Whats Going Wrong with Digital Transformation

And How APIs can Fix It

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Executive Summary

Key challenges
Businesses are under increasing pressure to provide delightful experiences to customers, employees, and
partners in multiple channels as well as innovate more quickly than the competition
Business priorities and IT investments are misaligned, as IT continues to focus on tactical improvements and
maintaining legacy infrastructure and systems
Many organizations still dont understand digital transformation

Recommendations
Innovate more quickly by adopting a new IT operating model to empower line-of-business users (LOBs) to self-
serve IT
Partner with LOBs to ensure business priorities and IT investments are aligned and supporting the overall
business goals
Use APIs to open up data and deliver reusable assets that accelerate digital transformation and revenue
growth

The digital transformation imperative

As consumers expect everything to be dynamic, always on, and always mobile, businesses are under increasing
pressure to deliver products and services instantly. Many businesses are turning to new, digital technology to address
this demand. They are undergoing digital transformation to speed up the pace of innovation and deliver more user-
centric experiences.

MuleSofts 2016 Connectivity Benchmark Report surveyed

802 IT decision makers (ITDMs) who confirmed digital To accelerate digital
transformation is taking place in their organizations The
transformation, improve business
survey also showed that IT plays a central role in digital
transformation (65 percent of ITDMs agreed). However, the agility, and increase the clock
survey also revealed significant challenges are hindering
ITs ability to achieve digital transformation goals fast
speed of business, IT must evolve
enough, putting revenue at risk. 66 percent of ITDMs said into a self-service platform with
that their companys revenue would be negatively impacted
within six months as a result of these challenges, which reusable data assets.
include business and IT misalignment (45 percent), time
constraints (43 percent) and legacy infrastructure and
systems (39 percent).

To accelerate digital transformation, improve business agility, and increase the clock speed of business, IT must evolve
into a self-service platform with reusable data assets that LOBs can use to build their own connections, processes, and
applications. At the core of this new IT operating model are APIs, which allow organizations to building application
networks. An application network, which seamlessly connects applications, data and devices within the enterprise and
to external ecosystems, enables reuse by an entire organization to drive agility, innovation and revenue growth.

Legacy technologies prevent IT from fulfilling business priorities

The need for speed and agility are universal enterprise requirements, putting added pressure on IT to deliver initiatives

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MuleSoft Connectivity Benchmark Report: The State of Digital Transformation and APIs, May 2016
n=802

quicker for LOBs. As a result, ITDMs are turning to technologies such as cloud applications (64 percent), business
intelligence and analytics (56 percent) and integration solutions that connect apps and data sources (44 percent).

While legacy systems are the least popular technology used to fulfill LOB requests and projects (14 percent),
surprisingly, a large number of ITDMs said that legacy systems and maintaining foundational investments are still very
important IT priorities for the next 12 months even with an increase in budget this year.

MuleSoft Connectivity Benchmark Report: The State of Digital Transformation and APIs, May 2016 n=802

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These findings suggest that the burden of maintaining legacy technologies is taking ITs focus away from
transformative initiatives that better serve the business. In fact, of the ITDMs surveyed, only 18 percent reported being
very confident in meeting this years digital transformation goals. This also underscores the importance of easy
integration because newer cloud and analytics applications need to work well with existing legacy systems, and IT
doesnt time for custom coding.

A companys success in meeting digital transformation goals is determined by how well it can leverage technology to
drive innovation and differentiation. CIOs need to partner with CEOs and LOBs to ensure business priorities and IT
investments are aligned and support the overall business goals.

Digital transformation misconceptions

Many organizations still have an antiquated notion of what digital transformation really means, despite the fact that 96
percent said they are or plan to execute on related initiatives. For instance, 82 percent of ITDMs associate digital
transformation with going paperless, a term synonymous with IT in the early 2000s.

What top initiatives are part of a digital transformation within an organization?

Going paperless 82%
Developing web-based apps and services 78%
Moving to the cloud 77%
Upgrading servers 77%
Integrating digital technologies 75%

MuleSoft Connectivity Benchmark Report: The State of Digital

Transformation and APIs, May 2016 IT teams are favoring tactical
n=802
improvements rather than
This indicates that IT teams are favoring tactical focusing on more
improvements, rather than focusing more on transformative
initiatives that deliver long-term business value, such as transformative initiatives that
integrating third-party apps and services with APIs to drive
new sources of revenue. In many cases, businesses arent deliver long-term business
confident in the time and resources they have available to
manage both day-to-day tactical projects and long-term
value.
strategic initiatives. However, as evidenced by traditional
retailers like Blockbuster and Borders, solely focusing on
tactical projects will drown a company while visionaries like
Amazon sail by.

