Special Feature
Part of a ZDNet Special Feature: Digital Transformation: A CXO's Guide

Democratization of innovation with application networks

Integration is one of the biggest challenges and opportunities facing CIOs today. Done right and even the largest and oldest organizations in the world can innovate like nimble startups. Done wrong and organizations will slow down to a permanent and devastating halt. Integration strategies today make or break companies.

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Integration is one of the biggest challenges and opportunities facing CIOs today. Done right and even the largest and oldest organizations in the world can innovate like nimble startups. Done wrong and organizations will slow down to a permanent and devastating halt. Integration strategies today make or break companies. 

While the vast majority of organizations (97%) are currently undertaking or plan to undertake digital transformation initiatives -- through technologies such as big data analytics, IoT, and artificial intelligence -- businesses still struggle to overcome the traditionally fragmented way of operating. 

In addition, 92% of IT organizations say integration needs to expand beyond IT to a wide range of business areas, from business analysts and data science to HR and marketing.

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92% of businesses report integration needs span beyond IT

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Another key finding from the 2019 Connectivity Benchmark Report, published by MuleSoft and Salesforce, is that the growing need for IT support has led to organizations needing to rely more on application programming interfaces (APIs) to deliver significant business outcomes. 

Ninety-one percent of organizations that own public and/or private APIs report greater productivity and decreased operational costs, among other benefits. For 36% of respondents, APIs also generate more than 25% of their organization's revenue. By creating reusable API assets, IT not only improves the efficiency of their processes but also increases overall delivery speed and capacity for the business.

I recently caught up with integration expert Ross Mason, who founded MuleSoft back in 2006 on the premise that connecting systems and applications together should be easy. MuleSoft's (now part of Salesforce) mission is to help organizations change and innovate faster by making it easy to connect the world's applications, data, and devices. Before MuleSoft, Ross worked with investment banks in Europe to connect hundreds of systems together and was struck by how woefully complicated and limited everything was. It's what spurred him into creating MuleSoft.

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Ross Mason, Founder of MuleSoft 

Below, I've captured key insights from Ross on how the IT landscape has evolved over the past 10 years, the strategic value of APIs, and his tips for CIOs looking to drive business transformation in the age of AI, open banking and everything-as-a-service. 

Q: How is the business landscape evolving? What's changed?

Ross Mason: Across the globe, every organization is feeling pressure from disruptors. With unlimited cloud compute power, free developer tools, and a growing bench of open APIs, the barrier to entry in every industry has evaporated. Startups can launch in a matter of weeks and completely change consumer expectations overnight. As a result, the pace of product introduction and innovation has accelerated from five to 10 years to one or two years. 

Trying to guess what the market wants when it's in a state of constant disruption is extremely difficult. Not to mention, competing with the speed of Amazon, Airbnb, and Uber is no easy feat for organizations still relying on 50-year-old legacy technology. MuleSoft's recent IT report found that "legacy infrastructure and systems" was the most frequently reported challenge to digital transformation and was listed as an obstacle to introducing new technologies like artificial intelligence (AI), big data and the internet of things (IoT).  

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IT decision makers are feeling the pain 

To move fast and thrive in today's hyper-competitive landscape, CIOs need to democratize innovation. In other words, CIOs need to unlock the value of their organizations' data and assets and empower broader teams to innovate freely with them. The killer of innovation is not legacy systems but a legacy mindset.

Q: As I understand it, APIs play a big role in that. Could you tell us more about why APIs are gaining so much traction and how they can help companies democratize innovation? 

RM: Taking a step back, organizations historically designed themselves as castles with moats, where no one got in or out easily. The valuable resources were only accessed by a small, trusted group (a.ka. IT). To be successful today, organizations need to decentralize and design for the broader villages in mind, where different groups can freely access data of value so they can self start and build up their own economies. 

Democratizing innovation really means unlocking base materials for people who are going to innovate on their own. Most enterprises have decades of valuable information and capabilities trapped in legacy systems, such as inventory and customer data. With APIs, IT leaders can open up that data and allow their broader villages to innovate independently. As a result, modern APIs have become building blocks for innovation today.

We've seen it work incredibly well on the World Wide Web. The iPhone is heralded as one of the key innovations of the 21st century. However, it wasn't the device itself that drove the iPhone's popularity. Rather, it was the applications on the iPhone. And those applications are all built on the common building blocks available on the Web today -- APIs. Because of APIs, apps like Uber and Lyft didn't need their own mapping systems or payment systems built. Instead, they leveraged Google and Stripe's open APIs.

 The point is that all these different capabilities can be stitched together with API building blocks to create new products and services quickly. This is where innovation comes from: Once you have some of the building blocks in place, you can start reusing them and driving innovation quickly and at scale.

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Q: It sounds like APIs can create a network effect?

RM: If an API strategy is set up right, it absolutely can have a network effect. A common mistake many organizations make is writing APIs as pieces of code that will get used once. With this approach, organizations will end up with a bunch of random, under-leveraged APIs. However, if APIs are treated as reusable products that get evangelized and if they are used to create new products and services, these APIs will grow into application networks -- which are networks of applications, data, and devices all connected via pluggable and reusable APIs. 

It's important to note that application networks are not built outright, and they are not products that can be bought and airlifted into place. They are iterative architectures that emerge project by project. As APIs are built, they start to get reused in future projects alongside a couple new ones that are needed for each new project. Because the APIs are discoverable and consumable, an API store begins to grow and gets leveraged by broader groups. For example, global aircraft manufacturer Airbus built a mobile application that shop floor operators can access to gain real-time visibility into parts and projects. 

Building a set of APIs, Airbus was able to unlock and aggregate data from its cloud and on-premises systems to power its mobile app, reducing time to market for a new aircraft. The same API strategy is being used to provide data to the wider aviation industry through Airbus and Palantir's open data platform Skywise. As a result, airline customers and industry partners can develop and deploy their own capabilities on top of this rich data to improve things like fleet operational reliability, aircraft performance, and maintenance effectiveness. 

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Airbus mobile app

In addition, Pilot Flying J -- the largest operator of travel centers and travel plazas in North America -- leverages an API strategy to connect valuable data from its complex legacy systems with its mobile app. Using the same APIs, Pilot Flying J can make its capabilities externalizable so trusted customers, and partners can integrate the capabilities into their own workflows for frictionless customer experiences. According to Pilot Flying J's chief strategy and information officer Mike Rodgers, "They just subscribe to the API and consume that data."

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Pilot Flying J mobile app

And that's the game-changer. Organizations that can turn their data and assets into discoverable and consumable building blocks for internal as well as external partners to build on top of level the playing field with disruptors. If organizations don't get to this point, then they're still functioning as moated castles without enabling their surrounding villages to innovate. And their castles will soon crumble as disruptive forces chisel away. 

This article was co-authored by Ross Mason, Founder of MuleSoft.