The Business of the Digital Ecosystem

The Business of the
Digital Ecosystem
A Guide to Rapid Evolution in the Digital Economy

Proprietary Material
Copyright Apigee 2014
All industries are in the process of a major transformation
to software-driven, digital businesses.

Apigee leads enterprises in transition to digital world
The leader in API technology and services for enterprises and
developers
Billions of API calls per day
Over 100,000 developers in the community
Hundreds of enterprise customers worldwide across all industries
Over 50% of world’s top 10 telcos and retailers
Thought leader with over 100 webcasts, e-books, white papers,
courses

Global Digital Ecosystem
US Digital Ecosystem Mexico Digital Ecosystem

Two-thirds of the 140 million U.S. adults with smartphones
state they are more likely to shop at a store with an app.
Q: How much more or less likely are you to shop at a store that offers an app
with a searchable product catalog, featured sales, and a store locator?
Source: Apigee Institute Survey of 1,000 US Smartphone owners, November 26-30, 2013; margin of error +/- 3.1
19
36
25 18 11
66
84
67 66 65
0
50
100
Total Top App Users Millenials 18-49 $50K +
More Likely
Much More Likely

Mobile apps are a necessity now
15
32
14 15 14
81
92
78 79 79
0
50
100
Changed how I do this
Completely changed
how I do this
Q: How much has having a smart phone or tablet changed the way you shop?

Nine out of ten smartphone users expect mobile
to have changed their shopping behavior by 2015.
Q: Thinking of the next two years, how much do you expect smart phones,
tables, and apps to change how you shop?
90
99
90 89 89
50
100

Majority expect stores to have “key services and functions
available by app” today, rising to two-thirds by 2015.
52 57
47 46 49 53
67
49 47 47
67
81
69
64 64 66
77
59 61 62
0
50
100
Total Top App
Users
Millenials 18-49 $50K + Total Top App
Users
Millenials 18-49 $50K +
TOTAL
Within 2 years
Department Store Grocery Store
Q: Do you currently expect any of the following to have key services or functions available by app?
Of those you did not select, do you expect any to provide key services or functions
available by app within the next 2 years?

The implications of failing to meet rising expectations
and changing behavior are dire
19
36
25 18 11
66
84
67 66 65
0
50
100
More Likely
Much More Likely
Q: How much more or less likely are you to shop at a store that offers an app
with a searchable product catalog, featured sales, and a store locator?

Digital leaders outperform market on KPIs
71
53
75
55
79
65
80
55
0
50
100
Outperformed a lot
Outperformed a little
Digital leaders, about 43% of all companies. Above average score deploying apps, using data analytics, and operating APIs today.
Digital laggards, about 57% of all companies. Below average score deploying apps, using data analytics, and operating APIs today.
Analysis of 1,321
companies from
3 Institute surveys
from April
2013, Sept. 2013
and January 2014
Across surveys of 1,321 large companies, we have found that companies who
outperform on big data analysis, API development, and app deployment
have seen report significantly better market returns.
Margin Market Share Gross Revenue Customer Satisfaction

The pattern holds true with retail interviews
71
53
75
55
79
65
75
55
0
50
100
Outperformed a lot
Outperformed a little
Analysis of 57
Retail companies
from 3 Institute
surveys
The retail data, while a smaller sample,
follows the same pattern as the rest of the marketplace.
Margin Market Share Gross Revenue Customer Satisfaction
Digital leaders, about 50% of all retailers. Above average score deploying apps, using data analytics, and operating APIs today.
Digital laggards, about 50% of all retailers. Below average score deploying apps, using data analytics, and operating APIs today.

Across the board, owners embrace smartphones and apps
with intense favorability
16
75
61
79
72
17 39
17
0
50
100
Aggregate Store
Favorability
Your Smart Phone Your Apps Smart Phones
Very Favorable
Favorable
Q: I'd like to rate your feelings toward some brands, people and things,
where 100 means you have a VERY WARM, FAVORABLE feeling, 0 means you have a
VERY COLD, UNFAVORABLE feeling, and 50 means you're not particularly warm or cold.

