mashery.person’s environment more digital. emerging; Table 3 lists a sample of them.Today it is becoming possible to capture The collective impact of these tech-information from data points as diverse nologies makes the pursuit of aas a toothbrush, home appliances, a permeable enterprise an imperative.thermostat, a car, or a home. Every With the rise of RESTful APIs and APIobject can be equipped with sensors that management platforms comes thedigitize the information about the object’s opportunity for enterprises to extendstate, location, and other relevant data. and deepen their digital footprint by making it possible to easily access and combine data from many more sources than previously possible. The business value of APIs 45
    • Embracing openIT: Enabling thepermeable enterpriseBy positioning IT capabilities as a platformcomposed of open, self-describing, modularservices with reliable interfaces, CIOs canenable the permeable enterprise and createnew strategic options in digital ecosystems.By Bud Mathaisel, Patrick Shankland, and Vinod BayaIf CIOs are going to be successful in the ecosystems, CIOs are tapping intonew world of social, mobile, analytics, these value drivers, seeding a digitaland cloud (SMAC) trends, they need to operating model and creating newthink differently. Legacy ways do not strategic options for their organizations.scale well to the possibilities of digitalecosystems. To increase the speed of RESTful APIs are the catalytic enablersdevelopment and co-create their futures for the open digital ecosystem. They arewith internal and external third parties, the self-describing interfaces and dataCIOs need to adopt a new mantra: go packages organized in business-relevantopen. This co-creation mandates a and logical hierarchies, accessible vianew open platform enabled through HTTP.1 They define the idea of open,application programming interfaces accessible, self-service interfaces, which(APIs), especially representational are also important for engaging with thestate transfer (RESTful) APIs. More consumerization of IT trends. By makingthan a technology purchase, “go open” an organization more permeable,is an architectural transformation RESTful APIs establish a universalnecessary to create and participate shared architecture and collaborationin digital ecosystems and to enable model for linking software and systemspermeable enterprises. (See the as networks, bringing the benefits ofarticle, “Exploiting the growing value Metcalfe’s Law2 to software components.from information,” on page 06.) 1 HyperText Transport ProtocolAs business ecosystems become more 2 Although initially defined in relation to tele-digital, the value drivers increasingly communications networks, Metcalfe’s Lawcome from the information (bits) today applies to all networks and states that the value of a network is proportionalaugmenting the physical product to the square of the number of nodes inor service (atoms) it represents. the network. See more details at http://en.wikipedia.org/wiki/Metcalfes_law.By engaging with emerging digital The business value of APIs 55
    • Figure 1: Open IT builds on prior or ongoing SOA efforts and reorganizes IT capabilities in modular chunks to allow co-creation with internal and external partners. Co-create Not much value Open IT (internally and externally) Who creates new services Traditional IT SOA efforts Only IT creates Low Modularity of capabilities High IT can take a quantum step to deliver on The open IT transformation the promised value of information for Open IT delivers information services“  Statistics we have both internal and external users. The that internal and external audiences collected suggest that key to delivering this value is RESTful build on rather than passively accept APIs, which provide the technical as the endpoint in an information using [RESTful] APIs underpinnings for loose coupling as supply chain. It requires a change from reduces development detailed in the article, “Consumerization delivering and maintaining full, end-to- of APIs,” on page 34. Without end applications to delivering a platform time by 50 to 75 percent.” this loose coupling, the complex with modular capabilities expressed interdependencies of traditional systems as reliable interfaces. (See Figure 1.) —Devon Biondi, Mashery integration generally lead to steep This change is now possible due to the learning curves for programmers, less sharply lower cost and complexity of reliable software components, the integration during the development possibility of very long development of new capabilities. “Statistics we have times, and user frustration over what collected suggest that using [RESTful] is delivered. RESTful APIs are the APIs reduces development time by 50 major ingredients that have made the to 75 percent. What used to take six to new digital ecosystem possible over eight months to integrate now requires the past five years. “It’s a confluence hours or days,” says Devon Biondi, of many things,” says John Donovan, vice president of strategy services at senior executive vice president of Mashery, an API management vendor. technology and network operations at AT&T. “It’s the quality of the APIs; it’s The combination of self-describing the skill set of the API developers; it’s interfaces (RESTful APIs), identifiers the evolution of the JavaScript; it’s the (Uniform Resource Identifiers [URIs]),3 evolution of how code is developed.” and standard access methods (HTTP) helps mitigate the long lead times for The time is right to take advantage development and high costs created by of this confluence. 3 In computing, a Uniform Resource Identifier (URI) is a string of characters used to identify a name or a resource. See Wikipedia: http://en.wikipedia.org/wiki/URI56 PwC Technology Forecast 2012 Issue 2
    • tightly coupled, proprietary integration CIOs must make these investments. “Ifmethods. AT&T, for instance, now the CIO’s team doesn’t understand thisexposes a growing catalog of RESTful market and is waiting for technologiesAPIs—such as billing, subscriber to mature or standards to emerge,profiles, device characteristics, and competitors are going to eat your lunchmessaging—that cut the time developers by being more nimble,” warns Johnrequire to deploy their applications on Musser, founder of ProgrammableWeb.AT&T’s network from months to days. The good news is that the broadIT organizations typically have long outlines of how to open IT are amplylists of projects proposed by internal demonstrated on the consumercustomers—lists that seem to grow web, and enterprise-class toolslonger over time. SMAC trends are and supportive infrastructure arelikely to exacerbate this issue, leaving becoming available. “CIOs historicallybusiness units even more frustrated. haven’t had the toolkit to provide“When they take a request to IT, the open services,” says Sam Ramji, viceanswer is often ‘no’,” says Brian Katz, president of strategy at Apigee, providerhead of mobility industrialization of an API management platform. APIand engineering at Sanofi, a global management solutions allow enterprisesdiversified healthcare leader. Such to take their existing IT assets and turndynamics prevail where the IT function them into platforms that bring thecontinues to operate as the sole provider enterprise into the digital ecosystem.of end-to-end application functionality.However, the world outside IT has API interfaces: A new boundary “ A lot of employeeschanged. “A lot of employees today are to link IT with businesssavvier with IT, as they have grown today are savvier with At many enterprises, a typical ITup with the Internet and associated stack for applications might look like IT, as they have growntechnologies and services. They want the example in Figure 2, composedto be able to get their work done up with the Internet of three layers. The core, enterpriseand have the capability to build or resource planning (ERP), and other and associatedprocure IT services,” Katz says. large enterprise-wide applications technologies and and associated data warehousesThe central IT function is clearly remain the foundation, and they are services. They wantresponsible for delivering core systems the source and repository for dataand services. The distribution of to be able to get their for transactions. These data are theresponsibilities is shifting, however. most precious enterprise assets. The work done and have“We in IT don’t have to do all the coding middle layer contains the functionalanymore,” says David Zanca, senior vice the capability to build applications that use these datapresident of IT, customer access, and assets and support functions, such as or procure IT services.”revenue systems at FedEx Services. “The pricing, inventory, finance, web retailkey role for my group is to be the owner, store, and others. The third layer is —Brian Katz, Sanofiproducer, and platform of the services.” at the edge, closer to engagementWith a RESTful-inspired architecture, with employees and customers, andIT can deliver robust and reliable builds on the other two layers tointerfaces against the core systems. provide role-specific solutions such asBusiness unit leaders and their business- collaboration, reporting, and so on.unit IT staff can take advantage of theseinterfaces by combining them with self- In traditional end-to-end ownershipgenerated or sourced functionality to of IT, the information flows from thecreate new capabilities. Through this core systems to the edge applicationsco-creation process, marketing, sales, accessed by employees and customers.and other internal groups can become The flow could be mediated byfull partners with the IT organization. middleware, proprietary or internal The business value of APIs 57
    • Figure 2: The IT application stack in traditional IT and open IT and highlights of some of the changes necessary Traditional IT application stack What changes Open IT application stack Edge applications Edge applications are no longer within Edge applications Social, mobile, analytics, cloud IT’s end-to-end control. IT engages Social, mobile, analytics, cloud (SMAC) applications with internal and external developers. (SMAC) applications Edge security services The security focus expands from an Edge security services intrusion prevention orientation to rights management (certificate for a specific user for a specific element of data for a specific Edge APIs period of time). (RESTful, SOAP, and other flavors) Middleware (enterprise service bus) A new edge represented by APIs reaches Middleware deeper into the IT stack and enterprise (brokering, orchestration, capabilities. Brokering, orchestration, and API gateway) API gateway take on new importance. Functional applications and Functional applications and databases likely Functional applications and databases (finance, pricing, already have been rewritten to expose data databases (finance, pricing, inventory, web retail store, to the web and provide real-time processing inventory, web retail store, sales, etc.) of transactions. Prepare for a higher sales, etc.) frequency of processing from API adoption. Core security services API adoption will invoke a higher frequency Core security services of transactions. Optimize for higher Core applications and databases transaction loads. The highest level of Core applications and databases (ERP, CRM, transactional engines) protection is mandated for this layer. (ERP, CRM, transactional engines) IT owned Degree of change: High Medium LowAPIs, service-oriented architecture also highlights other key changes in each president of engineering, platforms,(SOA) efforts, or other mechanisms. of the layers when transitioning from a and applications at Streetline, a globalBut central IT maintains full control and traditional stack to an open IT stack. provider of smart parking solutions.responsibility for the full stack from thecore to the edge. In contrast, in open RESTful APIs enhance the commercial Reorganizing and energizing the ITIT, the information flows between the value of enterprise data and information function for open IT is a key to the digitalcore systems and the RESTful APIs and assets in a digital ecosystem. These future. To realize the full potential of aopen APIs. These APIs, which represent interfaces even make it easier to digital operating model, there are foura new edge or boundary, expose the organize IT in a manner synergistic leadership opportunities for the CIO:capabilities across the IT stack of the with business, a challenge IT has facedenterprise and the related information all along. Streetline, for example, • Embrace a new architecture.assets as services, becoming the building defines business requirements and APIblock for new services. Central IT does logic together as the company builds • Address a new audience: internalnot have responsibility for the end- out its digital ecosystem for parking and external developers.user application at the edge, but has operations. “There are APIs for eachthe responsibility to support the level of use case: a parking status API, a meter • Overcome new challengestraffic and the service level agreement payment API, a payment status API, from openness.that API usage might entail. Figure 2 and so on,” says Peter Leiser, vice • Upgrade organizational skills.58 PwC Technology Forecast 2012 Issue 2
