Research: Old School Integration Habits Are Stubborn Obstacles To Digital Transformation

If your organization's old point-to-point integration habits are steadfast as obstacles to its digital transformation intiatives, some new research is revealing that you are not alone. In fact, across organizations, progress in terms of breaking the habit may not only be stalled, it's actually going in the wrong direction as IT departments attempt to respond as quickly as possible to mounting demands from their business counterparts.

In order to get a better understanding of trends, challenges, and progress among their customers (and in the API management market in general), most of the major API management vendors conduct annual research studies and release their findings for public consumption. Earlier this year MuleSoft completed and released the 2019 edition of its Connectivity Benchmark Report and to learn a bit more about the company's findings and the benchmark's objectives, I conducted a video interview (video and full-text transcript embedded below) with MuleSoft's director of solution engineering Ani Pandit (disclosure: MuleSoft is the parent company to ProgrammableWeb).

Among the objectives of the study, according to Pandit, were to check the pulse and progress on organizational digital transformation intiatives. I stopped Ani there because here at ProgrammableWeb, we've seen an untold number of explanations for the phrase "digital transformation"; some of which share in certain commonalities and others which have nothing in common (mainly attempts to trendjack a popular phrase). According to Pandit, digital transformation is the ability of an organization to reshape their business based on customers needs or customer journeys that they are trying to engage with to create personalized and dynamic experiences. "It's also markedly a radical change in the organization's thought process on how they use technology, people and process to bring about these innovations where they are looking at processes, and to engage these customers and in those journeys" said Pandit.

The main point here is that today's technologies -- real time technologies, cloud technologies, affordable artificial intelligence and machine learning, and especially APIs -- make it possible to engage customers with radically different and suprisingly personalized experiences in ways that were hardly possible even a few years ago. Organizations that see and embrace that potential are the ones that are digitally transforming themselves. But, based on the study's outcome, it's not as if enterprises are universally evolving to this different operating model at the same pace. Some are pretty far along while many others are struggling. 

One of the keys to succeeding at digital transformation has to do with integratiion of the myriad organizational systems both on premises in the cloud such that a variety of 360 degree views are created; 360 degree views of customers, 360 degree views of finances and organizational resources, 360 degree views of supply chains and inventories and so on. But integration has not only proven to be a perennial challenge for many companies, MuleSoft's survey revealed that collectively, organizations are in moving in reverse.  According to Pandit, MuleSoft's report suggests that 84 percent are not only facing significant challenges, many of are still committing the cardinal sin of integration by taking a point-to-point approach that, at scale, is nearly impossible to manage (and harder to unravel once the time comes). In other words, they're digging themselves deeper into a mess that will further delay their digital transformation initiatives.

That said, it's not like those surveyed aren't aware of the digital transformation imperative: 91% of organizations said that if they didn't transform themselves and their processes digitally, to create these experiences for their customers, they would have a severe impact on revenue.

Here's the video interview (the full text transcript appears below) and what Pandit suggests would be next steps for organizations looking to move a bit faster, in the right direction.

Video Interview of Ani Pandit

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Full Transcript of David Berlind's Interview with Ani Pandit

David Berlind: Hi, I'm David Berlind, Editor and Chief of ProgrammableWeb and this is another Developers Rock podcast that will be appearing both on ProgrammableWeb itself, as well as our YouTube channel at www.youtube.com/programmableweb. And with me today is Ani Pandit, he's the Director of Solution Engineering at MuleSoft. Ani, thanks very much for joining us today.

Ani Pandit: Yeah, thanks David for having me over.

David: It's great to have you. Now MuleSoft has put out a connectivity benchmark report and you're here to tell us a little bit about what that report is about and why it is you do that. So let's start off with that. What is this report all about and why is it that MuleSoft does these reports?

Ani: Yeah, we've been doing this for the last five years and this report helps provide insights into how global IT decision makers are trying to address digital transformation challenges and how are they leveraging APIs to kind of transform the organizations. It kind of also details out things like what their top challenges are, what the state of today's digital transformation initiatives look like, what the strategies these enterprises are adopting and how the role of IT is kind of evolving within these organizations.

David: So how does this report help you make your solutions better or why is it that MuleSoft does these reports? What's the purpose or the objective?

Ani: So the objective is a couple of things. One, it gives us an insight into the challenges and it also gives us insight into the operating model changes in these organizations and how they are thinking. It also gives us the ability to understand this ecosystem, and create solutions and strategies within MuleSoft that can help these organizations adapt some of these newer strategies around microservices, APIs and integrations to go to the market faster in terms of delivering their digital outcomes within those organizations.

David: I get a lot of these reports from all sorts of vendors, MuleSoft competitors, about the idea of digital transformation. They all seem to have a different definition of what that is. So, I would like to hear from you, what is MuleSoft's definition of digital transformation and why is it such a priority?