Apps are an influential engagement channel
67
90
50
100
Very favorable (75+) scores
of 10 well known large
national stores with apps
80 57
 Mean Favorability Score 
where 100 means you have a VERY WARM, FAVORABLE feeling, 0 means you have a VERY
COLD, UNFAVORABLE feeling, and 50 means you're not particularly warm or cold.
with apps without apps

Even for frequent shoppers, favorability is 5% higher
with who use the store’s app compared to those who do not
Very favorable (75+) scores
of 10 well known large
national stores with apps
 Mean Favorability Score 
where 100 means you have a VERY WARM, FAVORABLE feeling, 0 means you have a VERY
COLD, UNFAVORABLE feeling, and 50 means you're not particularly warm or cold.
77 74
25
50
50
100
84 80 61 52
Frequent Shoppers Infrequent Shoppers
with apps without apps with apps without apps

Top app users enthuse about benefits from their smartphone
including access, information, connectedness and ease
Q: In your own words, what has changed most in your life due to getting a smart phone?

Leverage mobile apps to drive action and build engagement
43 46
93
68
56
92
0
50
100
Watch City Council Session Provide comments or response to a
proposed project in your town
Report a pothole or other need for city
services
All Consumers
Top App Users
PercentageGrowth
In each case, being able to perform each action using a mobile app
significantly increased respondent’s stated likelihood of performing each action.

Place bets beyond table stakes
0 10 20 30 40 50 60 70 80
Top App Users
Consumers
Easily usable interface
A store-finder feature
Customer service access
The ability to buy items (delivery)
The ability to buy items (pick-up)
Seamless app/tablet/PC connection
Seamless app/in-store connection
An attractive design
Personalized services based on previous purchases
Connection to other apps
Percentwhoreportfeatureiscritical
Q: Thinking of retail store apps, please categorize the following feature in one of the
following buckets: Critical for any retail app, desirable, ambivalent, or undesirable

Achieving return on innovation requires strategic execution.
The beginning steps that must be forcefully executed are:
Business Alignment: portfolio / roadmap for digital products
Program Organization: platform roadmap to support product
strategy
Program Execution: mobilize platform and product teams to
deliver the roadmap

Changing How You Change
CHANGE
AGILITY
• Organization
• Product Management
• Architectures
• Timelines
• Marketing
• Markets
• Consumers
• Partners
• Offerings
• Satisfaction
After
CONTROL
RIGIDITY
Before
Culture
Result

Digital Value Creation
BRAND /
HALOS
BUSINESS /
CUSTOMER
PROCESSES
DIGITAL
PRODUCTS
User Experience (UX)
Revenue Generation
Vanity Apps

Customers
Partner
Developers
Internal
Developers
External
Developers
Digital Assets

Apps
APIs
Data
Digital Assets

Apps
Grow
APIs
Data
Digital Assets

API
Digital Assets

Marketing
Services
9%
Education
5%
Entertainment
15%
Publishing
10%
Financial
10%
Travel &
Hospitality
8%
Public Sector
8%
Transportation &
Logistics
13%
Healthcare
3%
Real Estate
2%
Retail
10%
Telco
7%
Source: ProgrammableWeb data 7-25-13
10,000 Open APIs
~ 4% of APIs are open
• Open
• Diverse
• Adaptive
• Comprehensiv
e
• Competitive
• Dynamic
• Iterative
• Easy to Use

Core
Enterprise
Assets
App
App
App
Partner
Partner
App
Partner
BusinessDemand
App
Time
App

Impact to cycle times and costs
“<Top 5 operator> expects that APIs can reduce its application
development cycle from 12 – 18 months to less than 6 months. Assuming
each API initiative is reused at least one more time in addition to the original
use, there’s an estimated $100 – 200M in IT capital cost savings in 2012
and over $500M by 2015.”
Telecommunications Technology Transformation Market Research 2013
Coding reduction
50,000
LOC
4,000
LOC
Onboarding
reduction
12
WEEKS
4
HOURS
Greater reach
5K
DEVS
150K
DEVS

end-to-end
solution
end-to-end
solution
Technology Platform
Consumption
exposes the core assets and
applications as a consistent externally
addressable system.
enables interaction with the
enterprise assets in a controlled
manner from any app or device
regardless of type or language.
provides leverage for development of
first-party end-to-end experiences
and
for deriving value from partners and
customers.
Silo Solutions
Compute Resources Compute Resources
Enterprise Assets
Digital
Asset
Finished
App
Partner
Finished
App
Customer
Finished
App
Digital
Asset
Exposure
TRADITIONAL ENABLED
Enable innovation by exposing digital assets