    • A new architectureA good layered IT architecture—distributed, client/server, object- “At the highest level, thisoriented—has been important for morethan 30 years, but not until today, is an architectural change.with the emergence of web-based You need to architect yourservices and consumerization of IT,have enterprises had such a compelling platform and environmentreason to revisit their IT architecture. for co-creation and treatOpen IT, based on RESTful APIs, will APIs as products that yourequire changes inspired by platform publish and maintain forthinking and loosely coupled, self-describing, modular capabilities. “At long periods of time.”the highest level, this is an architectural —David Zanca, FedEx Serviceschange. You need to architect yourplatform and environment forco-creation and treat APIs as productsthat you publish and maintain forlong periods of time,” advises Zancaof FedEx. The goal is an architecturedesigned for compatibility withemerging digital ecosystems. Onecharacteristic of RESTful APIs consistentwith this architecture is their readinessfor a pull-centric world, where usersinvoke existing services and createnew services, versus the traditionalnotion of IT pushing services.Traditional architectures are optimizedfor batch calls against the core, usuallyhigh-volume electronic data interchange(EDI) or Extensible Markup Language(XML) format interchanges. Thisrequirement is unlikely to changein the digital ecosystem. What willchange is access calls through APIsthat will put additional stress on thecore. The new architecture shouldharden the core while providing morepermeable binding for API requests.Also influencing this architecturalchange is a higher pace of newapplication adoption in the enterprisecaused by SMAC technologies. Thisadoption cycle lies in stark contrast tohow fast core systems can or shouldbe changed. An architecture that takesthe core capabilities and makes theminto platforms with modular interfaces The business value of APIs 59
    • Figure 3: Stages of maturity in developing an internal- or external-facing developer program Third-party products treated as critical feature sets, not optional add-ons Support for developers from testing through Proactive developer marketing products Basic developer recruitment and capabilities: documentation community and supportallows a faster pace of application An API-friendly architecture shift “[CIOs] need to get the channel leader,evolution at the edge. AT&T organized also has implications for IT security marketing leaders, and technologyits API program to match this pace. “It at two general levels. Security for the leaders in one room and say, ‘Weis an architectural choice one makes core is intrusion prevention oriented, have a new channel,’” Ramji adds.for speed,” says Donovan, explaining and it may also be optimized aroundwhy AT&T created an API program. batch movement of data. Security To expedite the adoption of open in support of an API strategy is both platforms, some IT organizationsIn addition to publishing services for intrusion prevention oriented and establish a developers’ resource centerothers to consume, most enterprises rights managed—a certificate issued or an API program by productizingwill also consume external services to a specific user for a specific data the chosen capabilities and features asto enable their business. Also, all element for a specific period of time. modular services with stable interfaces.major enterprises do operate a large Although AT&T has had a developerpool of vendor-bought solutions. New channel, new audience program for years, the company hasThe CIO organization therefore will Open IT positions enterprise IT assets accelerated its use of RESTful interfacesbecome an orchestrator of services— to engage with the digital ecosystem and related open architecture during theacross vendor capabilities, published internally and externally. For many IT past two years. This transition allowsservices, and consumed services—a groups, this engagement will require AT&T and the developers to surfacerole that the new architecture will a new competency—to work with a new opportunities to monetize AT&T’sneed to acknowledge and enable. developer community outside the IT network assets. The intent is to make all organization. With published APIs, of the network capabilities addressableThe growing number of devices used third parties are encouraged to, and by enterprise or commercial developers.by employees and customers to access will, develop capabilities that will “Where do you put APIs? You literallyenterprise IT is also a consideration in benefit the enterprise and the third put them everywhere. That’s how you dothe new architecture. “We also have parties. “The real opportunity for CIOs internal development; that’s how the ITa continuously connected strategy is to develop the strategy for how the shop works; that’s how your outsourcerwhere we create a thin layer of services, enterprise participates in the digital does development for you; that’s howwhich are independent of end-user indirect channel,” says Ramji. For you build services,” suggests Donovan.devices and use cases,” describes Ramji, the digital indirect channel isZanca. FedEx created this thin layer what APIs make possible by giving Such an undertaking is akin to shiftingof customer experience services on access to a large and growing pool the role of the CIO to be more like thetop of its enterprise services to expose of internal and external developers. CEO of a software product company,them as RESTful web services. one that provides the APIs and software60 PwC Technology Forecast 2012 Issue 2
    • Figure 4: A successful developer program has many elements to achieve market objectives. Proactive outreach is needed to attract developers and help them understand how they can Developer outreach be successful with the developer program. Code examples, documentationDevelopers can and will help Technical forums, paid support options, and Community supporteach other. This help can be other content or service elementsfacilitated with the right online may be necessary to helpforums and event creation. API program developers build great applications.Ultimately, developers want to Tools will be needed for testingearn money, and helping them Testing applications under conditions Go to similar to those in real customerreach customers is a crucial part market andof a successful program. certification environments. Some industries may require certification processes for companies or applications.as part of a proprietary package for Successful developer programs include most enterprise IT organizations havecustomers and developers. “When I numerous elements that complement little experience with them. Moreover,talk about the priorities in my digital each other to achieve market objectives. APIs span a wide range of past andaccess group, one of them is to think (See Figure 4.) As they develop their present technologies, as detailedand act the way a best-in-class software programs, organizations will analyze in the article, “Consumerization ofcompany would,” says Thomas Wicinski, and consider many features, such as APIs,” on page 34. Going forward,vice president of digital access marketing program fees, API access fees, and enterprises need to evolve approachesfor FedEx Services. In addition to developer or app certification in their for consuming and offering RESTfulprocuring and implementing vendor go-to-market strategies. They will gauge APIs that address several challenges.solutions, CIOs also need to design and success by analyzing measures sucharchitect a platform and interfaces that as the number of engaged developers Challenges in consuming APIs:remain reliable over generations of use. (internal or external), the quality and • Diverse API technologies— quantity of third-party applications, Although an enterprise may preferAs an IT organization works to empower the volume of API calls, end-customer RESTful APIs, API architectures,external developers, it may follow a engagement, and monetization of protocols, and interfaces maymaturity path as illustrated in Figure the service. Measures also extend to vary across publishers of APIs.3. The journey starts with exposing internal activities. “Another measure This diversity complicates thesome basic capabilities and associated [for the API program] that we’re using development of enterprise and mobiledocumentation. As a company matures, is how many new APIs we are releasing applications that serve or utilizeit will attract more developers and as a cadence around our progress in services from multiple providers.make more comprehensive capabilities opening up more of the network,”available, creating a partnership- shares Jacob Feinstein, executive • Reliance on provideroriented business model. “We’re director of new technology at AT&T. capabilities—The quality ofgetting faster, and one result is that interfaces may be inconsistent, andthe architecture is shifting to allow Addressing API adoption they may have poor definitionsmore partnerships,” says AT&T’s challenges regarding contracts and serviceDonovan. AT&T today exposes APIs While the RESTful API programming schemas. Variations in qualityfor location, messaging, speech, device model and integration architecture are of service and independent APIcapabilities, and billing, and many fairly well established and scalable to versioning schedules acrossother APIs are in the future road map. accommodate large enterprise services, APIs can cause disruptions. The business value of APIs 61
    • Table 1: Mitigation approach to the key challenges in consuming and providing RESTful APIs Diverse API technologies: • Loosely couple or hide the underlying API technologies of providers through Reduce the complexity of using an enterprise service interface or gateway to create a consistent service multiple services developed with architecture, transport mechanism, and data encapsulation method as is varying technologies from providers. the case with RESTful APIs. Reliance on provider capabilities: • Expose the service to enterprise applications through generic internal contracts. Mitigate the impact of provider changes to service functionality and availability • Divide API functionality into multiple granular services to reduce reliance on to applications. a single service. • Allow the orchestration layer to manage exceptions and maintain consistent error messaging. Asset vulnerability: • Encrypt messages sent to RESTful APIs and data that will be stored outside Reduce the risk of exposing internal enterprise boundaries. assets while still taking advantage of third-party RESTful APIs. • Centralize API keys and control access to allow API use by only authorized devices. • Encrypt traffic between client applications and the enterprise to secure the transmission of data. Performance delivery: • Cache responses to reduce the time required for clients to complete round-trip Accommodate the additional hops vendor API requests. for RESTful API use while maintaining performance. • Use enterprise resources for heavy processing and API mashups. • Preprocess API responses prior to client delivery to reduce the payload and processing required by the client. Challenges in offering APIs: Upgrading the IT organization • Asset vulnerability—API adoption for the digital ecosystem“ The real opportunity introduces enterprise assets to new Moving into the new digital ecosystem is for CIOs is to develop vulnerabilities. Interaction with third- an organizational challenge for the CIO. party providers exposes applications First, if the enterprise IT group (and the strategy for how the to message manipulation and injection outside service providers) historically enterprise participates attacks from external sources. has been optimized around the design, deployment, and operation of core in the digital indirect • Performance delivery—The use of systems, it is unlikely the organization channel.” third-party functionality introduces has many of the new skills needed. additional hops and can increase —Sam Ramji, Apigee the length of round-trip requests. Second, the traditional structure Restricted capacity and processing of formal, separate organizations performance limit devices’ ability to for development, infrastructure, efficiently develop, consume, and security, and so forth are unlikely to utilize large service messages. enable the flexible invention that is the pulse of the digital ecosystem. As providers and consumers gain experience with RESTful APIs, some Third, the methodologies employed best practices for addressing these by most IT organizations, including challenges are emerging. Table 1 capability maturity models, the IT organizes some of these methods. Infrastructure Library (ITIL), and the methodologies that come with large62 PwC Technology Forecast 2012 Issue 2
    • systems, such as ERP, are inconsistent incubator groups, centers of excellence An open platform does not call for awith the fast development cycles needed for SMAC and/or RESTful development frontier mind-set, where fragmented APIto pioneer the new capabilities. that sometimes are located off the main generation replaces a carefully managed campus. These groups focus on building applications portfolio that CIOs striveRecognizing such impediments, up a competency in a given area and to maintain. CIO leadership must keepCIOs can use the digital ecosystem acting as evangelists for the methods, a balance in this evolution and manageopportunity to perform a current state tools, and so forth that will be used in IT assets in new ways. The advice toassessment of their organization’s the future. In addition, the members CIOs is to approach the evolution incapabilities. This exercise will allow of these centers might begin to plan, four dimensions: business need orthem to establish the future state execute, and gain experience building purpose, an enterprise architecture fororganization design, skill sets, and the future state architecture that has a digital operating model, developermethodologies for development and been laid out by the CIO. The great community management, and gapsdeployment. If IT wants to perform the news is that many in the IT organization in organizational capabilities.role of a software company, much more today are anxious to upgrade theiremphasis must be placed on platform skills, and they would welcome the First, recognize the hidden potentialarchitecture, on technical openness, opportunity to learn new skills and created by unlocking the enterprise’sand on marketing, sales, packaging, technologies. Additionally, the digital information assets, and identifyand support than is normally the case. ecosystem job opportunities are what specifically which data would be attract the people who have the skills exposed for what business purpose.The IT organization must assess its skills needed for the evolving IT group.and tools in light of the new context. Second, devise the new architectureMany IT organizations have not updated Conclusion inspired by RESTful APIs andtheir skills, especially in the economic Many CIOs are concerned