The need for IT innovation takes on new urgency in the post-pandemic world, according to MuleSoft's 2021 Connectivity Benchmark report. MuleSoft, working in collaboration with Vanson Bourne and Deloitte Digital, produced these findings from interviews with 800 IT leaders across the globe. All respondents work at an enterprise organization in the public or private sector with at least 1,000 employees.
The executive summary of the 2021 connectivity benchmark report covers five distinct areas of interest for IT and CIOs.
- The need for IT innovation takes on new urgency in the post-pandemic world: The pandemic created a tipping point for IT. Business demands on IT increased as remote work replaced office norms, and the majority of IT teams failed to deliver on all project commitments. Today, IT is under tremendous pressure to transform in order to move faster. Just 37% of organizations say IT completed all the projects asked of them last year.
- The importance of integration continues to increase, but challenges persist: As digital transformation accelerates, integration has emerged as the critical factor in determining successful speed of digital transformation across industries. However, integration challenges are still slowing down such initiatives. Organizations continue to spend a great deal of IT time and money on custom integrations. The average enterprise spends approximately $3.5 million per.
- Data silos and legacy IT complicate integration: Data silos and existing IT infrastructure, including point-to-point integrations, make it difficult for organizations to become more agile. But, those who can transform see increased customer engagement and innovation, and improved project-delivery speed. Only 18% of organizations say they can integrate end-user experiences.
- Organizations are embracing APIs for new integration projects: The vast majority of organizations are using APIs, and many are generating significant revenue from them. However, API reuse remained flat in the last 12 months -- still a massive area of opportunity for most organizations. On average, organizations generate 27% of their revenue from APIs and related implementations.
- IT must meet growing integration demands of business teams: More organizations are deploying self-service tools to empower their business teams to integrate apps and data sources. Data scientists and projects focused on big data and analytics are a significant focus for the year ahead. Some 36% of organizations have a mature approach to API-led integration for non-technical business users and 44% are developing a strategy.
Previous Salesforce research highlighted the 8 digital transformation trends in 2021, strongly emphasizing the need for organizations to adopt a digital-first culture. Organizations are under greater pressure to digitize services quickly at scale to meet rising customer demands, scale innovation, and create new revenue channels. The connectivity benchmark report further expands on the growing pressure and demand on IT. The connectivity report found that only 37% of IT teams were able to complete all the projects asked of them in 2020, and are asked to complete 30% more projects in 2021. Democratization of innovation was another trend for 2021. Line of business users is trying to develop digital customer experiences faster. IT needs to drive cultural change by empowering the business to self-serve and deliver solutions quicker. To do this, IT organizations must develop and scale integration strategies and deliberately address legacy infrastructure impediments.
Here's a deeper look into the first two parts of the executive summary -- the growing demand for IT innovation and the importance of integration of scale innovation and business digital transformation.
The need for IT innovation takes on new urgency in the post-pandemic world
The report identifies key trends that speak to working from anywhere, pressure to innovate, and expanded volume of projects. Here are three key IT trends:
- This past year, organizations relied on IT to support a rapid shift to remote working. Day-to-day operational demands have always taken up a large chunk of IT's time, but the impact of the crisis seems to have increased this.
- IT teams are falling behind in completing all projects asked of them -- fewer than 4 in 10 IT teams fulfilled all of their project commitments to business stakeholders.
- IT is being asked to deliver on 30% more projects this year, while their budgets are only expected to grow by just under 6%. This ongoing trend has perpetuated the IT delivery gap at a time when organizations' survival hinges on IT.
4. The day-to-day still dominates IT. Even though organizations asked IT to do much more than "keep the lights on," the average IT team spent 68% of their time running day-to-day business activities. This remains virtually unchanged from the previous year (69%) and indicates the need to increase IT bandwidth for growth and innovation-led projects.
5. IT delivery continues to stall. The increased demand for IT and the failure of many organizations to adequately optimize day-to-day business activities caused IT teams to slip in the percentage of projects they were about to complete. Only 37% of IT teams were able to complete all the projects asked of them, compared to 41% the previous year. This is a clear indicator that current IT operating models are under considerable strain.
6. IT budgets are not growing in line with demand. Demands on IT are compounding. Organizations are increasing IT budgets, but not in line with the growing demands from the business. On average, IT budgets are only expected to increase by approximately 5.84% in 2021 (a slight increase from 5.62% in 2020). This is contributing to a widening IT delivery gap for many companies.