Digital Business Success Model
Digital
Business
Mission + strategy
Outcomes + KPIs
Governance
Digital ecosystems
Product lifecycle
APIs for products
Monetization
API lifecycle
Developers + partners
API Team
Style of API programs
Developer community
Developer support
Developer analytics
Logical architecture
API facades + policies
API analytics
Lifecycle support
BaaS and other services
Security + auditing
Infrastructure architectures
Performance + scale
Security + identity
Availability + continuity
Analytics + diagnostics
IT change management
Digital
Products
Developer
Ecosystem
API
Services
IT
Architecture
Context and insights
KPIs + metrics
Data science
Big data + fast data
Realtime consumer
Behavior
Insights
Executive
Workshop
Ecosystem
Package
Governance
Package

Example of an Enabled Organization
Field Service
Partner Business
Retail Business
Chief Digital Officer
API Team
CEO CIO
IT Core Systems
IT Integration
IT Platforms
App Development
Revenue, Ecosystem Speed, User Experience, Innovation Security, Reliability, Cost
App Development
App Development
App Development
Vision and Influence
ServiceService
Control
Control
Service
Control

Software
Engineers
Profile of an API Team
Operations
Solution
Architects
QA UX
API
Product
Manager
API
Designer
API
Gateway
Operations
Executive
Sponsor
Developer
Community
Manager
Partner
Support
Business
Liaisons
Technical skills for
API Team are similar
to that of a solid
web team
Strong software
product
management skills
Strong web-centric
data architecture
skills
In depth platform
expertise
Evolves into Chief
Digital Officer
Social, technical, ev
angelist
Internal
transformation and
development skills
Creative, hands-on
business
development skills

Context is key to understanding customers
Customer
Experience
Partner
Interactions
Enterprise
Services
Location Time Weather Habits Social Prior Purchases
Discounts Brand Affiliation Promotions Integration Logic
DeveloperUser APIApp API Team Backend

Deliver & Collect
analyze behavior across
digital channels
generate new class of data
Enrich
add relevant surround
data for context
internal and external
Adapt
optimal contextual
experience
real time

Deliver & Collect
analyze behavior across
digital channels
generate new class of data
Enrich
add relevant surround
data for context
internal and external
Adapt
optimal contextual
experience
real time
w/ APIs w/ Big Data
& Earned Data
w/ Predictive
Analytics
Digital
AssetsAPI
API
API
API

All New Businesses are built on APIs

Composite of New Revenue Channels

About the research
This report is based on two sources of data.
The information regarding the enterprise results is based on a database of 1,321 interviews amongst executives and
IT decision makers at companies with more than $500 million in annual revenue. The data is compiled from three
surveys: 200 interviews from an April 2013 survey, 321 interviews from a September-October 2013 survey and 800
interviews from a January 2014 survey. All three surveys were conducted online via verified double-opt-in panel.
The consumer data came from an Apigee Institute survey of 1,000 US smartphone owning adults conducted via a
verified double-opt-in panel. The survey was conducted November 26-30, 2013 and has a margin of error of +/- 3.1.
The demographics were weighed to match The Pew Research Internet Project’s October 2013 poll of smartphone
owners.

The Business of the Digital Ecosystem

Recommended

Recommended

More Related Content

What's hot

What's hot (19)

Similar to The Business of the Digital Ecosystem

Similar to The Business of the Digital Ecosystem (20)

More from Software Guru

More from Software Guru (20)

Recently uploaded

Recently uploaded (20)

The Business of the Digital Ecosystem

Editor's Notes