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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,...
Proprietary Material
Copyright Apigee 2014
Apigee leads enterprises in transition to digital world
The leader in API techn...
Proprietary Material
Copyright Apigee 2014
Proprietary Material
Copyright Apigee 2014
Global Digital Ecosystem
US Digital Ecosystem Mexico Digital Ecosystem
Proprietary Material
Copyright Apigee 2014
Two-thirds of the 140 million U.S. adults with smartphones
state they are more ...
Proprietary Material
Copyright Apigee 2014
Mobile apps are a necessity now
Source: Apigee Institute Survey of 1,000 US Sma...
Proprietary Material
Copyright Apigee 2014
Nine out of ten smartphone users expect mobile
to have changed their shopping b...
Proprietary Material
Copyright Apigee 2014
Majority expect stores to have “key services and functions
available by app” to...
Proprietary Material
Copyright Apigee 2014
The implications of failing to meet rising expectations
and changing behavior a...
Proprietary Material
Copyright Apigee 2014
Digital leaders outperform market on KPIs
71
53
75
55
79
65
80
55
0
50
100
Outp...
Proprietary Material
Copyright Apigee 2014
The pattern holds true with retail interviews
71
53
75
55
79
65
75
55
0
50
100
...
Proprietary Material
Copyright Apigee 2014
Across the board, owners embrace smartphones and apps
with intense favorability...
Proprietary Material
Copyright Apigee 2014
Apps are an influential engagement channel
67
90
50
100
Very favorable (75+) sc...
Proprietary Material
Copyright Apigee 2014
Even for frequent shoppers, favorability is 5% higher
with who use the store’s ...
Proprietary Material
Copyright Apigee 2014
Top app users enthuse about benefits from their smartphone
including access, in...
Proprietary Material
Copyright Apigee 2014
Leverage mobile apps to drive action and build engagement
43 46
93
68
56
92
0
5...
Proprietary Material
Copyright Apigee 2014
Place bets beyond table stakes
0 10 20 30 40 50 60 70 80
Top App Users
Consumer...
Proprietary Material
Copyright Apigee 2014
Achieving return on innovation requires strategic execution.
The beginning step...
Proprietary Material
Copyright Apigee 2014
Changing How You Change
CHANGE
AGILITY
• Organization
• Product Management
• Ar...
Proprietary Material
Copyright Apigee 2014
Digital Value Creation
BRAND /
HALOS
BUSINESS /
CUSTOMER
PROCESSES
DIGITAL
PROD...
Proprietary Material
Copyright Apigee 2014
Customers
Partner
Developers
Internal
Developers
External
Developers
Digital As...
Proprietary Material
Copyright Apigee 2014
Apps
APIs
Data
Digital Assets
Proprietary Material
Copyright Apigee 2014
Apps
Grow
APIs
Data
Digital Assets
Proprietary Material
Copyright Apigee 2014
API
Digital Assets
Proprietary Material
Copyright Apigee 2014
Marketing
Services
9%
Education
5%
Entertainment
15%
Publishing
10%
Financial
1...
Proprietary Material
Copyright Apigee 2014
Core
Enterprise
Assets
App
App
App
Partner
Partner
App
Partner
BusinessDemand
A...
Proprietary Material
Copyright Apigee 2014
Impact to cycle times and costs
“<Top 5 operator> expects that APIs can reduce ...
Proprietary Material
Copyright Apigee 2014
end-to-end
solution
end-to-end
solution
Technology Platform
Consumption
exposes...
Proprietary Material
Copyright Apigee 2014
Digital Business Success Model
Digital
Business
Mission + strategy
Outcomes + K...
Proprietary Material
Copyright Apigee 2014
Example of an Enabled Organization
Field Service
Partner Business
Retail Busine...
Proprietary Material
Copyright Apigee 2014
Software
Engineers
Profile of an API Team
Operations
Solution
Architects
QA UX
...