Ani: So, you're right, Dave. When you read different types of articles online or strategy documents, or strategy reports from different consulting organizations, they all have different definitions of digital transformation. It's a buzz word in the industry now. In terms of MuleSoft's definition this is how we think about transformation itself. It's the ability of an organization to reshape their business based on their customers needs or their customer journey that they are trying to engage with to create personalized experiences and dynamic experiences for their customers.

Ani: It's also markedly a radical change in the organizations thought process on how they use technology, people and process to bring about these innovations where they are looking at processes, and to engage these customers and their journeys. Take an example, for instance, you have say a retail customer and that customer is trying to search for product information online, and probably stepped on an advert online or on a mobile device, and their researching product information. From there they may end up in a store. Their experience is now moving from a digital world to an in-store experience where they want to touch and feel the product. Then maybe go back to a mobile device or some other online interaction platform.

Ani: From there it might bleed into a social media where they might want to solicit feedback from their friends and others, or want to look at reviews, right? Then finally they do a purchase, and once they are interacting with that brand and that product, potentially they may want to have some issue, they want to interact with that brand again from a customer support standpoint. Once that experience is great, they want to go back and share that with their friends or their social media contacts.

Ani: So when you think about this experience it's touching a whole different set of functions within the organization and the brand itself. The ability of an organization to create that same brand experience, across all these interactions, is what is what we call digital transformation, if I may.

David: When we read about digital transformation in the report there seems to be a pretty tight linkage between digital transformation and this idea of integration. What is integration, how does it relate to digital transformation and why is that such an important issue for MuleSoft's customers?

Ani: Yes, that's a great question. If you look at what's going on around us there's a convergence of market forces that's going on that is impacting organizations. There's demand for solutions that leverage AI, IOT, SAS and other things like analytics and big data. You have finite resources within an organization. These finite resources from an IT standpoint are really tasked hard to create these types of newer experiences for their consumers, their customers, where you might want to bring an AR/VR experience with an AI experience, and may be able to expose those engagements on a mobile device.

Ani: If you look at IT they're tasked with not only managing and maintaining the applications that they have built before, but also trying to adapt all these newer technologies within the organization or applications within this organization. You look at what the customers are demanding. They're not immediately demanding newer experiences, but those experiences keep changing every quarter or every year. The trends are different.

Ani: Our customers always have told us that they need the ability to have a flexible capability to kind of adapt to and cater to these newer requirements from their business. They are really looking to transform their organizations. When we look at customers going through this different types of points in their customer journeys, they're interacting with different systems, different data that come from their front applications within the organization.

Ani: Integration becomes a really key aspect of an organization's ability to launch new products faster, be able to deliver a new experience faster, be able to create efficiencies where they can connect all these applications, and data and devices across their organization to create these unique experiences for their customers. That's where we see integration being an extremely important aspect of an IT organization and be able to support—

David: What if an organization doesn't digitally transform? What's the risk there?

Ani: Back in 2000 ... One of my favorite leaders is Jack Welch and he said, "If the pace of change on the outside outweighs the pace of change in the inside, the end is near." That's kind of reflected in some statistics as well, if I may.

Ani: From the year 2000, you would realize that 52% of the Fortune 500 companies have either gone bankrupt, or got merged, or have fallen off the wagon. Why is that? That is because there are upstarts, there are newer companies and companies that are transforming experiences for their customers much, much faster than they are. Like —

David: The disruptors, for example, the way a lot of people credit Amazon with putting Sears out of business.

Ani: Exactly. Amazon, just look at how they impacted the retail industry in the last eight years itself. How they're using technology as AWS capabilities to kind of do that. Their mandate at Amazon from Bezos was API first. Make everything reusable, composable across their enterprise that gives them that flexible foundation.

Ani: That's reflected in the report as well. Some of our IT decision makers who responded to our survey, in this benchmark that we did, 91% of organizations said that if they didn't transform themselves and their processes digitally, to create these experiences for their customers, they would have a severe impact on revenue. So that kind of—

David: So the organizations are relatively self-aware. Integration, as a concept, if you don't mind me saying this, has been around for a pretty long time. I've been a tech journalist now for almost 30 years, and across most of that history of my career, I've been hearing about integration. Yet, when I read the survey I saw that 84% of organizations, all these organizations that as you pointed out are pretty self-aware, 84% of them are still having integration challenges.

David: That's kind of surprising to me. You'd think by now they would have had it figured out? Why not?

Ani: I'm not surprised. The IP landscape is so complex and changing at a rapid pace. Think about a scenario, say you're in a moving train and you were asked to change the engine. How would you go about it? That's exactly the kind of pressure that the IT organizations are facing, where they're not only keeping the lights on, existing legacy processes and applications, but they've also tasked you, "Deliver on these newer experiences." And newer projects, and newer systems and newer apps. So business wants to adapt a new SAS application. So there is—

David: It's like changing the wings while the airplanes still flying. You often hear that metaphor.

