69 Percent of IT Leaders Keep the Lights On Instead of Innovating. Enter APIs.

Responding to a question regarding their ability to innovate on behalf of the organizations they work for, 69 percent of IT leaders surveyed said they felt they were working just to keep the lights on versus innovating. This was the answer to one of many questions that MuleSoft posed to over 800 IT leaders, the complete results of which can be found in the 2020 edition of the company's annual Connectivity Benchmark Report.

One of the key challenges facing many IT leaders has to do with how the business side of their organizations is asking for more digital innovation without a commensurate increase in budget. With existing budgets largely allocated to activities that “keep the lights on,” there isn’t a lot of funding left to experiment with new approaches, risk entry into new speculative digital channels, or otherwise drive the sort of game-changing innovation that separates market leaders from the also-rans. But for organizations that understand how efficiencies gained through the reusability of holistically conceived APIs, there could also be some budget relief as well. 

That was one of the key summaries of the report put forth by MuleSoft Director of Solutions Engineering Ani Pandit in an interview with ProgrammableWeb. The interview, a ProgrammableWeb Developers Rock Podcast, is available below in video, audio-only, and full-text transcript forms. 

“80 percent of IT decision makers in this report suggested that Integration and API strategies were very key to their transformation success. Well, there are two things that are very critical for this” said Pandit. "One is building a culture of self-service, and building reuse into that strategy. As long as you do those two things, I would definitely see a lot more acceleration in terms of innovation. Because when I see just the organizations who are using these two tenets as key constituents of their API strategy, we are seeing 67 percent more productivity in these organizations. And that is just the anecdotal data coming out of this benchmark this year.”

In the interview, Pandit refers to the type of singularity in end-to-end customer experiences that all organizations should aspire to across their web, mobile, brick-n-mortar and other customer touch points. To prove his point, he gave an example of a recent purchase he made where that sort of frictionless experience was lacking across all the channels he touched in the course of investigating, purchasing, taking delivery of, and eventually using a tennis ball machine. “[Companies] want to deliver a very linear experience in the sense that the customer doesn't feel that they are working in isolation, or working in silos with different parts of the business” Pandit said.

According to Pandit, delivering that optimal experience to the customer depends on how well the individual systems behind those silos can be integrated with one another (the sort of integration where APIs are the key enablers). Furthermore, once great progress is made in terms of integrating those systems, a 360-degree view of the customers will start to take shape, which in turn allows an organization to maintain a much more personal, timely, and ultimately profitable partnership with those customers.

However, another sobering fact revealed by MuleSoft’s report is how, across the organizations surveyed, only 28 percent of silo’d systems have been integrated in some way so far. In other words, there’s a lot of work to do — potentially the other 72 percent — before many organizations can achieve full Digital Transformation. In other words, if you understand the need to integrate but feel like you’re running behind, you’re not alone. According to the report, 92 percent of the respondents have understand the urgency and have recognized that digital transformation is now a strategic imperative.

For more on what Pandit had to say about the survey and the progress that organizations are making against their digital transformation objectives, be sure to watch, listen to, or read the interview below.

Disclosure: MuleSoft is the parent company to ProgrammableWeb. ProgrammableWeb is committed to the fair and objective coverage of companies, products, and trends from across the API economy.

Video of Interview with Mulesoft Director of Solutions Engineering Ani Pandit

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Audio-Only Version

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Full-text Transcript of Interview with Mulesoft Director of Solutions Engineering Ani Pandit

(00:29) David Berlind: Hi, I'm David Berlind, Editor in Chief of ProgrammableWeb. Today is Tuesday, March 17th, 2020, and this is ProgrammableWeb's Developers Rock podcast. With me today is Ani Pandit. He is the Director of Solutions Engineering at MuleSoft, and MuleSoft has just released their new connectivity benchmark report. We want to dig into that, but first Ani, thanks very much for being here on the show.

(00:55) Ani Pandit: Thanks David for having me over.

