Starting Digital Transformation on the Right Path: 5 Best Practices
Digital transformation is an imperative because IT is no longer merely the keeper of infrastructure; it’s a core enabler of new strategies and a core catalyst for growth.
Legacy architectures and traditional systems integration techniques can’t meet the pace of modern business, so true transformation doesn’t come from mobile apps, e-commerce or websites — it comes from adopting architectures and operational models that support agile development, enabling companies to combine and recombine software to create new customer experiences and business opportunities, and to constantly iterate to satisfy changing customer preferences.
Consider Ticketmaster’s* transformation, which my colleague Brian Kirschner recently described in an article for CIO.com:
Ticketmaster has been online for a long time — but until recently, its interactions with customers were funneled through relatively limited channels. Going online gave Ticketmaster scale beyond physical ticket booths, but its business still essentially operated according to old models of supply and demand. The company was bearing the cost of building channels — whether those were booths, websites or apps — and the cost of marketing and promotion to drive customers to them.
That’s no longer the case. Ticketmaster established an API platform to make its core business services, such as ticket purchasing and event discovery, more easily available for partners — which now include Facebook, Broadway.com, Costco and Fox Sports. By converting its business into pieces of software that developers — including those beyond the walls of the firm — can easily build into apps and services, Ticketmaster benefits from demand generated by third parties and transactions fulfilled in channels it didn’t have to build.
Apigee works with hundreds of enterprises on these sorts of transformations, and we’ve observed that though no two companies follow the same journey, businesses fall into patterns that make it possible to prioritize action steps and leverage best practices. In this article, we’ll focus on best practices for companies at the beginning of their journeys, as they move from digital projects to full platform and continuous delivery capabilities.
1. Build a case for the business value of APIs
The digital economy has moved beyond smartphone apps and e-commerce. Customers expect seamless experiences — i.e., that interactions begun in one place, whether an app or a website, will be reflected in other places, such as physical stores or other apps. Sophisticated businesses no longer focus exclusively on producing a finite supply of products and selling them through a finite range of channels — they also use technology and platform strategies to mediate the exchange of value wherever it can be consumed.
AccuWeather* doesn’t just provide weather data on a first-party website, for example — it makes its weather data available via APIs so developers can build it into their own apps. Likewise, Walgreens* doesn’t just offer services such as photo printing and prescription fulfillment through stores and other first-party channels — it makes these services available as APIs. There are literally thousands of examples like this, in which companies use infinitely scalable digital assets for strategic leverage.
- Align senior business and technology leaders around an API-first platform vision: Modern businesses are agile, using APIs to combine and recombine their software in order to bring new capabilities to market, expand ecosystem participation, capitalize on short-lived opportunities, and quickly adapt to changing customer needs and market conditions.
- Emphasize that APIs are not technical minutiae or middleware; they are products that empower developers to leverage core systems and functions to build apps and digital experiences.
2. Fund API projects as a step toward platform strategies
An effective API platform typically requires a funding model that gives teams the flexibility to iterate rapidly without running into bureaucratic blockers and stifling governance. This sort of funding may require top-down support, and building the requisite executive consensus can be a challenge.
Put another way, if your funding model, development cadence, and governance processes are designed for a waterfall world, your API program will likely struggle to gain momentum. Project-to-project funding is generally not tenable in the long run, but as a starting place, single projects can be a good way to generate success and build the credibility needed to align executives around the API platform’s growth. These early projects should focus on building APIs as products — i.e., designed for developer consumption, not just to expose systems. Even if the initial scope of these APIs is modest, they can become references to driver wider platform adoption.
- Start now by explicitly funding the API components of a significant in-flight or imminent project. Good candidates include partner integrations or web, mobile or IoT functionality projects. Such projects initially involve exposing systems — but to demonstrate a path to broader digital business, your teams should think bigger. If the team applies user-focused, outside-in strategies and designs and manages its APIs as products, the APIs should become a foundation for shifting the rest of the business to platform strategies.
3. Unite business and technical talent
Top businesses generally operate from the outside-in, using a customer focus — rather than IT roadmaps — to define strategies. To achieve this dynamic, business and technology workers should develop digital strategies collaboratively.
IT isn’t just responsible for maintaining infrastructure, in other words — it’s the core enabler of new business models. APIs shouldn’t be built in silos, with business teams dictating requirements and simply handing them off to IT.
- Have technical and business talent jointly define desired customer experiences, then move to required product features.
4. Challenge Existing Business Models
Digital ecosystem participation is an increasingly popular digital transformation accelerant. Enterprises can participate in ecosystems by packaging business systems and services into API products that provide value to partners and external developers. To take advantage of these opportunities, executives must remain open to new business models that may emerge as ecosystem participants in other industries begin to leverage the company’s APIs.
Successful digital businesses can benefit from network effects as users and partners gained in one part of an ecosystem translate to new users and partners elsewhere. Apigee customers have pursued API-first ecosystem models to enter adjacent markets, create new customer interaction models,and rapidly grow their brand reach and partner ecosystems.
- Design APIs that are easy for partners to consume. Manage the APIs as products that developers can leverage at scale to extend your brand. Set clear permissions for faster, more secure onboarding, and encourage adoption with self-service features, including documentation, sample code, and testing tools.
5. Measure How APIs Are Consumed
API consumption metrics help enterprises align their workforces around digital best practices, understand changing user behavior, and drive business results. Traditional enterprise ROI metrics assume certain conditions — e.g., long payback periods and predictable patterns around transaction volume and pricing strength. Modern digital business operates under different conditions, such as shorter opportunity windows and more fragmented customer segments, that require different metrics.
API consumption metrics, such as which APIs product the highest-value transactions per call or which APIs generate the highest partner engagement, can be strong signals of emerging business opportunities, for example. Arbitrary metrics, such as the number of APIs produced, don’t provide this kind of insight.
- Use API consumption metrics to understand how digital initiatives lead to business impacts.
- Ticketmaster, AccuWeather, and Walgreens are Apigee customers.
[Looking for more insights about digital transformation? Check out Apigee’s resource hub here.]