Digital Transformation: The Vision Thing
In a previous post, we introduced three broad and important concepts—vision, alignment, and execution—and the 10 core digital transformation dimensions that fall into these areas. Here, we’ll dig into vision.
When we talk about vision in the context of digital transformation, we consider how an organization has the right mindset to achieve digital transformation, and whether leaders understand the scope and core concepts involved. It encompasses the following dimensions: Platform, APIs, Outside-In, and Ecosystem.
PlatformModern businesses are agile: they combine and recombine software to repackage their core capabilities for new use cases, interaction models, and digital experiences. Legacy IT architectures and traditional systems integration techniques can’t achieve this kind of speed. A platform approach is required. Enterprises build platform capabilities by creating APIs that empower developers to leverage core systems and data to build new services and products.
Apigee customer Magazine Luiza, one of the top retailers in Brazil, has leveraged its API platform in numerous ways. In June 2016, for example, the brand launched a new digital marketplace that enables third parties to sell under the Magazine Luiza banner, with new participants entering the ecosystem via Magazine Luiza’s API platform.
This approach means the company incurs virtually no marginal cost to add new marketplace customers. Magazine Luiza’s marketplace dramatically expanded the company’s e-commerce capabilities, supplanting a legacy sales and distribution system that supported only 35,000 SKUs. As of late 2017, the marketplace offered over 1 million SKUs.
Magazine Luiza’s other platform initiatives include an ecosystem of mobile apps that enable new services, from an app for in-store associates that provides real-time inventory information and enables customers to pay on the spot to a logistics app that coordinates hundreds of delivery contractors across Brazil.
APIsModern, RESTful/JSON APIs are the backbone of a digital transformation. They encourage developer productivity by providing both programming flexibility and an intuitive, accessible interface for accessing core systems. Leading digital businesses typically recognize APIs as strategic assets—to be designed and managed as products that empower developers.
If an enterprise treats APIs as middleware—as a way to do systems integration or to expose assets—it can undermine virtually all of its digital transformation efforts.
Sophisticated organizations monetize their APIs by packaging them for the needs of different developers. When Apigee customer AccuWeather began designing APIs for individual external developers, for example, it recognized that some developers would need up-to-the-minute weather information, which would generate billions of API calls, whereas others would prefer daily forecasts, which impose a much lower data overhead. The company customized multiple API packages to let developers purchase according to their needs.
Outside-InSuccessful digital businesses adopt an outside-in perspective that focuses on how customers and partners experience the brand. Our most successful customers are typically also those most fanatical about exceptional customer experiences.
Organizations that master this dimension use analytics to understand the needs of both customers and the developers translating APIs into experiences for those customers. Armed with this information, companies can produce a more relevant set of APIs and offer apps and experiences that seamlessly cut across product, service, and internal organizational boundaries.
EcosystemAs the preceding examples demonstrate, digital ecosystems enable companies to focus on their strengths while relying on developers, partners, and other ecosystem participants for the infrastructure and services that turn those strengths into fully-featured digital experiences, expand the reach of those strengths, generate more demand, and facilitate entry into adjacent businesses.
This enables enterprises to distribute demand generation and value creation across potentially infinite digital networks. In many situations, it can also create network effects that cause momentum in one part of the ecosystem to spread elsewhere, creating the conditions for non-linear growth.
Competitive businesses recognize that ecosystem strategies are diverse—that a business doesn’t always need the gravitational center of an ecosystem to be successful. Often, rather than attempting to build a platform on the scale of Android or Facebook or attempting to be the central platform for an industry, companies grow simply by partnering with other ecosystem participants to expand their reach.
APIs can enable ecosystem participation by enabling companies to combine and recombine software and data without friction—but only if those APIs are designed and managed for this purpose, with developer and partner ease-of-use in mind.
Pitney Bowes, for example, has expanded its ecosystem by offering productized APIs to developers via its Commerce Cloud, as mentioned above. The company also leverages the Android operating system for its SendPro C-Series of all-in-one mailing, shipping, and tracking solutions, opening the devices up to the ecosystem of Android developers.
It will soon launch an online marketplace, built with Google Cloud’s Orbitera platform, to deliver apps built around its services. These ecosystems of external software, infrastructure, and developers have combined with the company’s internal strengths in shipping, logistics, and technology to open new revenue opportunities that arguably wouldn't have been available without an ecosystem approach.