(00:57) David: It's great to have you.

(00:58) Ani: Second year in a row now.

(00:59) David: Second year in a row. That's right. We caught up on this connectivity benchmark report that you guys did last year. The first question I want to ask you, though, is for those people who don't know what MuleSoft is, what is MuleSoft?

(01:12) Ani: All right, let's start there. So MuleSoft provides a Platform that necessarily helps companies achieve their digital transformation initiatives, and we do that by helping them easily create connected experiences for their customers, their employees, or partners. And we do that by helping them easily connect all their business systems, their data silos and devices, IoT devices, by means of APIs. And our platform helped these companies streamline API and integration life cycle and help them strategically stand up API programs that help them build these integrations and connected experiences faster.

(01:59) David: What's an example of a connected experience?

(02:01) Ani: So I'll use something that most people would relate to is when they go online and they search for a product or a service, right? For example, recently I was looking for a tennis ball machine online. I went to Google, said "Hey, which are the best tennis ball machines?"" And then it gave me 10 different products. And from there I went to Amazon, I looked at that product, looked at the reviews, went to Yelp, looked that one up. And then went to our local store that had the device there and talked to the people over there. And then I went back online to the company's website, and through their eCommerce platform I actually bought it. So a couple of days later I realized that the device was not shipped to me. So what I did was I called in the call center to find out where my order was and they expedited that shipment.

(03:05) I got it, and I started using it. So when you think about this journey of a consumer, in this case myself, interacting with this brand across many, many different channels from the time where I'm researching the product to experiencing the product, to going and buying and paying for the product, and then even getting after-purchase support from the vendor. That's the experience we're talking about. And a lot of customers, when they say "connected experiences", they want to deliver a very linear experience in the sense that the customer doesn't feel that they are working in isolation, or working in silos with different parts of the business. Where they have a unique experience with the brand and a consistent experience with the brand as they move through that customer journey.

(04:04) David: So when you connect these siloed systems behind the scenes, it allows you to create something that's much more seamless and frictionless from the beginning to the end of the journey. Is that what you're saying?

(04:15) Ani: Exactly. Like typically you would imagine most organizations on average have close to 900 to 1,000 applications. And when you think about our typical customer experience, it spans around 35 to 37 different systems where information and data are being collected. So if you think about delivering a consistent linear and a unique experience to that particular customer, you're thinking about integrating and connecting all of these 35, 37 different systems to deliver that consistent experience to the customer. So, you're absolutely right David, it's all about getting the connectivity of your platforms and your data to deliver that unique customer journey for your constituents.

(05:10) David: Well you just mentioned that there are like 900 applications at these organizations, and that is the data that I also saw when I previewed this connectivity benchmark report, that there's somewhere between 900 and a thousand applications at these companies. But something else I saw in the report was that somewhere around only 28 percent of companies actually had these applications integrated with each other (Editor's Note: the report indicated that, across those surveyed, only 28 percent of applications were integrated). And you're talking about how important this is to create the sort of 360 degree view of the customer. Well if only 28 percent have them integrated, that doesn't speak well of the other 72 percent. Is that something that's changing at all from year to year? You did this report last year and I think the data was pretty much the same.

(05:52) Ani: Yeah, that's a great observation. It's remained pretty flat year over year. And my assessment of this is a few things. First of all, as I've been talking to a lot of leaders across the board in different industries, and a common thread of what they are seeing is they've been retiring a lot of applications — legacy ones, some that are not useful as their businesses have evolved. But on the other side they have accelerated bringing in newer business functionality that enables them to be more competitive in the business. So with that, what's happened is there's more and more demand in terms of building these connected experiences for their IT team. Even though there has been some progress in modernizing older systems, but the whole increase in number of applications that the business is adopting statistically doesn't show a marked improvement in terms of integrated applications as such.