The importance of integration continues to increase, but challenges persist
Here are three key trends in the report regarding the importance of integration and ongoing challenges:
- In the past year, digital transformation has accelerated across industries. More (77%) respondents claim that failure to transform will impact revenue. Integration challenges continue to be a major roadblock for digital transformation initiatives.
- IT teams are spending over a third of their time on integration projects. The pandemic has put pressure on organizations to enhance connectivity between systems, applications, and data. However, this doesn't come cheap -- the average enterprise spends $3.5 million per year on integration-related IT labor costs.
- More organizations (69%) are taking a top-down approach to developing an integration and API strategy than last year. Still, in most organizations, less than a third (29%) of apps are currently integrated. This matters -- the average organization runs over 800 apps, each with an approximate lifespan of four years.
Digital transformation is critical to future revenues. Driving growth and streamlining operations through digital transformation became even more important this past year. Some 77% of respondents say failure to complete digital transformation projects will impact their revenue over the coming year, up from 74% in 2020. This is particularly clear in the financial services sector, which has seen a considerable consumer shift toward online and mobile services over the last 12 months. Here, 89% say revenues will be negatively affected.
For IT, integration challenges continue to persist. Unfortunately, integration issues continue to slow down digital transformation initiatives for the vast majority (87%) of organizations. This issue has gotten worse over the last few years. Integration also takes time. In today's digital-centric world, organizations must connect their systems, applications, and data. This is resulting in IT teams spending over a third (36%) of their time designing, building, and testing custom integrations. And time is money. Custom integration work isn't cheap. It takes up a significant amount of time, especially for those with many point-to-point connections to manage. This also translates into a substantial financial outlay: Roughly $3.5 million in IT labor per year in large enterprises.
The cost and time benefits of integration mean that integration strategy is being led from the top. According to the report: Integration is something organizations know they must get right. More (69%) organizations are taking a top-down approach to developing an integration and API strategy. The real challenge is that organizations have hundreds of apps to manage. Having a clear integration strategy is essential, especially when the average organization runs 843 individual applications (this rises to 901 in financial services). The report found that only 29% of applications on average are integrated, up slightly from 2020 (28%). With the average lifetime of an application being just four years, organizations must evolve away from being hierarchical and hardwired toward being flexible and open to change -- a composable enterprise.
Here are some additional findings from other key trends in the report:
Data silos: Data silos (90%) and existing IT infrastructure (60%) make it difficult for organizations to integrate new technologies and make changes to IT systems and applications.
User experience across multiple channels: Only 18% of organizations have integrated end-user experiences across all channels. Those that do see increased customer engagement (53%), business transformation (53%), and innovation (50%).
Customer experience: More than half (59%) of business users think their organization's inability to connect systems, applications, and data will hurt customer experience.
Legacy infrastructure: 60% of organizations claim it's difficult to integrate new technologies because of existing IT infrastructure. This is even higher in healthcare (70%) and insurance (68%).
The biggest challenge for digital transformation: Legacy IT infrastructure hinders many digital initiatives -- 34% of organizations claim that legacy IT infrastructure and systems are the main challenges to digital transformation.
API adoption: The vast majority (96%) of organizations use APIs. Most are using APIs to build integrations and deliver new projects.
Speed to value via APIs: Speed and efficiency are critical in the application development process. More organizations are turning to DevOps (47%) and leveraging APIs (46%) to improve the process.
Business benefits of APIs: Organizations leveraging APIs experience increased productivity (59%), self-service (48%), and increased innovation (46%). Business benefits also include a decrease in operational costs, increased employee engagement, and revenue growth (28%). On average, organizations that use APIs generate over a quarter (27%) of their revenue from those APIs and related implementations.
The report concludes by guiding IT to meet the growing integration demands of the business. To do this, IT must enable more non-technical users to need integration support. The report also suggests that data is a key focus for integration. Among the roles with the greatest integration needs, data scientists came out top (47% compared to 38% last year). Data is at the heart of invest plans. After cloud (57%) and security (53%) projects, top investment priorities for enterprises in 2021 are data analytics (45%) and big data integration (43%). This further highlights how data-focused business users and initiatives are prime candidates for integration support.
Recommendations for IT leaders
- Promote integration everywhere with easy-to-use tools
- Manage and monitor API projects
- Focus on reusable APIs to drive revenue and innovation
- Don't forget security
The MuleSoft 2021 connectivity benchmark report is quite extensive with number of use cases and additional IT and business-related performance metrics that will clearly impact IT leaders in world post-pandemic. To learn more about the report, you can go here.