about the platform thinking. RESTful APIsdownturn. One major constraint can chaos that could be caused by the are pull-centric, not the traditionalbe the lack of understanding about accelerating disruptions associated push model. The new architectureRESTful API capabilities. The CIO’s with SMAC trends. For some, however, hardens the core while thoughtfullyteam needs RESTful API literacy. it’s a blessing in disguise. These exposing the valuable assets“RESTful API ignorance is a risk that CIOs are learning to proactively captured by the core—information—no CIO wants to be accused of a couple engage with SMAC by adopting a via RESTful API connections.of years from now,” says Musser. digital operating model, powered by RESTful APIs and supported by Third, approach the digital ecosystemMany job descriptions still feature API management platforms. In the opportunities by targeting an audienceexperience with decades-old process, they also open up new business of developers who can create newtechnology. Many IT organizations have opportunities for their enterprises business value based, in part, byoutsourced custom development— in permeable digital ecosystems. extending your capabilities. You canperhaps all development—and have start with existing mobile projectsno insight into the details of the job As SMAC trends accelerate, PwC that can benefit most from APIs, andskills contracted for. A move to open expects that most enterprises will let the momentum build from thereIT would be an opportunity to offer increasingly incorporate features of toward a platform and API program.attractive career growth to staff who information (bits), even if they are stillhave the skills the organization needs in a physical business (atoms) such as Fourth, use the digital ecosystemto participate in a digital ecosystem. retail, distribution, manufacturing, and opportunity to upgrade your healthcare. To successfully navigate this organizational structure and skillsThe CIO needs to focus on building a transition, enterprise IT organizations in the context of the inexorable shiftweb-, mobile-, and cloud-competent must adopt many core competencies toward a new operating model. ApplyIT organization. To achieve such an of software companies; in particular, new leadership approaches to recruitorganization, CIOs are separating web they must create platforms the way and manage these new skills. Letdevelopment and deployment teams that software companies do. Just as the organization learn and developfrom those that develop and deploy the software companies build successful around early trials. Partnering withcore, placing them under leadership platforms, enterprise IT will build outside experts is a valuable way toseparate from the applications and manage APIs in a manner that prime these internal capabilities.development organization. Some opens up IT for the co-creation of newdigital ecosystem CIOs are establishing services internally and externally. The business value of APIs 63
    • APIs: An architecture for speed at AT&TJohn Donovan, Sanjay Macwan, and Jacob Feinstein of AT&T detail how the API programis a driver of speed in their innovation efforts.Navigating the far-flung functional, than 150 startups. As a result of this care for AT&T, new revenue opportunityorganizational, and technical structure outreach, 40 projects are in the works for SundaySky, and increased satisfactionto bring new ideas to any large company and 11 are deployed commercially, for the customer. AT&T and SundaySkycan be slow and confounding. For a generating revenue for AT&T and co-created a solution facilitated by thecompany the size of AT&T, this had the its collaborators or delivering new transparency and ease of programmingpotential to create lengthy delays for efficiencies that benefit customers. to the billing API. Without that, such andevelopers seeking to test innovations endeavor might have taken too long.against the network. Today, external APIs are the keyinnovators and developers access The underlying enabler to increase the Making AT&T addressable:much of AT&T’s network and other pace of innovation is the company’s Network as a platformcapabilities in a self-service manner, application programming interface AT&T has opened up several categoriesallowing them to bring new offerings to (API) program. By opening up core of RESTful APIs so far and processesmarket three times faster than before. horizontal and vertical capabilities about 4.5 billion API calls every month. through RESTful public APIs, AT&T AT&T has an aggressive road map toThis new speed is central to AT&T’s has established a digital platform that open new APIs across several serviceinnovation strategy. Whether ideas drives an ecosystem of network-centric categories. This plan makes the networkare generated internally or co-created services. “It is an architectural choice an intrinsic part of an innovationwith outside innovators, AT&T wants to one makes for speed,” Donovan says. ecosystem and gives AT&T an opportunitymatch the pace at which the market is for new monetization by servingchanging and innovating—particularly When a company has the size and consumers and business customers.around mobile and cloud technologies. scale of AT&T, speed is not easy or a given. The API program removes Ultimately, the goal of an API program is“If you have infrastructure assets and organizational, functional, and technical to make internal capabilities addressableare going to operate at a pace at which barriers to accessing AT&T’s network by others. “Many people think API equalsthe external market is moving, you and information assets. Extensive open and open equals free; that’s not thehave to take capabilities—industry- documentation, sample code, immediate case at all. What is needed is a thoughtfulspecific or not—and make platforms access to RESTful APIs, and sandboxes architecture that allows you to take layersfrom them. And then make them easy for testing are some of the features above and below your platform, and maketo address,” says John Donovan, senior that reduce the friction for a thriving them modular and addressable,” Donovanexecutive vice president of technology ecosystem of developers and innovators. says. AT&T’s goal is to make its networkand network operations at AT&T. the most addressable network globally. Consider the case of SundaySky, aThe emphasis on speed extends beyond company AT&T chose to work with With APIs making capabilities addressable,technology. Startups participate in “speed after a speed dating session. Telecom the network becomes a platform thatdating” sessions with AT&T executives, bills can be difficult to understand for accrues many advantages. Developersa fast-paced 20 minutes in which they some customers, particularly when they save time and resources and build onhave a deal or an understanding of start or change services. AT&T’s billing top of AT&T’s assets instead of investingwhy not. “We always have some of our system has more than 1,000 elements. in network and telecom equipmenttop decision makers in the room—not Confusion stemming from a bill leads to themselves. A platform approachjust the technology leadership, but our high call volume to customer care. Using positions legacy assets for the futurebusiness unit leaders, chief marketing AT&T’s billing API, SundaySky created a by abstracting and combining them toofficers for enterprise and consumer, service that dynamically builds a custom increase their relevance to emergingand others. Because the key decision video to address customers by name and trends in cloud, mobile, and socialmakers are listening to the pitch at the walk them through their bills. In a trial technologies. “APIs give you the abilitysame time, we can decide whether to of new subscribers for the IPTV service to better manage the legacy environmentmove forward immediately after the (U-verse), the call volume to customer and future-proof them,” Donovan says.speed dating session,” says Sanjay care dropped by 20 percent amongMacwan, assistant vice president in customers who had access to the video A well-executed API program reorganizesthe AT&T chief technology office. review service developed at the AT&T capabilities to establish consistency and innovation center with SundaySky. ease of use. It makes an organization’sIn 2011, AT&T met with more than internal knowledge accessible in a500 startups, and in early 2012, the The result is a three-way win: cost savingscompany already has met with more from fewer or shorter calls into customer continues to next page › The business value of APIs 21
    • semantically consistent manner. “APIs reconstitute their work in a more modular, simplify things architecturally and create fungible, and co-creation–centric manner. a better story and capabilities for the developers by having a common taxonomy,” As a result, APIs are increasingly coming says Jacob Feinstein, executive director from all parts of the organization and not of new technology. “If you have a more just from the API program group. The educated community, they’ll think of new consumer marketing organization, the things that they might do with the network enterprise marketing organization, the that they wouldn’t have thought of doing.” product organization, and the emerging devices organization feed the API pipeline. The platform strategy extends beyond Teams are also proposing APIs out of the network assets. “Our APIs cut across the gate with new solutions, including capabilities such as payment, device teams from AT&T’s network equipment characteristics, location, messaging, speech providers. “APIs are being thought of at recognition, and others,” Macwan says. the outset, and they influence the early “Any developers who want to embed speech ideation around network release and recognition in their services can just call a road map planning. Now we actively speech API to access our speech engine.” look at what the API opportunities are as we roll out each next generation of “Most of the things we do are candidates network technology,” Feinstein says. for the new architecture,” Donovan says. Speed is also a function of an External outreach organization’s operating model. changes internal “We’re pivoting toward thinking about “[The API program] is operating model architecting everything we do in a an architectural choice Donovan cautions against more API-centric way,” Feinstein adds. APIs impose modular thinking on the the common notion that one makes for speed.” APIs are for giving away enterprise. They have allowed AT&T to data free just to be nice. reconstitute its capabilities and assets in —John Donovan, AT&T That thinking limits the modular chunks with stable interfaces. internal potential of APIs. They have digitized the operations that “The use of APIs and take place around the company’s network their impact is not just and the value-added services it delivers. for outreach to the external developer Being digital, these capabilities are easier community. It changes how you operate,” to engage with and now operate at a faster he explains. “You literally put APIs pace with a large number of partners. everywhere. That’s how you do internal development, that’s how the IT shop The single principle: Speed works, that’s how your provider should Despite the size and scale of its do development for you, that’s how your infrastructure and operations, the offshore stuff lands into your environment, architecture changes enabled by API and that’s how you build services.” thinking, API technology, and an API platform strategy can have a real impact AT&T is changing on the inside, too, as a on innovation, growth, and the AT&T result of the API program. The thinking bottom line. “We’re getting faster, and one and architecture the program represents result is that the architecture is shifting to are seeping deeper into company one that allows more partnerships. You’ll operations. Many teams now understand see us do more technology partnerships the change in thinking the API architecture and move faster, both at the pace of requires. “People are applying an API lens the market and in terms of innovating whether they’re in the labs, the network on our own. There will be efficiency teams, or what traditionally have been benefits as well,” Donovan says. finished product groups. They offer an API-centric view of their work,” Feinstein His advice on how to think about APIs: says. As these diverse groups think about “Operate under one principle and then ways to support the API program, they architect around it; ours was speed.”22 PwC Technology Forecast 2012 Issue 2
    • PwC: David, how are the mobility,Tapping value cloud, and social technologies trends impacting your world? DZ: What we are seeing is that thesein information trends are making technology much more pervasive than before, and one significant shift is the changingDavid Zanca and Thomas Wicinski of FedEx customer behavior. It’s a behavior shift in how customers interact, whereServices describe how FedEx is a connected they interact, and what they expect.enterprise and provides digital access to During the past decade, the growth in e-commerce has been substantial, but itits services on the customer’s terms. was from a small base of total retail. This past Christmas season we experienced aInterview conducted by Vinod Baya, Bo Parker, and Surajit Kar very different phenomenon. We clearly saw the shift from the consumer doing all the shipping of goods to the e-tailer shipping on behalf of the consumer. This shift suggests that consumers are doing David G. Zanca less driving to a retail store, loading up David G. Zanca is the senior vice president the car, taking it home, and shipping the of IT, customer access, and revenue systems presents to their family. Instead, they at FedEx Services. Zanca is responsible window shop in local stores, go home for bringing market leadership across the and buy online, and the e-tailer ships it. customer-facing domains of all the FedEx operating companies. A primary focus for It’s also very clear that the platform Zanca is the extension of a “connectedness” strategy that embeds FedEx services of choice for consumers has changed. into mobile devices and applications that The access from the mobile platform customers and partners use every day. is showing strong momentum, and shipment tracking from mobile Thomas Wicinski devices exploded this year. The ubiquity and convenience of mobile Thomas Wicinski is vice president of devices is resulting in more frequent digital access marketing for FedEx Services. Wicinski and the digital access marketing lookups, so we have more continual team develop, manage, and launch market- interactions with our customers. leading software, web services, and fedex.com to enable customers and partners PwC: Thomas, you lead digital to access all business services offered access marketing for FedEx. What by FedEx. are you seeing in this regard? TW: From a marketing standpoint, one of the strategic pillars of our digital access program is providing access to FedEx services on customers’ terms. Our capabilities should be accessible where customers are, and we have done that24 PwC Technology Forecast 2012 Issue 2