(07:06) David: Now you're talking a little bit about making these changes and digitally transforming internally. Another data point that I saw had to do with the number of organizations that are looking at integration as a means of solving internal problems, but may not be necessarily looking outward. This idea of operating in two different modes, sometimes people call it two-speed IT. I don't think the report refers to it that way, but what's happening on that front? Are organizations seeing the connection between operating in those two different modes and something like improved efficiency overall better, better efficiency than their competitors, or better revenues than their competitors?

(07:47) Ani: This is a great question, because it talks to some business strategies, right? Certain organizations are primarily focused on delivering the right experience, but they are thinking about delivering that by driving internal efficiencies. And that helps them improve margins as part of their customer interaction. And there are certain set of customers who are thinking about, "Hey we need to grow our top line revenue and show growth in terms of introducing new products and services, and deliver those products and services to these new experiences." So that those two strategies talk to where we are seeing the industry or most of our customers drive these strategies and on modernization.

(08:37) Ani: So when we think about driving internal efficiencies, we are looking at customers and companies that are taking APIs and taking these modern strategies to drive better automation of their business processes where they can integrate these systems to deliver these experiences. And this includes a Legacy Modernization where access to say a mainframe, or a legacy database, and custom applications on the back end are being driven through modern age APIs, and their core focus in that first phase of transformation is to drive accessibility to these legacy systems and be able to have the data that had been locked into these applications over many years in these organizations. So that's one aspect, which is the majority of companies that were surveyed in this report, which they talked about.

(09:41) David: And of course you're talking about, when you talk about taking a system like a mainframe and modernizing it, fronting it with APIs, we're literally talking about that's one of those 900 systems that needs to be integrated with something else, which may not be a legacy system. It may be a modern system, but at the end of the day, whether it's new or old, these are those 900 systems that have to be pulled together to create those connected customer experiences you're talking about.

(10:06) Ani: Exactly. I'll give an example just to illustrate. Even though this is one of the systems, they become really core to some of the businesses, like for example, I was working with one of the largest banks in Europe, on one of their open banking initiatives in primarily their entire credit card services and core banking system is running on a mainframe. So pretty much 90 percent of what they do in that particular line of business is driven through mainframe. And as part of their business project they were trying to build a newer customer experience with an application that would help their credit card customers become much more better at spending money and driving points and loyalty with the bank. So they wanted to create a mobile app. Now think about the impedance mismatch between the experience you're trying to drive in a modern mobile app, and the green screen data that you're seeing in a mainframe, right? And that's where APIs come in handy, where these types of companies are using APIs to modernize and bridge that impedance between a modern engagement layer and legacy data.

(11:30) David: Right. So getting that information that's typically viewed on a green screen and moving it into a really slick mobile Front-end that customers can use on their smartphone.

(11:39) Ani: That's right. And that becomes a foundation for them to unlock this information from their mainframes into other applications as well, going forward. So setting that foundation has been a core focus for a lot of the companies that were surveyed in this particular benchmark report.

(11:58) David: And there, I think you're talking about the reusability. Once you've got an API that's open for access to, let's say the new mobile app, you can reuse that API in some other innovative way.

(12:09) Ani: Yeah. So this is a good point you're making. That is the hope, that when people are driving these strategies, one thing that came out of this benchmark report was 80 percent of IT leaders identified that APIs were super critical for them to drive this digital transformation. But also a lot of them also reported that they were not necessarily building APIs that were reusable. So, this is where I see an opportunity for a lot of organizations to start thinking more strategically in how they build building blocks, which are these APIs, that can become more reusable, that help them accelerate the speed of a newer initiatives and newer projects down the road. And this is one way where they can change the clock speed of their organization where rather than starting from scratch, by reusing some of these frameworks, they are basically accelerating their ability to deliver these new initiatives.

(13:19) David: Yeah. So I think what you're getting at is that organizations have to include more stakeholders in the API strategy conversation. Like, "Hey, is this API going to be reusable and in multiple places? If not, what do we have to do to make it that way so that it serves the entire organization and not just one application?" Because if you end up with sort of a one-to-one relationship between the final API and some application and it doesn't get reused, you're losing out on a whole bunch of potential efficiency.

