The Business of the Digital Ecosystem

The Business of the Digital Ecosystem

A Guide to Rapid Evolution in the Digital Economy

Proprietary MaterialCopyright 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 dayOver 100,000 developers in the communityHundreds of enterprise customers worldwide across all industriesOver 50% of world’s top 10 telcos and retailersThought leader with over 100 webcasts, e-books, white papers, courses


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

Total Top App Users

Millenials 18-49 $50K +0

50

100

1936

25 18 11

66

84

67 66 65TOTAL

More Likely


Mobile apps are a necessity now


Total Top App Users


50

100

1532

14 15 14

8192

78 79 79TOTALChanged how I do this

Q: How much has having a smart phone or tablet changed the way you shop?


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?


Total Top App Users


100

9099

90 89 89


Majority expect stores to have “key services and functions available by app” today, rising to two-thirds by 2015.

Total Top App Users

Millenials 18-49 $50K + Total Top App Users


50

100

52 5747 46 49 53

6749 47 47

67

81

69 64 64 6677

59 61 62

NowWithin 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

Total Top App Users


50

100

1936

25 18 11

66

84

67 66 65 TOTAL

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

0

50

100

71

53

75

55

79

65

80

55 TOTALOutperformed a lot

Digital leaders, about 43% of all companies. Above average score deploying apps, using data analytics, and operating APIs today. Digital laggards, about 57% of all companies. Below average score deploying apps, using data analytics, and operating APIs today.

Analysis of 1,321 companies from

3 Institute surveys from April 2013, Sept. 2013 and January 2014

Across surveys of 1,321 large companies, we have found that companies who outperform on big data analysis, API development, and app deployment

have seen report significantly better market returns.

Margin Market Share Gross Revenue Customer Satisfaction


The pattern holds true with retail interviews

0

50

100

71

53

75

55

79

6575

55TOTALOutperformed a lot

Analysis of 57 Retail companies

from 3 Institute surveys

The retail data, while a smaller sample, follows the same pattern as the rest of the marketplace.

Margin Market Share Gross Revenue Customer SatisfactionDigital leaders, about 50% of all retailers. Above average score deploying apps, using data analytics, and operating APIs today. Digital laggards, about 50% of all retailers. Below average score deploying apps, using data analytics, and operating APIs today.


Across the board, owners embrace smartphones and apps with intense favorability

Aggregate Store Favorability

Your Smart Phone Your Apps Smart Phones0

50

100

16

7561

79

72

17 3917

Very FavorableFavorable


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

0

50

100

67

9

Very favorable (75+) scores of 10 well known large

national stores with apps


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


Even for frequent shoppers, favorability is 5% higher with who use the store’s app compared to those who do not

Very favorable (75+) scores of 10 well known large

national stores with apps

Mean Favorability Score

Q: I'd like to rate your feelings toward some brands, people and things, where 100 means you have a VERY WARM, FAVORABLE feeling, 0 means you have a VERY COLD,

UNFAVORABLE feeling, and 50 means you're not particularly warm or cold.

0

50

100

77 74

255

84 80 61 52


Frequent Shoppers Infrequent Shopperswith 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

Watch City Council Session Provide comments or response to a proposed project in your town

Report a pothole or other need for city services

0

50

100

43 46

93

68

56

92

All Consumers

Top App Users


Perc

en

tage G

row

th

In each case, being able to perform each action using a mobile app significantly increased respondent’s stated likelihood of performing each action.


Place bets beyond table stakes

0 10 20 30 40 50 60 70 80

Top App UsersConsumers

Easily usable interface

A store-finder feature

Customer service access

The ability to buy items (delivery)

The ability to buy items (pick-up)

Seamless app/tablet/PC connection

Seamless app/in-store connection

An attractive design

Personalized services based on previous purchases

Connection to other apps

Percent who report feature is critical

Table St

akes

Small R

each

Innovation

Q: Thinking of retail store apps, please categorize the following feature in one of the following buckets: Critical for any retail app, desirable, ambivalent, or undesirable



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 /CUSTOMERPROCESSES

DIGITALPRODUCTS

User Experience (UX)

Revenue Generation

Vanity Apps


Customers

Partner Developer

s

Internal Developer

s

External Developer

s

Digital Assets


Apps

APIs

Data

Digital Assets


Apps

Grow

Acc

eler

ate

Engage

APIs

Data

Digital Assets


APIAPI

API

Digital Assets


Marketing Services9%

Education5%

Entertainment15%

Publishing10%

Financial11%

Travel & Hospitality8%

Public Sector8%

Transportation & Logistics

14%

Healthcare3%

Real Estate2%

Retail10%

Telco7%

Source: ProgrammableWeb data 7-25-13

10,000 Open APIs~ 4% of APIs are open

• Open• Diverse• Adaptive• Comprehensi

ve• Competitive• Dynamic• Iterative• Easy to Use


CoreEnterprise

Assets

AppApp

App

Partner

Partner

App

Partner

Busi

ness

Dem

and App

Time

API Lay

er

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 2013Coding reduction

50,000 LOC

4,000 LOC

Onboarding reduction

12WEEKS

4HOURS

Greater reach

5KDEVS

150KDEVS


end-to-end solution

end-to-end solution

Technology Platform

Consumption

exposes the core assets and applications as a consistent externally addressable system.

enables interaction with the enterprise assets in a controlled manner from any app or device regardless of type or language.

provides leverage for development of first-party end-to-end experiences and for deriving value from partners and customers.

Silo Solutions

Compute Resources Compute Resources

Enterprise Assets

DigitalAsset

FinishedApp

PartnerFinished

App

CustomerFinished

App

Digital Asset

Exposure

TRADITIONAL ENABLED

Enable innovation by exposing digital assets


Digital Business Success Model

Digital Business

Mission + strategyOutcomes + KPIsGovernanceDigital ecosystems

Product lifecycleAPIs for productsMonetizationAPI lifecycle

Developers + partnersAPI TeamStyle of API programs

Developer communityDeveloper supportDeveloper analytics

Logical architectureAPI facades + policiesAPI analytics

Lifecycle supportBaaS and other servicesSecurity + auditing

Infrastructure architecturesPerformance + scaleSecurity + identity

Availability + continuityAnalytics + diagnosticsIT change management

Digital Products

DeveloperEcosystem

API Services

IT Architecture

Context and insightsKPIs + metricsData science

Big data + fast dataRealtime consumer

BehaviorInsights

Exec

utive

W

orks

hop

Ecos

yste

m

Pack

age G

over

nanc

e Pa

ckag

e


Example of an Enabled Organization

Field Service

Partner Business

Retail Business

Chief Digital Officer

API Team

CEO CIO

IT Core Systems

IT Integration

IT Platforms

App Development

Revenue, Ecosystem Speed, User Experience, Innovation Security, Reliability, Cost

App Development

App Development

App Development

Vision and Influence

ServiceService

Cont

rol

Cont

rol

Serv

ice

Cont

rol


Software Engineers

Profile of an API Team

Operations

SolutionArchitects

QA UX

APIProduct Manager

APIDesigner

APIGatewayOperations

ExecutiveSponsor

DeveloperCommunityManager

PartnerSupport

BusinessLiaisons

Technical skills for API Team are similar to that of a solid web team

Strong software product management skills

Strong web-centric data architecture skills

In depth platform expertise

Evolves into Chief Digital Officer

Social, technical, evangelist

Internal transformation and development skills

Creative, hands-on business development skills


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 experiencereal 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 experiencereal time

w/ APIs w/ Big Data & Earned Data

w/ PredictiveAnalytics

Digital AssetsAP

I 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

Technology

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