    • “We keenly seek out new sources of information to increase connectivity and make relevant information available to customers in their context.” —David Zancafrom the very beginning of the company. the hubs—almost everything has to us and the customer. For example,For instance, in the past we have technology embedded in it and tells us over the years we added more anddistributed desktop software, which where it is or what its state is. Without more scans on a package as it movedwould run on the dock at the end of a the connectivity, we would not get the from pickup to delivery, which digitizedfulfillment line to generate a label. That’s information about the package that more locations and increased thea production scenario, and we’re fitting we and our customers value so much. granularity of information we capture.into the customer’s context; in this case, A typical package, over its journey,somebody who’s operating a fulfillment Connectivity is core to our operating gets scanned more than 25 timesoffice and needs to generate a label. model, and we have become good at today, and we make a subset of these enabling, creating, and managing a scans available to our customers.Today it goes to the other extreme. connected world. Also, we keenly seekAs David said, we are becoming more out new sources of information to Other characteristics also push us torelevant on mobile phones. Every increase connectivity and, as Thomas be more and more digital. Althoughpackage that gets sent has a recipient. said, make relevant information most people think of us as transportingIncreasingly for all recipients, the available to customers in their context. documents, the company was foundedmobile device is a device that they live on the notion of the fast cycle timeson, as much as any other. I compare PwC: What are the fundamental necessary for critically needed goods,this to where we were in 1993 and characteristics of having such as equipment and computer spare1994 when we were deeming the web the connectivity DNA? parts, that must be moved quicklyas the next place for FedEx to be. We DZ: We essentially operate two to repair a broken-down machine orare growing in that same way now, networks: the physical network of equipment. So speed and responsivenessas mobile and cloud and social will planes, vehicles, and packages, and are core to our operating model.have some of the same implications. the second network of information about the package. The information PwC: What is an examplePwC: FedEx has a long history network is a digital equivalent of of where you are stretchingof treating information about the physical movements of our the edge of connection?the package with the same assets and packages. Extending and DZ: Looking back, when most otherimportance as the package. combining the two networks is how sites were just rendering content, ourHow does this principle embody we create value for our customers. tracking service was one of the firstitself in your company? functional web applications. Fast-DZ: That’s right. In the late 1970s, our On the surface, you may think of the forward 20 years, and our first iPhonefounder and CEO Fred Smith said, “The information as what we present to app was one of the first functionalinformation about the package is just customers to track their packages. It apps from a business perspective. Ouras important as the package itself.” It’s is much more than that. Indeed, the web applications from 20 years agoa vision that has given our company a customer wants to know where the and our mobile apps from today bothculture that values information and that package is, but the information about stretch the connections between ouruses it in all we do. The vision embodied the package tells us all sorts of things enterprise and our customers. There isitself by seeding a connectivity DNA. about our internal quality, productivity, a lesson in innovation here: the ideasAlmost every piece of our business effectiveness, and operations. for both of these came from somebodyis instrumented; it has some degree Information about the package helps in a cubicle playing with the webof intelligence and automation on it. us run our business better. That comes technology or the iPhone well beforeOur planes are all intelligent and they from a digital operating model where the web or building apps were popular.tell us where they are. The trucks, all our assets are connected and surface We encourage such experimentationthe couriers, the knowledge workers, information to increase overall value with emerging technologies. The business value of APIs 25
    • As I said before, almost every piece of our business has embedded sensors and intelligence. Looking forward, where we haven’t had the intelligence and will be adding it is on the package itself. The bar code provides some intelligence, but one must actively scan the package. This will change over time. One of our solutions, SenseAware, which we now use on a small percentage of our packages, makes the package intelligent. It’s essentially a cell phone that calls home and tells us, “Here’s where I am,” and provides information about location, temperature, velocity, light, vibration, and so on. With SenseAware, we push the edge of connection deeper into our operations, because the product location and sensor “ Our capabilities should be information is available continuously in real time as it moves in our system. accessible where customers are, At the same time, we get deeper in and we have done that from the customers’ contexts, as they are in constant touch with their packages and very beginning of the company.” can take actions if necessary. I think in the next 10 years or so, you could see —Thomas Wicinski some type of intelligence being placed on all packages. It might be sensors, it could be tags, but clearly the technology is going to evolve and improve. TW: That’s right. SenseAware is a continuation of our accessibility strategy. With it, one gets accessibility to the next level of detail that customers are looking for. Tracking information gives great comfort to our customers. The market and competitive dynamic now suggests that not only do our customers want more information about the packages, but they also now want more interaction with FedEx and26 PwC Technology Forecast 2012 Issue 2
    • “With SenseAware, we push the edge of connection deeper into our operations, because the product location and sensor information is available continuously in real time as it moves in our system.” “At the same time, we get deeper in customers’ contexts, as they are in constant touch with their packages.” —David Zancaexpect us to react to changes and resolve medical industry. If a temperature try to have a common code base allproblems if they occur. This is called drops below a certain level, then that across, so you’re not writing customintervention—customers are expecting item could be damaged. The customer software for every channel each time.it. They’re trying to ensure successful can drive an operational change, such Your mobile device may have somedelivery, not just know that something as return, reship, reroute, or any other native apps running, but they are callingwent wrong along the way. That’s one suitable action. From our viewpoint, it’s web services that are the real brainsof the fundamental business shifts that’s an element of being in the customer’s for shipping, tracking, and so on.causing us to need to provide more context by ensuring successful delivery.information than we ever did before. TW: You could say that we have gone PwC: How have the methods from a proprietary specification atPwC: So in some sense, the for making your capabilities the very beginning, distributing acustomer is becoming part of accessible changed over time? piece of software, to now where weyour operating environment, DZ: We have multiple platforms that we are migrating to a pure web servicesand you need to surface more support to interface with our vast pool capability. We’re seeing more of ourinformation to bring that of customers, and our methods have partners move to using the web services,value to the customer? surely evolved over time. We started which basically gives them one lessTW: Absolutely. It allows us to have a in the 1970s, making our systems and piece they need to worry about. We’reclosed-loop system with our customers. information accessible by our customers. definitely seeing a market shift there.A very interesting thing about our As Thomas indicated, the early methodsbusiness is that every transaction is were proprietary, and we gave customers PwC: What are some changeshigh intensity. Customers anxiously software and sometimes hardware you are seeing in termsawait their packages. We recognize to access our transaction systems, of how IT operates?it is the most important thing to the generate shipping labels, and so on. DZ: One change I see is that we in ITperson who’s getting the package, so don’t have to do all the coding anymore.we try to build the experience and our More recently, we are also using web The key role for my group is to be theoperations with that notion in mind. services, and it is by far the fastest- owner, producer, and platform of the growing platform right now. Customers services. Business units, even thirdMore information matters on packages call our APIs [application programming parties, can use the services to developbecause if something occurs, then we interfaces] or web services and access a new capability; they can write theand the customer can do something real-time information. In either case, thin veneer of code around it and weabout it. Right now, SenseAware gets we empower and engage millions of don’t have to do that. It’s a win-winused a lot for perishable items in the customers. Underneath all of that, we situation: less work gets added to an The business value of APIs 27
    • “ We in IT don’t have to do all the coding anymore. The key role for my group is to be the owner, producer, and platform of the services.” —David Zancaalready full IT pipeline, and the new We also have a continuously connected Do you manage APIs as products? Arecapability comes to market quickly. We strategy where we create a thin layer of you thinking in terms of publishingmay be involved in some code review, services, which are independent of end- APIs and making them available?but we’re going to end up concentrating user devices and use cases. We take ouron being a platform of core services. enterprise services and apply that thin PwC: And are you driving layer of customer experience services an ecosystem?And we’re already experiencing this on top, which in turn exposes our DZ: Yes. And how do you managebecause we have third parties that services as RESTful [representational the ecosystem? I think sophisticatedtake our software, couple it with their state transfer] web services. Then we enterprises are starting to thinksoftware, and then sell that as part of have all the different types of end- more like a software company—their capability in the marketplace. user devices flowing across the top. as a platform and an ecosystem.PwC: So you are co-creating So, we’re powering a new multitude of TW: When I talk about the priorities innew capabilities? Is this an customer solutions that do not have to be my digital access group, one of them iseasy change to make? fully developed by my IT shop. Thomas to think and act the way a best-in-classDZ: Indeed, we are co-creating with the and other marketing leaders, as well as software company would, as a companyconstituents we serve. And no, it’s not an third parties, can create new solutions that sells software for its own business.easy change to make. It’s a big change for our customers by using the services We have absolutely been implementingand needs to be part of IT strategy and we expose. This expands the value this. You called it a business model;it takes some leadership. At the highest universe a lot quicker than submitting I call them business processes. Thatlevel, this is an architectural change. the work and adding it to our queue. would be very consistent with whatYou need to architect your platform a company does that sells its wares.and environment for co-creation and PwC: One premise PwC hastreat APIs as products that you publish is that all sizable companies Between David’s group and myand maintain for long periods of time. are becoming software group, we are a pretty big software companies, although it’s not company sitting inside of this bigPwC: What are the technologies their core business. Do you transportation company. Many ofenabling this change? think of yourself as a software our activities are identical to what aDZ: We maintain a FedEx Developer company in some regard? big software company does. WhenResource Center, where third- DZ: As we look at our API strategy, I benchmark our group, I actuallyparty developers from enterprises our web developer center, and how we do it against the leading softwareor commercial developers can find share information with third parties, vendors, long before I look at what ourour web services in a WSDL [Web we are starting to think of it more that transportation competition does. SoServices Definition Language] way. The question is what makes a the idea of having a single platformspecification for shipping, office software company. For us, that means: that will support multiple customerand print, and other capabilities. Are you thinking platforms? Are you interfaces—that’s our mechanism thinking of allowing others to build to do it in an affordable manner. new capability on top of your platform?28 PwC Technology Forecast 2012 Issue 2