(13:51) Ani: Exactly. In my observation I've seen two or three different types of approaches just to add a little more color to what you just summarized there, which is a very important point. A lot of organizations last year did recognize that APIs were extremely critical for them to deliver these integrations and connected experiences, whether it was for an internal audience or an external audience, but how they went about doing it, the data in this report shows a very marked difference. There are certain organizations that took an API strategy much more isolated from the rest of the organization. It was very project focused, and not necessarily as a strategy that was holistic. And in some instances they were strategies that were only line of business focused, and they did see some efficiencies and benefits out of that.

(14:56) And there were very few organizations, less than 25 percent, that took this to the next level where they said, "this has to be a top down strategy where we can drive the most efficiency and effectiveness across the organization and be able to realize a consistency in doing that." And that directly talks to exactly what you're saying is, "How do you transform an organization?" By building these building blocks that are reusable and recomposable, so that you can drive better agility and effectiveness in delivering new products, services, or optimizations in business processes.

(15:39) David: Let's jump on that top down approach, because I did read in the report that the organizations that were most effective were ones that had more of a top down approach here. And to me, I think, in my personal view that sounds problematic. I mean, we all know about the famous memo that Jeff Bezos sent out to everybody at Amazon that from now on we're going to take more of this services led approach where every system has a service layer on it like an API. And if you don't do it, you're going to get fired. That was back in 2002. Very famous, and speaks to, it's great when the leaders of the organization really get it, right? But in truth, all of those businesses out there all around the world don't have leaders like Jeff Bezos who are thinking on these terms, and at some point, it seems to me like this has to come from within the organization.

(16:38) It has to be the people who are working facing customers, people who are working in the accounting department, who are the ones who, they are aware of the potential of integration getting these 900 systems connected to each other, just exactly how they can move the business forward. It's got to be driven from within. If we just wait for all of this top down approach to happen, I think we'll continue to be stuck. We won't be seeing a lot of change in this data from one year to the next. I don't know what your opinion of that is.

(17:07) Ani: I would concur with what you're saying. There needs to be pragmatism. Let me chime in on the Jeff Bezos comment that you made. Let's look at Amazon back in 2002. It was still an upcoming company completely built on modern technology. They did not have challenges like a 150 year old insurance company or a banking company, or a 70 year old retail company has, in terms of tech debt, or a mandate in terms of organizational culture where you have leaders who can actually drive such a change, right? So you cannot necessarily do that in certain organizations just because of the culture of it. So your observation is spot on that certain organizations are not built for a top down specific mandate. To be most effective, it has to be grassroots driven, but there are methods and methodologies that can be mandated as part of a organization for them to be able to deliver the right kind of bottoms-up strategy.

(18:21) One example you brought up was people who are closer to the customer. As long as you take your design cues of whatever you're building, whatever experience you're building, by taking feedback from your constituents or people who are going to consume your products or services or your application, and design your applications that way, it can basically drive a lot of behavior in teams and project teams and lines of businesses and how they build their experiences and their applications. What I'm seeing also in some of the organizations I've worked very closely with who are doing this legacy modernization as their foundational layer for that first phase of digital transformation, they are taking a design thinking approach to identify what are the core assets that they should build that are going to be reusable for the long term.

(19:21) So having setup some time to think through that and being able to build those assets early on gives you a lot more value down the road. And they're seeing 70-80 percent productivity in their teams when they think about this bottom up strategy. So I would say in terms of my opinion, based on my observation, it depends on the organizational culture to have both a top down and a bottom up strategy. But it should always come from a place where you're always thinking about the consumer of your application or your services or your product.

(20:00) David: It's a huge cultural shift. And touching on that cultural shift, one other thing that I spotted in the report which really jumped out at me was, I'm going to read it here. 69 percent of the people surveyed felt like they were keeping the lights on versus innovating. So you've got IT directors here responding to the survey, the grand majority of them saying they're just keeping the lights on. That just seems to me like... How is it possible that any of these organizations are going to get these cultural changes in place? And even if they do, if they're spending so much time just keeping the lights on, they can't innovate. What's going to happen?