CIOs must educate their IT teams on what digital transformation truly means and provide guidance on how to align IT
strategies with business goals. Its not about going paperless; its about the IT team enabling the whole business to
innovate faster than competition and adapt quickly to market changes.

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APIs are driving a cultural shift within businesses

APIs are key for any business looking to match the speed and agility required of todays digital enterprise. Yet, its
difficult for businesses to keep pace with new technologies such as SaaS, mobile and IoT that exponentially increase
the number of endpoints with which a business must connect both inside and outside of the organization. Moreover,
these new systems change frequently.

It presents IT leaders with a complex problem: They must enable innovation and rapid iteration of the applications that
access core systems of record, while also ensuring stability and control of those systems. This challenge is referred to
as bimodal or two-speed IT. The trick is figuring out how to unlock valuable data hidden away in cloud, on-premises
and hybrid systems, so LOBs can accelerate innovation and drive revenue through self-service, all while IT maintains
security and governance.

In this way, IT is undergoing a cultural shift from technology implementer to business enabler and the business
must change the way it operates and behaves. This is where the survey results present another misconception: 42
percent of ITDMs said they do not believe a shift in the way IT and the business interact plays a role in digital
transformation.

For a business to succeed, IT must move away from delivering projects and towards delivering reusable assets: pre-
designed and pre-built capabilities implemented across the enterprise (e.g., APIs, templates, connectors, project
accelerators, SDKs). For example, IT could define integration templates for connecting applications, such as Salesforce
and SAP. These templates would capture common scenarios requested by LOBs so different teams could make
connections between applications through configuration instead of through coding. Furthermore, the template would
contain the necessary application management, logging, security and error handling that complies with IT security and
governance.

APIs introduce a whole new way for companies to connect, share and manage data and applications with application
networks. An application network is built using APIs to connect applications, data and devices, making them pluggable
and reusable. By making any application, data or device plug-and-play into an application network, companies can
achieve business outcomes faster.

APIs and reuse drive revenue growth

APIs arent only speeding IT delivery for digital transformation; they are also driving revenue. One third of
organizations with more than 100,000 employees expect to generate $10 million or more in revenue through APIs and
activities directly related to API implementation.

Approximately, how much revenue do you think your company generates through APIs and activities directly
related to API implementation?
$10M or more 33%
$9.999M - $5M 23%
$4.999M - $1M 28%
$999,999 - $500,000 12%
Dont know 5%
*Organizations with more than 100,000 employees

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Organizations are recognizing that APIs provide real business value, as they impact the bottom line. For example, eBay
has more than doubled its annual revenue with APIs. eBays API allows developers to create programs that submit
items for listing on eBay, display eBay listings on other sites and receive high bidder information for items being sold,
among other things. Increasing its level of exposure through APIs, eBay is able to drive more revenue. In fact, APIs
generate 60 percent of eBays revenue, 50 percent of
Salesforces revenue and 90 percent of Expedias revenue.

IT leaders must enable

innovation and rapid iteration APIs are transforming industries

of the applications that access Digital transformation is happening all around us. For
example, traditional retailers like Target are revamping online
core systems of record, while and in-store shopping for consumers, and financial
institutions like Bank of America are exploring chatbot
also ensuring stability and implementations underscoring the importance of
continuous digital disruption. The common denominator for
control of those systems. digital transformation across industries are APIs, and
industries like financial services, retail and healthcare are
leading the charge.

Financial services
With the rise of nimble fintech firms, the pressure for traditional banks to become digital is exceptionally high. In fact,
94 percent of ITDMs in financial services said they are implementing an API strategy to integrate new software with
existing systems and applications. In addition, 50 percent have budgeted more than 10 million on IT spending in 2016,
with 10 percent planning to spend more than 50 million. As traditional banks are pressured into developing new types
of technology, such as mobile apps, fingerprint touch ID and chat bots, its evident they recognize the need to digitally
transform and innovate as quickly as agile startups.