    • “ Many of our [IT and digital access group] activities are identical to what a big software company does. When I benchmark our group, I actually do it against the leading software vendors, long before I look at what our transportation competition does.” —Thomas Wicinski The business value of APIs 29
    • PwC: Mark, can you tell usThe rising value of about your company? MN: Sure. Streetline was founded about six years ago with the vision of applyinglinked information wireless sensor technology to compelling problems. We were very excited about low-power mesh networking and allMark Noworolski and Peter Leiser of Streetline the applications it makes possible with region-wide connectivity and sensors.detail how they are transforming the We explored many applications andparking ecosystem with cloud, mobility, and chose to transform parking first. What excited us about parking was thatanalytics technologies using RESTful APIs. it’s an activity that occurs in a dense urban environment and with a largeInterview conducted by Vinod Baya, Bo Parker, and Bud Mathaisel number of transactions. We often asked ourselves, “Where can I derive some value from the bits of information that I’m able to squeeze through a wireless mesh network?” We were looking for Mark Noworolski something where we can assign a value Mark Noworolski is the CTO of Streetline. to each one of those bits of information. He has been working with low-power sensing technology for more than 15 years, and he At a high level, parking raises many co-founded Streetline to leverage low-power challenges in almost every city. A sensor design, mesh networking, and web one-year study of a 15-block area in technology to deliver valuable applications Los Angeles found that about 30 percent to cities. of the traffic in the city is people looking for parking. That’s almost 1 million miles of driving and about 50,000 gallons of wasted fuel. Peter Leiser Peter Leiser is vice president of engineering, We have digitized the process of parking platforms, and applications at Streetline. and created new value for consumers, parking garage operators, and local governments concerned about parking enforcement and the impact that parking-seekers have on the quality of life in cities. We get two pieces of information from the field in real time: occupancy and payment information. We use this information to transform the parking process and create a smart parking ecosystem. [See Figure 1.]30 PwC Technology Forecast 2012 Issue 2
    • Figure 1: Smart parking ecosystem enabledfrom Streetline’s technologies and solutions Consumers & motorists Private parking Merchants providers New sources of data City & department of System integrators transportation New insight for action Sensors & apps Meters & smart parking Revenue management & parking operationsSource: StreetlinePwC: What’s possible now that time with messages such as, “I have awas not possible before? special on parking right now near yourMN: In our system, we address several location.” There’s also the ability to “We often asked ourselves,use cases. The first innovation is to offer reserved parking. For example, ‘Where can I deriveguide consumers to available parking if OpenTable1 is integrated with thespots. Parker is our consumer guidance ParkEdge platform, a restaurant could some value from theapplication, available on iPhone and offer a reserved parking space with bits of informationAndroid platforms. Parker takes the dinner reservations. Similarly, if you’reparking availability, policy, and pricing a merchant, you could validate parking that I’m able to squeezedata, and displays it to drivers in real for consumers shopping at your store. through a wirelesstime so they can find parking quickly. Many such use cases are now possible.We also have a mobile payment mesh network?’ Wecapability inside the Parker app, so PwC: How does the system work? were looking foryou can set reminders for yourself to PL: On the street, we have sensorsadd new payment before the parking in each parking spot and meter something where wemeter expires, thereby avoiding a fine. monitors, as well as wide area network can assign a value toYou can even take a picture of where gateway devices on lampposts.you parked, and that picture will be Everything is connected to everything. each one of those bits ofmarked with GPS. Then when you’re Information flows from the field information.”done shopping, for example, and need and is posted to our data center. Ourto find your car, just pop up the picture detection engine generates arrival —Mark Noworolskiand it will show you where to go. and departure information in real time. This information is publishedOne of our other solutions is ParkEdge, onto a messaging queue to update thewhich is a parking management appropriate systems. We also aggregateplatform that is a self-service solution information about payments fromfor private garage operators. Now meters. We have a meter paymenta parking garage operator who has API [application programmingexcess inventory in the middle of the interface] to aggregate informationday can access parking-seekers in real from different meter vendors that all have their own data semantics.1 OpenTable is a real-time online restaurant reservation network, www.opentable.com. The business value of APIs 31
    • openness applies to the sources from which we will consume data and to “  If I were starting a company now, or the way we share data via robust APIs. doing an application that had a mobile From relatively early in our company’s history, we’ve taken the position that and web component at any enterprise, we don’t need to limit ourselves to I can’t think of any way to do it other using only our own sensors. It does not matter where the data comes than focusing on the platform that from; the value comes from how you provides the RESTful APIs that the aggregate and link data together. mobile and web client consumes from.” PwC: What are some benefits you are seeing with an API- —Mark Noworolski driven approach? MN: One of the interesting things about our APIs is that the core data is the same. What changes is how the data gets used. Different use cases want parking data presented in different ways. For example, in Parker, if you’reMN: Also, through our ParkEdge but there’s also a lot of value to the trying to do real-time guidance toproduct, garage operators can enter historical aspect of the data. This is empty parking spaces, you’re not aftertheir inventory into our system and where analytics comes in. It turns out historical data; you’re after what’sindicate that some amount of capacity that occupancy varies from day to happening right now or what’s likely tocould be reserved. They can handle day. The advantage of having sensors be happening by the time you get there.it any way they want: publish their and real-time meter information ischarges, change pricing dynamically, that you can then feed that into a Whereas if you’re sitting in the parkingoffer valet parking, and so on. back end that will allow you to look department office and need to see at historical trends over time. You can what’s going on out on the streets,PwC: So you instrumented compare one city street to another, that’s a different API on the same data.parking spaces, surfaced new and if you have a true global reach to In Los Angeles, we will cover closeinformation, and digitized the that data, then you can also compare to a third of the city’s entire meteredparking process so that it can be how your city is doing to other cities. parking spaces. A parking controltransformed with cloud, mobile, officer now has a global view that showsand analytics technologies? PwC: You are using RESTful how many violations there are in eachMN: Indeed, that is what we have [representational state transfer] individual city block and can be guideddone. The key for us, as I said before, APIs to publish and share data. by that information to specific blocks.has been to find information that we What is the strategy behind that? The officer can zoom in, and it showscould assign value to. It was clear to MN: We’ve had an open business where the parking violations are onus that real-time information about strategy from the beginning, and that individual block. As the officeroccupancy and payments is valuable to we’ve come to see RESTful APIs as a gets out and writes that ticket, it sendslots of constituents. You can probably key enabler of that. We use them in information back to the server, andappreciate that there’s a lot of value our internal development as well as that information then gets republishedto the real-time aspect of the data, in how we interface externally. The to all the other officers in the city.32 PwC Technology Forecast 2012 Issue 2
    • “  If you use this loosely coupled RESTful API approach, you accumulate less technical debt for every new piece of functionality created.” —Peter LeiserPwC: Are there benefits outside of know the entire stack and understand debt.” The longer you’re in businessparking to what you are doing? all the interdependencies. Just because and the more things you’ve built, theMN: Indeed, a key benefit we plan of that, you need to do something like more technical debt you have. Thatfor is the extensibility of our platform. this. You need to become more API technical debt is really like financialAn example that we’ve considered driven, because if you don’t, you’re debt, where sometimes just servicing itthat’s not directly related to parking is going to have intricate dependencies. ends up eating all your time and capital.to open up our sensor mesh network I would advise CIOs to not be afraidto collect other types of information PL: In the past, we ended up with big to start over. If you use this looselyfrom the environment. The idea pieces of software. When you looked coupled RESTful API approach, youbeing that you could then spur open at it, you could determine what was accumulate less technical debt for everydevelopment of different sensors. shared and what had been added new piece of functionality created. specifically for another application,Consider pollution sensors, for example. but it’s all one big soup. That becomes With loose coupling, it’s a lot easier toLet’s say we weren’t sure whether a maintenance nightmare, because replace modules one by one, piece bythere was a market for those, but we there’s always this problem where you piece. When you have an API contract,opened up the APIs and we allowed change one thing over here and you’ve those systems that talk to your API don’tsomebody to build hardware that just broken something over there. need to worry about what goes on undercould use our already-deployed mesh the hood. What is important is to keepnetwork infrastructure to move pollution Now we have multi-tenant, system-of- the API stable, so it needs to be manageddata from highly distributed sensors record APIs. There are APIs for each like a product that would be maintained,back to pollution control officers. Or use case: a parking status API, a meter supported, and evolved with goodbecause the APIs are open, we could payment API, a payment status API, change management practices.get information from some other and so on. It makes it much easierinfrastructure entirely. That data can to organize and run engineering MN: Strategically, you need to take anbe published to our servers, and then it development and much, much easier educated guess about what informationcan be mashed up or brought into the to integrate with external code bases. and APIs will add to business value.Parker app. Anybody could use the open We think API first now. We think, Technically, if I were starting a companyAPIs to extend the parking experience “What is the API contract based on the now, or doing an application that hadto include pollution information or use cases?” and that helps us establish a mobile and web component at anyother environmental information. clear boundaries. Even with an internal enterprise, I can’t think of any way to do application, the question is, “What data it other than focusing on the platformPwC: How has the transition does that application need?” So you that provides the RESTful APIs thatto RESTful APIs affected drive that through this API framing, the mobile and web client consumesyour software engineering which has the added benefit of not from. This way, you can actually get topractices, enterprise constraining other potential use cases. market fastest because you can havearchitecture consideration, one built in parallel with the other.and that side of things? PwC: Based on your experience,MN: If you think of everything you code what would be your advice toas a module that has an API, it’s much CIOs considering a move to moreeasier to run development. As a small openness and more focus onstartup company you have a few people linking to other sources of valuewho know the full software stack and both internally and externally?all the interdependencies in that stack. PL: Internally, we talk about our olderInevitably as you grow, fewer people practices as having created “technical The business value of APIs 33