Ani: Exactly.

David: And there's not a lot of people around, or technologies that are helpful in doing both of those things at the same time, I guess.

Ani: Exactly. So what's that leading these IT organizations to do is have ... build a culture of custom code, create point-to-point integration, which are basically bandaids because they want to do it fast, and they're not thinking about the long term repercussions because they need to deliver on these projects.

Ani: So they're writing custom code all over the place. In some instances they're using technologies that they have from the past that they might have brought in, like a data integration product or a SOA product, but that's necessarily giving them all the capabilities to grab these newer trends and newer technologies in the organization.

David: But there's a lot of companies out in the market, MuleSoft included, that are advising these companies to get on the bandwagon, and stop with the point-to-point integrations and move forward with more of an API led strategy. If you look at the research that you did last year, compared to the research that you did this year, has there been any improvement?

Ani: You'd be surprised. My hope was that there would have been some improvement, but the reality is based on the research that we have done, it's actually getting worse. If you look at some of the data points that we collected in this survey organizations are saying they have thousands of applications on average. For them to be able to create these new age experiences, deliver new product services, create efficiencies, they want these applications to be kind of talking to each other and integrated.

Ani: But only 29% of these applications are kind of integrated or talk to each other in some way or form. So you're left with literally 71% of the ecosystem untouched, which creates these silos of data across the enterprise that could be leveraged to create these unique services and engagements.

David: Is there any hope for these organizations? What are they expected to do? How are they going to solve this problem if it's getting worse not better?

Ani: So the IT landscape is pretty complex ... than ever. For example, if you look at ... I was having a conversation with a couple of CIOs earlier this week. One is from a startup, a really good startup, and then the other one was from a three billion dollar company in the Valley. They all were saying the complexities are increasing and they need to think about creating flexible foundations.

Ani: That's where we think about ... This pain can improve if organizations start thinking more strategically and think about how they can create these flexible foundations that they can compose and recompose to quickly adapt to these new changes. An API strategy is one way to really look at it, both from the outside-in and then inside-out. Because when we think about creating flexible foundations ... I'll give you an example. Say you had a legacy application, it's very hard to have this legacy application information to a mobile app, for instance.

Ani: What APIs end up doing is they end up creating an abstraction for these apps, and exposing this data in a meaningful way that can be discovered through an app store like experience by mobile developer and be able to quickly create new functionality and grab that functionality. So an API strategy—

David: So the mobile developer's basically shopping for the API that's going to solve the problem. And he's looking for ... He's looking to build, he or she I should say, is looking to build a unique customer experience and it's the API that exposes some underlying capability in the legacy system, to the mobile application, to the developer in a way that they can produce that experience?

Ani: That is exactly right. Then what ends up happening is ... like to my example of that startup and the big company, they ... For the startup, for example, the CIO was saying, "They had over 400 applications and their business kind of adapt four to five new functionalities, SAS functionality, every quarter. They want to try out these new things to be agile. The things that stick they want to keep and the things that they don't want is taken off." So now you have this flexible foundation that can adapt to those kind of changes, where you can bring in new applications, connect them together into your business process, be able to deliver this new functionality. And also have the flexibility to take them off without impacting the rest of the capabilities that you have already built on.

David: Yeah, but if IT makes this flexible foundation that you're talking about how is it that somebody ... Who's job is it to imagine the customer experience that takes advantage of that? I can't imagine that the IT people ... they're not really customer-facing. So how does that work?

Ani: Yeah, that's a great question. So, as part of our survey we have seen a couple of things that kind of stand out. As digital transformation is becoming a core strategy for a lot of organizations we are seeing a lot of alignment between the IT stakeholders as well as the business, where they are in alignment. What that means is they're already thinking about a change in an operating model within their organizations, where the IT teams are moving away from being more operationally focused to being a core you know —

David: They're becoming business people.

Ani: Exactly. And they're—

David: They have to become business people, but you would think, though, to the extent that the business people have to be ... The people who are previously business people they kind of have to become a little more like IT people. They have to understand that idea that you're talking about, this idea of a flexible foundation and that maybe it's possible for them to imagine outcomes that they couldn't imagine before because of that foundation, no?

Ani: Exactly. Speed is what everybody wants, right? Now IT is moving away from doing everything for the business and having a backlog of projects, to being this org that is delivering value-added, reasonable assets to the business side. And the business IT are empathizing with that, being able to kind of use those core digital assets, recompose them and create new experiences. Maybe even create much more value-added capabilities on top of that by composing multiple different assets. So now you have this partnership between business IT and central IT in these organizations.