Retail
For traditional retailers to survive in the age of Amazon, which is driven by data and powered by software, they need to
become digital to deliver seamless customer experiences across channels. The competitive landscape and changing
customer behavior has led 2016 retail IT budgets to rise faster than any other industry (86 percent), with top IT
priorities including business intelligence and analytics (84 percent) and mobile (75 percent). Retail ITDMs also led all
industries in companies that currently have an API strategy (73 percent) to expedite digital transformation. They
recognize the immediate danger in falling digitally behind competitors and are strengthening their ability to compete
both in-store and online.

Healthcare
Hospitals and systems within hospitals arent connected, and its a massive problem riddled with friction and human
error. To eliminate data silos for better patient care, healthcare IT professionals are turning to APIs to seamlessly share
data between internal and external systems. For instance, legacy monitoring equipment in the ICU could instantly
share data with a cloud-based platform used by the medical lab, or wearable fitness trackers could share real-time
vitals with care providers. With 52 percent of healthcare ITDMs budgeting over $10 million for IT spending in 2016, its
clear hospitals are making strides to power the connected patient care weve come to expect.

Case Studies

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 Unilever
Consumer goods company Unilever is one of the oldest multinational companies, overseeing global brands like
Lipton, Dove and Axe. To support all SAP-centric integration requirements emerging across regions and
countries, the company implemented a systematically oriented global integration competency center (ICC) in
2012. The ICC allowed Unilever to deploy over 12,000 integration interfaces that connected over 1,600
application and partner endpoints, processing on average 1.6 million transactions per day.

By 2014, the ICC could no longer achieve the speed and agility required by the business and failed to address a
growing number of cloud service and mobile app integration needs. To address these digital challenges and to
provide cloud-service integration and API management capabilities for self-service IT, Unilever deployed
MuleSofts Anypoint Platform. As a result, Unilever was able to adopt a platform-centric approach across IT for
faster delivery and lower costs.

UCSF Medical Center

UCSF Medical Center is among the nations leading academic medical centers, with more than 750,000 patient
visits and 40,000 admissions each year. To ensure close communication between the 8,000 staff members who
support patient care, UCSF used a robust homegrown paging system. However, communication was one-way
and text-based, slowing the flow of information between staff and the response to patients. Without a
centralized system to store messages and with multiple devices on hand, the approach proved cumbersome
and expensive.

Partnering with Salesforce and MuleSoft, UCSF developed CareWeb Messenger, a messaging platform that
securely integrates patient information across key systems. MuleSofts Anypoint Platform uses a hybrid
approach to connect UCSFs on-premise and cloud applications via APIs. Additionally, Salesforce provides a
single view of each patients communication trial and test results.

CareWeb now works as a paging system for UCSF staff across web and mobile platforms, dramatically
improving communication. For example, CareWeb tags all messages and stores both text and images in each
patients account. Since Salesforce meets all patient health information standards, UCSF is also able to
collaborate around this patient data in a HIPAA-compliant environment.

Conclusion

Becoming a digital business is about more than just incorporating technology for tactical implementations. By applying
an API-led approach to connectivity and delivering reusable assets for LOBs to build on, businesses can respond to
rapidly shifting market conditions quickly and easily.

Key takeaways

Digital transformation is dependant on alignment between IT and the business: IT is no longer just a
corner office that offers infrastructure and troubleshooting. ITs role needs to shift from the centralized support
function to becoming the strategic business enabler, responsible for helping drive innovation.
APIs fuel a necessary cultural shift within the enterprise: APIs will be key to enabling digital
transformation. They arent just changing how technologies work; theyre also changing the way businesses
operate and behave. APIs are igniting a cultural shift away from centralized IT and toward an open,

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 collaborative environment. By opening up data instantly in a governed way through APIs, LOBs can leverage
this information to meet their needs quickly without IT serving as a bottleneck.
APIs and reuse speed the pace of business: With growing pressure to deliver on LOB needs and to meet
digital transformation goals quickly, IT teams are responding by driving speed and agility through the use of
APIs. APIs and reuse play a critical role in enabling IT to create self-serve capabilities that the business can
consume and drive revenue from.

The complete MuleSoft 2016 Connectivity Benchmark Report can be downloaded here.

MuleSofts mission is to help organizations change and innovate faster by making it easy to connect the worlds applications, data and devices. With its API-led approach to connectivity,
MuleSofts market-leading Anypoint Platform is enabling over 1,000 organizations in more than 60 countries to build application networks that increase the clockspeed of business. For
more information, visit https://www.mulesoft.com.

MuleSoft is a registered trademark of MuleSoft, Inc. All other marks are those of respective owners. 8