    • PwC: APIs [applicationThe digital indirect programming interfaces] are something the software industry has known and usedchannel since their inception. Why are they more important now? SR: A key challenge to business alwaysSam Ramji of Apigee explains why APIs are has been how to build bigger and bigger systems of coordination, because theof strategic importance to all businesses. bigger the system, the greater the power and the more things it can do. ThisInterview conducted by Vinod Baya and Ted Shelton led me to be interested in distributed computing. What is well known is that to create distributed intelligence, one needs to collaborate. Over the years, the barrier to collaboration has Sam Ramji decreased dramatically with Internet Sam Ramji is vice president of strategy at and digital technologies, which is a Apigee. Prior to Apigee, Ramji led open significant change. More recently is source strategy across Microsoft. He was this Cambrian explosion of devices. a founding member of BEA’s AquaLogic It’s not just a mobile device, but it’s a product team. He also led the Ofoto TV, a car, or an appliance, and almost engineering team through its acquisition anything when you look at what is being by Kodak. He holds positions on the boards of the Outercurve Foundation for open called the Internet of Things. Industry source and the Open Cloud Initiative, and estimates forecast 15 billion mobile he is a contributing editor to the ACM’s Internet-connected devices by 2015 journal Ubiquity. and orders of magnitude more non- mobile Internet-connected devices. Another change is that the homogeneous world of PCs, Macs, or web browsers is transitioning to a heterogeneous world where almost anything can have an IP address and be open to collaboration. How will such a large system be coordinated? To collaborate, they all need an easy mechanism to connect and communicate. That is why APIs are important. They provide such a mechanism in a digital ecosystem.46 PwC Technology Forecast 2012 Issue 2
    • The winners in the current digital indirect platform era zeroare those who can take the interaction costs to zero. costPwC: Why is that interface—the way you engaged withimportant to business? the customer—that was OK, because “What is happeningSR: What is happening is that we have the customer would adapt. In thisstarted to expand the software supply digital indirect world, the actor at is that we havechain. Today, a third party—sometimes the other end is not that smart. It’s a started to expandmultiple third parties—is involved in piece of software, it can be brittle, it’sgetting your signal all the way to the as it was written. Now if you change the software supplyedge where the customer is. If you want the interface, you break the software, which raises the need for companies chain. Today, a thirdto get your signal to an end consumerwho is using an Android tablet, you’ll to manage the interfaces—the APIs. party—sometimesneed to expose digital signals from PwC: The focus on the developer multiple third parties—your business in a way that a thirdparty with the expertise in designing community seems different is involved in gettinga really satisfying experience for that from before. Why is that? SR: One impact of the proliferation your signal all the waymarket niche can include your signal. of devices is that it results in so many to the edge where theWhen we step back to see what the big use cases that enterprise developers can’t possibly build fast enough to keep customer is.”revolution is, we see that APIs are thefirst serious digital indirect channel. up with the demands of businessesAlthough physical indirect channels and consumers. It helps to look athave supported businesses for a long the numbers. Today there are abouttime, the equivalent in the digital half a million enterprise developers.domain has been unclear so far. With modern-day methods based on RESTful [representational statePwC: How is this different transfer] and JSON [JavaScript Objectfrom the web so far? Notation] interfaces that are easy toSR: The winners in the current use, loosely coupled, and coarselydigital indirect platform era are those grained, there is an addressablewho can take the interaction costs audience of about 5 million developers.to zero. Interaction costs becamemuch lower with the web, but the When you get a step function likereason they were low is because a that—an order of magnitude shiftvery smart actor—a human—was in the number of developers whoon the far side of the browser. have the requisite skill and talent— you end up with outsize networkHumans are adaptable, and that created effects, capable of meeting thea couple of issues. For example, if for demand created by the proliferationcompetitive reasons the marketing of devices and the Internet of Things.department changed the website The business value of APIs 47
    • “ The API game is about unlocking latent value in data and information assets by combining them with other internal or external assets.” All of this feeds back directly to the the devices from which you are able question, what is the economic basis? It to access them. The company did not is unlike the web, where 1 billion web- need to perform all the R&D to learn connected humans were mediated by how to build the software for each of half a million developers. In the future, those different devices. Instead, Netflix probably 5 billion device-connected said, “Here are our APIs, here are the humans will be mediated by about 5 metadata APIs where people can log in million developers. The value of each and discover content, here is the Netflix- developer just went up by a factor of branded partner-restricted media, 20 to 50, and those developers are able and here is the codec to do license to build many apps in their lifetime. management.” Netflix was in the role of being QA; no engineering required. PwC: Much of REST and JSON adoption seems to be among So API use shifts not just the cost but digital-native and Internet it also changes the agility, because businesses. What is the relevance the ecosystem has changed from a to non-digital-native businesses? vertically integrated monolithic business SR: The API game is about unlocking concept to a distributed business latent value in data and information where winners and losers can establish assets by combining them with other themselves in the market without you internal or external assets. The winners over-investing in any single one. in the API game overall are going to be the smartest legacy businesses, PwC: How do trends we have because they have an unfair advantage talked about impact the IT of decades of transaction data as well organization of any enterprise? as other information and data assets. SR: There is clearly an impact at the They may have only a decade that’s edge of the IT organization. The web worthwhile, but they have that. In this taught business self-service. By making market, if companies can overcome information and transactions open their organizational inertia, incumbents and accessible, businesses found that actually have every opportunity to be the customers could serve themselves. big winners in each industry with APIs. The next level of self-service is self- PwC: What is the impact on service on the data, both for internal the software engineering and external use. It is about opening practices of organizations that data. For example, let’s say a marketing need to adopt and offer their professional has $150,000 at the end capabilities via RESTful APIs? of the quarter and gets an ad agency SR: Since APIs really promote to build a mobile app to influence co-creation dynamics, where you create the competitive dynamics in the new value directly or indirectly with marketplace. How will they enable third parties, the engineering and it to get access to corporate data and R&D burden is shared with the digital transactions? How can they do anything supply chain. For instance, Netflix uses with it if access to corporate data is not APIs to get its services quickly on all easy? How long will it take? When an IT48 PwC Technology Forecast 2012 Issue 2
    • department is closed and its whole focusis on securing and locking everything,then that opportunity doesn’t exist.Going forward, it will be an imperativeto be able to do self-service on the data,because modern enterprises need to bemuch more permeable than they areaccustomed to being. Protecting the dataappropriately is essential while allowingself-service. So IT will increasinglyfocus on security, availability, andreliability. IT organizations mustget away from feeling like they areresponsible for building all the thingsthe business wants and insteadenable the organization to be agileby providing self-service on data.PwC: What should CIOsof enterprises do to takeadvantage of APIs?SR: The real opportunity for CIOs isto develop the strategy for how theenterprise participates in the digital “Going forward, it will beindirect channel. The fact that they’rea CIO at a major enterprise means an imperative to be able tothey already understand and have the do self-service on the data,capability to conduct channel-basedbusiness. They need to get the channel because modern enterprisesleadership, marketing leadership, need to be much moreand technology leaders in one roomand say, “We have a new channel.” permeable than they are accustomed to being.”The new channel is a capability, usuallyan app, built by third-party developers.Understand the channel, segment it,and figure out which segment pointsmost effectively to the markets moststrategic or the most under threat.Together develop an ecosystemmodel that can be supported with atechnology and business platform.It’s a strategy for a new channel. The business value of APIs 49
    • PwC: Devon, what are someGetting into the of the trends you’re seeing? DB: An important trend is how ubiquitous connectivity is becoming.customer’s context The latest research suggests that 30 countries now have 100 percent ubiquitous connectivity; that is,Devon Biondi of Mashery details how there’s at least more than one Internet connection at any given time forAPIs allow businesses to engage with every person in that country. Andcustomers in their context. more countries are following. We’re certainly far from the days where youInterview conducted by Vinod Baya and Bo Parker had to wait to get to your hotel room and plug in to the connection; now you’re just connected everywhere. Related to this trend is the diversity Devon Biondi of devices, which is driving the requirements for significantly faster Devon Biondi is vice president of strategy development of digital services. services at Mashery. She helps e-commerce, Previously, companies had a corporate media, and technology companies align their API programs with broader business mandate that they would support strategies. Prior to Mashery, Biondi served PCs and a brand of smartphones, as executive strategist to the CEO at but now in almost all enterprise Tibco Software. environments, IT departments need to support non-sanctioned devices. PwC: Why is that important to business? DB: If you look at the history of business, the competitive dynamics have been changing. James Governor of RedMonk has said, “20th-century IT was about raising barriers to entry for competitors. 21st-century IT is about lowering barriers to participation.” In the future, the way to increase the barrier to competition will be to lower the barrier to participation. Digital data and digital interactions are becoming the next fertile ground for competing, creating, and growing companies. This impacts all companies, whether they are digital or not.50 PwC Technology Forecast 2012 Issue 2
    • “In the future, the way to increase the barrier to competition will be to lower the barrier to participation.”PwC: Mashery offers API PwC: How are APIs impacting[application programming customer relationships?interface] management DB: Previously, the interaction betweensolutions. Why are APIs companies and customers almostimportant to businesses now? always took place in the context of theDB: I think it helps to understand business—in the store, at the website,the analogy of APIs to the evolution or in the service. Now the customer isof the distribution of hard goods. taking control of the context, and theOne hundred years ago, if you were a business must get into that context.manufacturer, you probably also hada store and a relationship with the In fact, customers are creating newcustomer, and that was the way you context. For example, Best Buy is onesold goods. Over time, new channels of the point redemption partners fordeveloped and intermediation the Citi rewards program throughhappened. Then manufacturers could Citibank. If I’m standing in Best Buy,distribute their goods through their which is part of my context, and I scanown stores, through co-branded the bar code of a product, the appexperiences inside another store, or will tell me how many Citi rewardsthrough third-party retail stores. points I need to buy that product. Since I am a Citi rewards member, itToday, apps [as on mobile devices is looking up my Citi rewards accountand tablets] are creating a new role in and letting me know if I have enough.between the business and customer.There always have been new channels Because Best Buy had an API to itsin between the business and the catalog, it was easy for Citibank tocustomer, and now apps are the new just link to it and be in the in-storeones. Some of those apps will be built shopping context. Also, from theby you, some of those apps will be built Citibank rewards website, customersby your strategic partners, and some can look up the inventory at the Bestof those apps will be built by people Buy store near them without going toyou have no relationship with at all. the physical store—all through the API. By exposing APIs, Best Buy gets into theThe API is a recognition of the reality customer’s context in other experiences.that there are just too many nichesand too many ways that customersneed to be served. No business willbe able to do all of the scenarios. In adigital world, an API is your interfaceto enable other distributors. The business value of APIs 51