Proprietary Material
Copyright Apigee 2014
Context is key to understanding customers
Customer
Experience
Partner
Interacti...
Proprietary Material
Copyright Apigee 2014
Deliver & Collect
analyze behavior across
digital channels
generate new class o...
Proprietary Material
Copyright Apigee 2014
Deliver & Collect
analyze behavior across
digital channels
generate new class o...
Proprietary Material
Copyright Apigee 2014
All New Businesses are built on APIs
Proprietary Material
Copyright Apigee 2014
Composite of New Revenue Channels
Proprietary Material
Copyright Apigee 2014
About the research
This report is based on two sources of data.
The information...
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The Business of the Digital Ecosystem

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Presented by Michael Leppitsch from Apigee during Mobile Day Mexico 2014.

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The Business of the Digital Ecosystem

  1. 1. The Business of the Digital Ecosystem A Guide to Rapid Evolution in the Digital Economy
  2. 2. Proprietary Material Copyright Apigee 2014 All industries are in the process of a major transformation to software-driven, digital businesses.
  3. 3. Proprietary Material Copyright Apigee 2014 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
  4. 4. Proprietary Material Copyright Apigee 2014
  5. 5. Proprietary Material Copyright Apigee 2014 Global Digital Ecosystem US Digital Ecosystem Mexico Digital Ecosystem
  6. 6. Proprietary Material Copyright Apigee 2014 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
  7. 7. Proprietary Material Copyright Apigee 2014 Mobile apps are a necessity now Source: Apigee Institute Survey of 1,000 US Smartphone owners, November 26-30, 2013; margin of error +/- 3.1 15 32 14 15 14 81 92 78 79 79 0 50 100 Total Top App Users Millenials 18-49 $50K + 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?
  8. 8. Proprietary Material Copyright Apigee 2014 Nine out of ten smartphone users expect mobile to have changed their shopping behavior by 2015. Q: Thinking of the next two years, how much do you expect smart phones, tables, and apps to change how you shop? Source: Apigee Institute Survey of 1,000 US Smartphone owners, November 26-30, 2013; margin of error +/- 3.1 90 99 90 89 89 50 100 Total Top App Users Millenials 18-49 $50K +
  9. 9. Proprietary Material Copyright Apigee 2014 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 Source: Apigee Institute Survey of 1,000 US Smartphone owners, November 26-30, 2013; margin of error +/- 3.1 Department Store Grocery Store Q: Do you currently expect any of the following to have key services or functions available by app? Of those you did not select, do you expect any to provide key services or functions available by app within the next 2 years?
  10. 10. Proprietary Material Copyright Apigee 2014 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 Total Top App Users Millenials 18-49 $50K + More Likely Much More Likely Source: Apigee Institute Survey of 1,000 US Smartphone owners, November 26-30, 2013; margin of error +/- 3.1 Q: How much more or less likely are you to shop at a store that offers an app with a searchable product catalog, featured sales, and a store locator?
  11. 11. Proprietary Material Copyright Apigee 2014 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
  12. 12. Proprietary Material Copyright Apigee 2014 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.
  13. 13. Proprietary Material Copyright Apigee 2014 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 Source: Apigee Institute Survey of 1,000 US Smartphone owners, November 26-30, 2013; margin of error +/- 3.1 Q: I'd like to rate your feelings toward some brands, people and things, where 100 means you have a VERY WARM, FAVORABLE feeling, 0 means you have a VERY COLD, UNFAVORABLE feeling, and 50 means you're not particularly warm or cold.