(20:45) Ani: Yeah. So this is exactly why we see not a marked change in from last year, is because of this delivery gap that we spoke about a few minutes earlier. What's happening is the demand on IT, like IT budgets are not increasing that much. It's less than 10 percent year over year on average. And the number of resources in those organizations aren't growing markedly either. So, basically you have a certain finite set of resources, but the demand from business is significant, they are like, let's bring in Big Data analytics, let's do some marketing initiatives—

(21:34) David: Artificial Intelligence.

(21:35) Ani: — and intelligence in AI and bot automation. And they're bringing in all these concepts which are completely new to deliver these newer experiences. But what the IT teams and leaders are tasked with is not only bringing these newer and adopt these new technologies and deliver these new projects, but also endure the legacy aspect and support those things. So the pace of innovation hasn't accelerated, even though IT leaders are having, doubling down on building the building blocks for modernization through a dev ops and cloud-first and API integrations, their strategy in terms of execution is where there is a lot of opportunity for us to focus on and be able to drive efficiency so that next year we can start seeing benefits out of that, where we start seeing more innovation coming out of these organizations.

(22:40) David: Yeah, 69-31. I mean, I have a really clear image of a guy standing by a light switch just praying that the mainframe stays on, and keeps powering all those applications. But what you're saying, I think, is that in some ways an API led holistically thought out strategy is one that can help deal with that 69-31 split. You're not getting more budget, but if you can get more efficient about how you're delivering this end to end customer experience, these 360 degree views of the customer, the integration of these 900 different applications, you can essentially find a way to drive more innovation eventually.

(23:29) Ani: Exactly.

(23:29) David: You're saying in a year. So, are you saying that one year from now when I come back and I interview you, we're going on two years now, we'll do it a third year in a row, when I come back there is going to be a big change here?

(23:41) Ani: Yeah, so there are two critical aspects. What I want to see is this. For any organization who's already thinking and 80 percent of IT decision makers in this report suggested that integration and API strategies were very key to their transformation success. Well, there are two things that are very critical for this. One is building a culture of self-service, and building reuse into that strategy. As long as you do those two things, I would definitely see a lot more acceleration in terms of innovation. Because when I see just the organizations who are using these two tenets as key constituents of their API strategy, we are seeing 67 percent more productivity in these organizations. And that is just an anecdotal data coming out of this benchmark this year.

(24:53) David: So that's where you can close that delivery gap.

(24:56) Ani: Exactly. This is where there are differences between these 26 percent organizations and the other 73 percent of organizations.

(25:05) David: Well, those 26 percent of those organizations are going to end up ruling the world if the other ones don't get on board pretty quickly.

(25:13) Ani: I hope not. And I hope people see that this is quite essential to try and bridge the gap, this delivery gap.

(25:22) David: Ani, where can everybody go to find all the insights in this report?

(25:27) Ani: So we have published the benchmark report, the connectivity benchmark report on MuleSoft website on our resources section, and it's free to download.

(25:42) David: Okay. Well we're out of time. I want to thank you very much for joining us. We've been speaking with Ani Pandit, he's the Director of solutions engineering at MuleSoft. Ani, thanks very much.

(25:52) Ani: Thanks, David. Thanks for having me over.

(25:54) David: We'll see you next year. For ProgrammableWeb, I'm David Berlind, the Editor in Chief. If you want to see more videos like this one, you can just come to ProgrammableWeb.com, where we not only have the video, but we'll have the full text transcript of this and all the other videos we've recorded. Also the audio only version if you want to consume it as a podcast on your smartphone, and if you want to watch the video on our YouTube channel, just go to www.youtube.com/programmableweb. All of our videos are up there. Until the next podcast. Thanks very much for joining us.

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