    • Reduction in call volume that Bluefly experienced byintegrating order status information to an IVR systemusing RESTful API integration. 20% PwC: How has integration Statistics we have collected suggest that changed? using APIs reduces the development DB: One of our customers tells us time by 50 to 75 percent or more. What that they are being forced to create previously took six to eight months to compelling user experiences that must integrate can now require hours or days. be drawn on assets and services across many groups in their company. In the PwC: What are some adoption past, these types of integrations took patterns you have seen with APIs? six to eight months. The integrations DB: We see a wide spectrum of were custom and rarely reusable adoption patterns. Some companies later. They essentially performed a have remnants of APIs from prior project specification and then the efforts, because certain things are close integration. Then they would perform to being exposed and they just aren’t the next project specification, and so documented. Technically they are APIs, on. That is six to eight months every and the company just needs to clean time. That approach doesn’t scale, things up. So they can reuse past efforts and the reality is that businesses and refresh them with new methods. fall behind on integrations. Companies can have big API Another difference is that everything initiatives or they can start as seeds was a heavy integration. If there was based on a particular application. a seemingly small need, the cost of One of our customers, USA Today, integration could not be justified. For came to us when the iPad was to be example, one of our customers, Bluefly, released. The publication wanted its an e-commerce discount store, has content on the device when it was an API program. For a long time the launched. USA Today didn’t have the company saw that its call centers needed necessary capabilities and identified to answer a lot of questions about a development firm to help. order status, because customers had no way to get updates on their orders. The mobile team needed to get Bluefly built an API for order status so motivated and run really quickly. it could be called by the company’s IVR To provide access to its assets and [interactive voice response] system, capabilities, USA Today exposed a and Bluefly cut its call volume by 20 few APIs to this development firm. percent overnight. It would have been The result was that the publication’s difficult for Bluefly to justify a multi- content was then on the iPad when month project, but a lightweight it launched. The USA Today app approach addressed the need squarely. became the No. 1 news app from the beginning, and the publication’s overall digital presence, its Alexa ranking,1 went from 40 to 19 over time. 1 Alexa Internet (www.alexa.com), a subsidiary of Amazon.com, provides traffic data, global rankings, and other information on thousands of websites.52 PwC Technology Forecast 2012 Issue 2
    • “The best designed APIs are designed for a public audience, even though the most value in terms of consumption will be with strategic partners. You want to design with the broadest audience in mind so you can still get value among the long tail of developers.” “Another best practice is to look at APIs as products and at your own developers, your strategic partners, and long tail developers as customers.”Use of APIs started with an iPad was in place, they realized they could PwC: Many companies fearproject, and now all the publication’s expose it to the next development, opening up capabilities. Howmobile efforts are being driven by APIs and then it spread from there. should they handle the risk?because the organization has seen DB: I too hear many times from clients,how it can develop quickly with APIs. PwC: What are some best “There’s no way I’ll let my brand beAlso, APIs do not need to be public practices in using APIs exposed in that way.” My view is thatat first. For USA Today, it started as a that you are learning? all companies are already open to somesmall project for an internal use case, DB: The best designed APIs are extent; some of their data is already outand now the organization has since designed for a public audience, even there. Someone can scrape their websitereleased a number of public APIs. though the most value in terms of for publicly available data, and there is consumption will be with strategic a lot there. On a website, a lot of peoplePwC: Are customers changing partners. You want to design with are getting data through means that aretheir development practices? the broadest audience in mind not doing a service to your company.DB: A key change is that those who so you can still get value among However, if you expose it as you wouldare actually building the end-user the long tail of developers. with an API program, with terms ofexperience will first ask, where’s the service and controls on ways of use,API? Developers are increasingly Another best practice is to look at you can start to build much healthierexpecting APIs in more and more places. APIs as products and at your own relationships. There is mitigation developers, your strategic partners, of some risk in being proactive andAlso, we see that the API culture spreads and long tail developers as customers. exposing information assets withgradually and virally. Someone doesn’t So companies don’t just release an appropriate terms and controls.need to start with aligning a lot of API; they release a product line ofpeople to the API way of doing things. In APIs with different methods, accessmany cases, two or three people decided controls, service level agreements, termsto expose a private API on a few methods of use, and so on that addresses theto one development partner. Once this varying needs of this customer base. The business value of APIs 53
    • PwC: Laura, can you talkCreating a platform about your organization and the efforts that you are leading at Alcatel-Lucent?Laura Merling and John Musser of LM: Sure. I lead the application enablement organization. TheAlcatel-Lucent share how enterprises function of this organization is tocan use APIs to create platforms from drive the adoption of the network as a platform. If you could turn theexisting assets to unlock new value. network into a Facebook-like platform, how would you do that? This goalInterview conducted by Vinod Baya, Bo Parker, and Christopher Isaac has a couple of dimensions: the API [application programming interface] dimension and the cloud dimension. My group does all the software and Laura Merling technology development to expose capabilities of the network as APIs. Laura Merling is senior vice president of the application enablement business unit The capabilities could range from the at Alcatel-Lucent. She leads strategy and ability to select what cell you run on, execution for Alcatel-Lucent’s company- to functionality to route calls or access wide push to transform the network into a information such as call history. We software platform. Merling’s most recent also provide mechanisms to manage experience has been as a strategist in the use of these APIs; we put controls transforming companies to API and cloud- and rate limits on these APIs, normalize driven businesses. Her more than 20-year career spans leadership roles in executive the data, establish business rules— management, business development, and including related business models— product management in the software and on the data or service, and analyze the corporate IT sectors. data related to the API itself. We are also tightly integrated with our cloud John Musser offering, CloudBand, to provide API management as an embedded service. John Musser is the founder of ProgrammableWeb, the online resource for CloudBand combines dynamic network mashups, APIs, and the web as platform. He availability with cross-cloud access. is a Seattle-based technology consultant, writer, and teacher. During his 20-year career PwC: Why is creating and offering in software development, he has shipped five APIs to others important now? award-winning software products in three LM: In many ways, APIs are the building industries, working with companies that blocks of the digital economy. They include Electronic Arts, Credit Suisse, MTV, and Bell Labs. make existing capabilities fungible, so that it is possible to use them in new ways, quickly and easily, thereby64 PwC Technology Forecast 2012 Issue 2
    • “ To fully capitalize on existing assets, other businesses must shift to platform-oriented business models that allow others to extend their capabilities in innovative ways by enabling new applications.” —Laura Merlingspurring innovation and new value they are available and accessible same time, the goals of modularity,creation. All carriers have extremely over the public Internet. One of the reuse, ease of integration, andvaluable assets that are effectively previous methods, SOA [service- flexibility apply to both approaches.locked up in their own networks. Such oriented architecture], generally wasassets include network capabilities, behind-the-firewall web services PwC: Is this largely a changedata about QoS [quality of service], within a corporation—or sometimes about how you deliver the servicesubscriber profile information, and call across partners, but classic SOA is or does it influence the businesscontrol. These assets can be used to interdepartmental and within a single models in the industry?make existing services better or build enterprise. The phenomena growing LM: I see this as a disruptive change.completely new offerings, to drive for the last few years is really about You can view APIs as a toolkit toincremental revenues, and to enhance APIs being open and accessible to all co-create value, so they have ana third party or an enterprise brand. over the public Internet as the Twitter, impact on how value is distributed in Facebook, or Google Maps APIs are. an industry ecosystem. All providersLeading telecom service providers need new ways of thinking aboutare aggressively using these assets Another differentiator is that an API is their businesses. Now it is possibleto build deep, broad value chains not an SDK [software development kit], to see network capabilities digitizedacross previously unconnected market which typically is at either an operating and modularized, and thereforesegments. For instance, Facebook system level or a platform level, such as open to access and manipulation byrecently announced a relationship an ERP [enterprise resource planning] programming code. The networkwith AT&T, Softbank, Mobile Corp., system or database. SDKs used a becomes a platform for development.Telefonica, and others to provide in- very traditional behind-the-firewall It becomes capable of servingapplication purchases using carrier programmer interface into a layer of exponentially more use cases. Inpayment services. We already have the software. The difference now is emerging markets where greenfield LTEcustomers around the globe who that the layer of software is a website. [Long Term Evolution] infrastructurehave demanded that in the next two Typically over HTTP, you access a web is being installed, we see providersyears, all of our products should service endpoint that belongs to another wanting their entire network tohave web-based services or RESTful company. This is a lot easier to do. be API enabled out the door for a[representational state transfer] APIs nationwide broadband network andin and out of them. That request is RESTful interfaces create a level of differentiated value to the ecosystem.not just for our software solutions but simplicity that didn’t exist previously,for the hardware solutions as well. and simplicity always speeds things PwC: Are these messages up, making integrations cost-effective. relevant to industries otherPwC: John, you have tracked One of the challenges with SOA was than telecom providers?the growth of APIs for years. that it was over-engineered for the LM: Absolutely. Broadly speaking, allAPIs have been a part of complex case, which was only about major enterprises have underutilizedcomputing as long as people 20 percent of the use cases. Owing to assets; that is, the existing businesshave been connecting one the complexity, it cannot adapt easily models are not tapping into the fullpiece of software with another. to 80 percent of the simpler cases. APIs inherent value. For telecom serviceWhy the new interest now? today, using RESTful interfaces, make providers, networks are such assetsJM: There are a couple of primary it possible to easily serve 80 percent that can create a lot more value if thedifferentiators with APIs now. First, of the most common use cases. At the providers open them up with APIs. The business value of APIs 65
    • “ [Internal and external] developers expect to use their time efficiently. The easier it is for them to tap into your assets, the more they focus on creating value-added capability and bringing it to market quickly.” —Laura MerlingSimilarly, to fully capitalize on existing the auction marketplace. Not so. The developers expect to use their timeassets, other businesses must shift to company’s first API was to add listings efficiently. The easier it is for them toplatform-oriented business models that to the marketplace, because that was tap into your assets, the more they focusallow others to extend their capabilities what was strategic. The winner in the on creating value-added capabilityin innovative ways by enabling new auction universe would be the provider and bringing it to market quickly.applications. This cannot be possible with the biggest marketplace, so toif tapping into the capabilities is eBay, success meant the ability to grow PwC: Are there any guidelinesexpensive, time-consuming, or complex. that catalog as quickly as possible. for where CIOs can focus first? JM: One easy way is to look at yourPwC: What should enterprises PwC: What should organizations existing portfolio: what’s on the plateknow about using APIs? know to start on this journey? now, and how can any of those high-LM: One common misconception I see LM: Organizations need to establish a priority projects that are either inin how enterprises define ecosystems vision of the ecosystem that they will development or about to get underis targeting the long tail developers create or be a part of and what role they way benefit from an API? In today’sonly. However, platforms that have would play. This vision is dependent marketplace, anything to do with mobileused APIs successfully, such as Twitter on the existing business model and is a natural candidate. Who doesn’t haveor Facebook, have a small number of the assets that organizations can tap a mobile strategy right now? Nobody.API users in the ecosystem that drive to create new value. They also should CIOs should take anything to do withthe bulk of their traffic. Twitter actually look for