  14. 14. Proprietary Material Copyright Apigee 2014 Apps are an influential engagement channel 67 90 50 100 Very favorable (75+) scores of 10 well known large national stores with apps Source: Apigee Institute Survey of 1,000 US Smartphone owners, November 26-30, 2013; margin of error +/- 3.1 80 57  Mean Favorability Score  Q: I'd like to rate your feelings toward some brands, people and things, where 100 means you have a VERY WARM, FAVORABLE feeling, 0 means you have a VERY COLD, UNFAVORABLE feeling, and 50 means you're not particularly warm or cold. with apps without apps
  15. 15. Proprietary Material Copyright Apigee 2014 Even for frequent shoppers, favorability is 5% higher with who use the store’s app compared to those who do not Very favorable (75+) scores of 10 well known large national stores with apps  Mean Favorability Score  Q: I'd like to rate your feelings toward some brands, people and things, where 100 means you have a VERY WARM, FAVORABLE feeling, 0 means you have a VERY COLD, UNFAVORABLE feeling, and 50 means you're not particularly warm or cold. 77 74 25 50 50 100 84 80 61 52 Source: Apigee Institute Survey of 1,000 US Smartphone owners, November 26-30, 2013; margin of error +/- 3.1 Frequent Shoppers Infrequent Shoppers with apps without apps with apps without apps
  16. 16. Proprietary Material Copyright Apigee 2014 Top app users enthuse about benefits from their smartphone including access, information, connectedness and ease Source: Apigee Institute Survey of 1,000 US Smartphone owners, November 26-30, 2013; margin of error +/- 3.1 Q: In your own words, what has changed most in your life due to getting a smart phone?
  17. 17. Proprietary Material Copyright Apigee 2014 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 Source: Apigee Institute Survey of 1,000 US Smartphone owners, November 26-30, 2013; margin of error +/- 3.1 PercentageGrowth In each case, being able to perform each action using a mobile app significantly increased respondent’s stated likelihood of performing each action.
  18. 18. Proprietary Material Copyright Apigee 2014 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 Source: Apigee Institute Survey of 1,000 US Smartphone owners, November 26-30, 2013; margin of error +/- 3.1
  19. 19. Proprietary Material Copyright Apigee 2014 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
  20. 20. Proprietary Material Copyright Apigee 2014 Changing How You Change CHANGE AGILITY • Organization • Product Management • Architectures • Timelines • Marketing • Markets • Consumers • Partners • Offerings • Satisfaction After CONTROL RIGIDITY Before Culture Result
  21. 21. Proprietary Material Copyright Apigee 2014 Digital Value Creation BRAND / HALOS BUSINESS / CUSTOMER PROCESSES DIGITAL PRODUCTS User Experience (UX) Revenue Generation Vanity Apps
  22. 22. Proprietary Material Copyright Apigee 2014 Customers Partner Developers Internal Developers External Developers Digital Assets
  23. 23. Proprietary Material Copyright Apigee 2014 Apps APIs Data Digital Assets
  24. 24. Proprietary Material Copyright Apigee 2014 Apps Grow APIs Data Digital Assets
  25. 25. Proprietary Material Copyright Apigee 2014 API Digital Assets
  26. 26. Proprietary Material Copyright Apigee 2014 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
  27. 27. Proprietary Material Copyright Apigee 2014 Core Enterprise Assets App App App Partner Partner App Partner BusinessDemand App Time App
  28. 28. Proprietary Material Copyright Apigee 2014 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
  29. 29. Proprietary Material Copyright Apigee 2014 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
  30. 30. Proprietary Material Copyright Apigee 2014 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
  31. 31. Proprietary Material Copyright Apigee 2014 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
  32. 32. Proprietary Material Copyright Apigee 2014 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
  33. 33. Proprietary Material Copyright Apigee 2014 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
  34. 34. Proprietary Material Copyright Apigee 2014 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
  35. 35. Proprietary Material Copyright Apigee 2014 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
  36. 36. Proprietary Material Copyright Apigee 2014 All New Businesses are built on APIs
  37. 37. Proprietary Material Copyright Apigee 2014 Composite of New Revenue Channels
  38. 38. Proprietary Material Copyright Apigee 2014 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.

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