David: Well, it all makes perfect sense. I totally get what you're saying, but at the same time your survey revealed that things are getting worse not better. What are these organizations going to do to overcome these blockers? What are the blockers and how do they get them out of the way?

Ani: It's really important for these organizations to think differently. I think the only way they're going to be successful is they start aligning they're business strategy with their organizational strategy, and also think about how they can bring about an API strategy that aligns with their business strategy. When they start doing that they start building these flexible foundations and composable enterprise where they can recompose functionality and be able to deliver on that.

Ani: Where MuleSoft comes in the picture is we enable these organizations ... And we have organizations such as, I'll give an example of this bank in Australia. They created a solution for loan processing within six months where all your loan application from capturing the data to servicing it, to underwriting it, can be done from a mobile device directly without sending tons of paper. Those are the types of solutions you want to deliver. The only reason this bank was able to deliver such solution was they looked at digitizing their core IP, that is the backing systems, their custom databases and mainframes, exposing that information as API and being able to compose those APIs into these newer age solutions.

Ani: So what I'm saying is there's still hope, where organizations have to kind of look at how their business strategy and API strategy can align to create these composable enterprise, and being able to create these flexible foundations. In our tomes we call it an application network, where you start creating these units of value across these projects and you compose them where they connect back into this network of APIs, and be able to have the ability to kind of plug and play different applications as they come to improve your business outcomes.

David: When you're pitching to organizations that they need to make this kind of shift, especially in light of the fact that so few are doing it successfully, and the situations getting worse, what are the proof points you give them? You cited one customer that's had a lot of success, but do you put some numbers behind that? Did their stock price get better? Did their revenues go up? Anything like that?

Ani: There's been a lot of research done around this. We found that organizations have at least a 25% uplift on top-line revenue in terms of being able to create a composable enterprise using an API strategy. However, just owning APIs is not enough to stay ahead in the market. You got to double up and drive an enterprise wide API strategy that is both essentially focused inwardly, where you're digitizing your applications, as well as externally where you can say, "Hey, as an organization I have all this information over the years. How did I think about monetizing it and exposing that through an API program?" For example.

David: Right, okay. Well, we're pretty much out of time. Before we sign off any last take aways from the survey that you want to let our readers know about?

Ani: Yes, absolutely. So the future proof of your business ... to future-proof it you have to set yourself up with an ability to kind of adapt newer technology within the organization. Most majority of respondents on our survey introduced said that introducing these new technologies was one of their hardest problems. That was due to a whole bunch of legacy technologies that they already had. Many of these most common technologies that are in scope today, like they are centered around security, big data, analytics, IOT, AI to protect, and enhance and analyze how your customers interact with your products and services.

Ani: They kind of benefit a lot of them, but the challenges these organizations are having is their inability to kind of adapt them at scale. If an organization is looking for that flexibility they are to adapt newer technologies and have that muscle where they can bring in new apps for creating new experiences. They should look at how they could go on and build an application network.

David: So this flexible foundation, the application network, it not only helps companies expose their legacy information in a way that makes it consumable across all different kinds of applications, but, what you're saying is, it also positions the company in a way that, if some new technology comes along, it's a hell of a lot of easier to snap that in and make it part of your technology stack and leverage it for competitive advantage.

Ani: Exactly.

David: So where does MuleSoft fit into all of this?

Ani: So MuleSoft is the leading provider, in terms of a platform, for building application networks on. MuleSoft Anypoint Platform ... we are trying to address one of the most largest, unsolved IT problem. This year organizations are going to spend like 700 billion dollars on integration alone. By using APIs organizations can unlock critical value out of these systems that they have built over the years, and be able to recompose them into valuable services and valuable innovations.

David: So your platform is basically what enables an organization to build that flexible foundation we've been talking about?

Ani: xactly. And it's uniquely positioned in the sense that it provides API, a life cycle and integration life cycle on a single stack, respective of whether you want to run it on the Cloud, you want to run it on PRIM or in a hybrid strategy.

David: That's good because the one thing companies need fewer of would be multiple panes of glass to manage the whole situation. So you're saying you'd do it on like one pane of glass?

Ani: Exactly. That's what makes it the engine for digital transformation in these organizations that — talk about.

David: Okay, great. Well, Ari Pandit, Director of Solutions Engineering for MuleSoft. Thanks very much for joining me here on ProgrammableWeb 's Developers Rock podcast.

Ani: Thanks for having me, David. Have a good weekend.

David: Thank you, you too.

David: We've been speaking with Ari Pandit, Director of Solutions Engineering at MuleSoft. This has been another Developers Rock podcast. For more of our videos you can go to ProgrammableWeb.com or you can go to our YouTube channel at www.youtube.com/programmableweb. For ProgrammableWeb , I'm David Berlind. Thanks very much for joining us.

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