opportunities where they can mobile and make sure it is integratedacquired the four top companies that digitize existing processes, because with a platform strategy, becausewere driving all its traffic. Businesses those processes create the opportunities they’re such a perfect and natural fit.need to also look for B2B2C [business- to expose APIs. Also, any organizationto-business-to-consumer] opportunities that succeeds with an API has a vibrant Also, CIOs should understand that usingthat are real and can scale quickly. developer ecosystem. There are many APIs is an architectural choice and not best practices on how to attract and a technology choice. OrganizationsJM: Indeed, the long tail of developers foster a developer ecosystem, and can build a platform using whateveris an option but not a requirement. organizations need to learn and their core technologies are. If they areThe requirement is that your audience adopt some of the best practices. It a Java or Microsoft shop or somethingfor APIs could be anything from your is important to understand that a else, there’s no need to change the core.own department by transforming your developer isn’t always the guy in the The concepts are neutral regardingprior SOA efforts to something more garage building the next Angry Birds. language and implementationsystematic, cost-effective, and flexible. platform. Organizations can useYou don’t need to bend over backward We have done studies and learned whatever stack the enterprise prefersjust to have an API; you need to think a great deal about what makes a and may have a mix of them as well.about that strategically. One of my developer ecosystem—one that spansfavorite examples is eBay. Back in 1999 casual hobbyists to professionals in PwC: Are there any risksor 2000, eBay opened what really was other large firms—tick. APIs have been to be aware of?the first API in this class of APIs. Of all with us for a long time, but in the past JM: For CIOs right now, it’s morethe things eBay could have an API for, they always took a lot of time to use and important to be API literate than to bewhat do you think it did first? Most make work. Now, thanks to emerging API ignorant. In the future, you’re notpeople think eBay had an API to search practices with RESTful interfaces, just going to produce APIs, you’re going66 PwC Technology Forecast 2012 Issue 2
    • to consume them. If you use a singlecloud service, just one, your team needsAPI literacy, period. API ignorance isa risk that no CIO wants to be accusedof a couple of years from now.CIOs are going to need to know how tointegrate services in the cloud. They’llneed to understand how to deployusing APIs, because there will be someproject that they must run on the VPN[virtual private network] version ofAWS [Amazon Web Services]. If theCIO’s team doesn’t understand thismarket and it’s waiting for things tosettle down, good luck in your newjob because it’s not going to be here.Your competitors are going to eat yourlunch by being more nimble and agileand not necessarily waiting for thingsto mature or standards to emerge.PwC: Where do things standwith respect to the use of APIsinternally or externally?JM: Most of the action today is inexternal use, but I think it’s going to bebigger inside the enterprise. I feel there’sa much larger universe of private APIsand their usage than there is of public “CIOs should understand that usingAPI usage. The two flavors of private APIs is an architectural choice and notAPI—for internal companies or for acompany’s partners—constitute the part a technology choice. Organizationsof the iceberg that’s under the water can build a platform using whateverand the tip of the iceberg represents thepublic APIs. The real body and meat their core technologies are.”of the API universe is hidden. This is —John Musserwhere a lot of the value is, because youcan be more adept and agile and getbetter ROI [return on investment]. The business value of APIs 67
    • PwC: Brian, you are an activeUsers as partners blogger, and you also lead mobility engineering at Sanofi. A key impact of cloud, mobility, andBrian Katz of Sanofi discusses how social technologies on IT is what is being called consumerizationconsumerization of IT means enterprise of IT [CoIT]. What is the trendIT should treat users as partners. and why is it important? BK: Indeed, there is a lot of talk aboutInterview conducted by Vinod Baya and Galen Gruman consumerization of IT these days. It is often equated to bringing your own device [BYOD], in that no longer are devices (phone or tablet or personal computer) only what is sanctioned by the IT function. Rather, employees can Brian Katz bring the device of their choice and Brian Katz is a director and head of the access enterprise services on that device. mobility industrialization and engineering When I look at the statistics, such as 87 group at Sanofi. He manages mobile percent of companies are doing BYOD, initiatives and enables the organization to probably 60 percent to 70 percent of make advance-ments in mobile services, such as mobilizing the salesforce, handling BYOD those companies are enabling e-mail on initiatives, and enabling new devices and the device. I don’t think enabling e-mail form factors for business success. He has on any device is enough to qualify to be more than 20 years’ experience in managing doing BYOD. That device needs to access and implementing IT processes at global the company’s IT ecosystem and the multinational corporations. services it represents. Until a company does that, it’s not truly doing BYOD. On the other hand, CoIT is a big deal. A lot of employees today are savvier with IT, as they have grown up with the Internet and associated technologies and services. They want to be able to get their work done and have the capability to build or procure IT services. CoIT brings that dynamic more to the forefront.68 PwC Technology Forecast 2012 Issue 2
    • “ The change necessary is to treat the users as partners. Successful enterprises today are starting to embrace the fact that they have users who can assist in handling many of their own IT issues, because they have already waded through them in the home environment.”PwC: How does that Does it make sense to design an app APIs to interact with the informationimpact IT operations? with 270 features, where the use case repositories, and to read, input, orBK: The popular opinion of the last 8 occurs less than 20 percent of the time? manipulate the data, they enable newto 10 years is that the goal of IT is to Maybe you build another app for when services that can get someone’s job done.enable the business. Yet, there’s not you have that use case or maybe youa place you can turn where people accommodate that need a different way. In reality, they’re building a workflowaren’t talking about “IT means no,” based upon modular chunks of whatin that when they take a request The change necessary is to treat the the user is doing. Most of the time,to IT, the answer is often “no.” users as partners. Successful enterprises users want to do work in small, focused today are starting to embrace the fact chunks. When companies do work inCoIT means it is much harder to say that they have users who can assist in such a modular way, it’s much easier to“no” now, because people are going handling many of their own IT issues, be more productive in everything else.to work their way around it. If IT is because they have already wadednonresponsive, employees today can through them in the home environment. PwC: With APIs, in some senseuse their know-how to find better and This is the vital transformation that IT opens up its capabilities andeasier-to-use tools to perform certain IT organizations must go through to allows employees to partner withaspects of their jobs. If that happens, IT continue to help their enterprises be IT to co-create new functionality.organizations can have a big problem successful. If they keep treating their Should IT encourage this?on their hands, because they will have employees as users, they will end up BK: That is what should happen inlittle to no control over these tools and stuck in their legacy thinking that values the long term. However, today it’s alimited visibility into the data used process over partnership with their big leap of faith and not everybodyand stored. So IT’s challenge becomes own internal customers. I would say is ready to do that yet. For example, Ihow not to say no, and to have a role in such thinking has led to the exodus of recently visited a very large companyenabling new capabilities and services IT talent from many large enterprises that has been transforming IT to makein partnership with the employees. that don’t see the morale-boosting, users into partners. A member of the efficiency-granting value in CoIT. IT team said, “Somebody requestedPwC: What changes should to put an app in our internal appIT make? PwC: Companies increasingly store the other day. They looked atBK: Most IT organizations spend way are becoming digital, and our APIs; they want to try designingtoo much time building applications there is the trend to use APIs something that they could use. Theyand not focusing on the user. The reason [application programming built this great app that a group ofthis happens and takes up a lot of IT’s interfaces] to share and co-create other people also thought was a greattime is scope creep on any project. It in a digital ecosystem. How is app, and they’re using it based uponhappens incrementally with people that impacting IT operations? capabilities made accessible by APIs.”saying IT really should be able to do this BK: If you think about it, informationone other piece, and then before you’re wants to be free, at least within Non-IT employees created a newdone, you have an application that the company. This is new for most app using the APIs. Now IT’s role ishas 300 features. The reality is that 80 companies; most companies lock up different. Perhaps IT just puts it in thepercent of the users only use 30 features; their information and don’t like to share internal app store and nothing else.what do you do with the other 270? it. However, when enterprises build Or IT adds security to it, or maybe IT The business value of APIs 69
    • “If you think about it, information wants to be free, at least within the company. This is new for most companies; most companies lock up their information and don’t like to share it.” “However, when enterprises build APIs to interact with the information repositories, and to read, input, or manipulate the data, they enable new services that can get someone’s job done.” looks at it and says, “You know, we On the other hand, they should avoid could help you make it even better building a platform that becomes so it scales to all employees.” IT may so unwieldy that they cannot make also get new ideas for opening up changes to it without much expense or other APIs that would prompt more disruption. I’ve lived through that. If co-creation. This is a good partnership. you talk to anybody who did any IT from 1995 to 2005, they will recall platforms PwC: To use APIs across the that people just kept adding to. They enterprise, do you think IT added to the point where, when they organizations need to reorganize need to update a piece, they have 27 their assets as platforms with other pieces that depend on it, so they addressable interfaces? can’t update because it’s locked. The BK: It depends on how they design and platform is complex and unwieldy. architect the platform. If a platform is building APIs to access data and make IT organizations should build the it available, whether on the premises or platforms so capabilities are modular in a private or a public cloud, then yes, I and interchangeable, and so modules agree that a platform is what they need. can be upgraded without disturbing the system. It depends on how they architect a platform. They need to have principles that define how they’re going to build their platform to avoid becoming complex and unwieldy.70 PwC Technology Forecast 2012 Issue 2
    • The business value of APIs 71
    • To have a deeper conversation aboutthis subject, please contact:Tom DeGarmo Ted SheltonUS Principal & Technology Leader Managing Director, PwC Advisory+1 (267) 330 2658 +1 (408) 817-5134thomas.p.degarmo@us.pwc.com ted.shelton@us.pwc.comBo Parker Eoin RussellManaging Director Director, PwC AdvisoryCenter for Technology & Innovation +1 (646) 471-4019+1 (408) 817 5733 eoin.russell@us.pwc.combo.parker@us.pwc.comRobert ScottGlobal Principal & Technology Leader+1 (416) 815 5221robert.w.scott@uk.pwc.comComments or requests?Please visit www.pwc.com/techforecast or sende-mail to techforecasteditors@us.pwc.com
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    • www.pwc.com/techforecastSubtextConsumerization The combination of trends where software manipulableof APIs (application interfaces (APIs) are becoming open and ubiquitous,programming as well as the democratization of the ability to create,interfaces) expose, and consume these interfaces (beyond software and digital native enterprises).Digital operating An operating model that combines the following:model instrumentation to digitize operations, modular capabilities in a loosely coupled architecture, and platforms addressable via open interfaces; all coming together to create the ability to scale integrations in a digital ecosystem.Permeable enterprise An enterprise that uses a digital operating model to enable co-creation of new value by allowing internal capabilities to reach outside and interact with external capabilities, as well as permitting external innovators to reach into the enterprise to tap into its capabilities.API management Emerging solutions that package tools, methods, andplatform services that help enterprises create, publish, manage, operate, and analyze APIs, thereby enabling them to pursue a digital operating model and the vision of a permeable enterprise.SMAC (social, mobile, An acronym to evoke the disruption and potentialanalytics, and cloud) from the confluence of the trends of social networking, mobile computing, analytics, cloud computing, and other emerging trends that take advantage of them, such as the Internet of Things.