API strategies continue to gain a foothold throughout enterprises. API-based software reuse is shown to increase productivity and innovation. And, it’s opening new revenue opportunities — on average, APIs now drive 35% of a company’s revenue.
MuleSoft recently released its seventh annual 2022 Connectivity Benchmark Report, produced in collaboration with Deloitte Digital. While the study confirms a near-ubiquity of API usage across the board, it highlights integration as a top concern for most companies. Without the proper connectivity standards, organizations face data silos and poor data accessibility, limiting digital user experiences.
Below, I’ll review the key takeaways from the report to see how technology leaders should respond as they revisit IT spending and digital projects in the year ahead.
On average, 72% of customer interactions are now digital. And, the rate of digital transformation continues to accelerate. The drive to complete digital transformation isn’t just to deliver ancillary features; it’s now necessary to the bottom line. The report found organizations could lose an average of $7 million if they fail to digitally transform.
There can be many hiccups on the path to digital transformation, but the most profound is integration — 88% say integration challenges slow digital transformation. Integration is followed by other challenges, such as risk management, compliance, and business and IT misalignment. Due to nuanced protocols and maintenance hurdles, upkeeping integrations is difficult for most developers.
And, integration is set to become an ever-pressing need as the number of applications and microservices increases. The average enterprise already oversees 976 different applications, but only 28% are integrated. A lack of interoperable components runs the risk of creating data silos and increasing technical debt. In fact, 90% of respondents cite data silos are a persistent problem.
Data inaccessibility prevents data scientists, financial analysts, and customer support representatives from leveraging data in innovative ways. For example, organizations most commonly want to incorporate data insights into user-facing applications or reuse data sources across applications. To open up data and unite isolated applications, many organizations turn to custom integration. However, this practice is very labor-intensive — an enterprise, on average, spends $3.65 million a year in custom integration costs, found the report.
IT Struggles As Projects Surge
85% of respondents said their IT budget will increase in the coming year. This is largely to support the sheer number of applications IT is now tasked with producing — on average, IT must now support 40% more projects in 2022. Yet, 52% of projects weren’t delivered on time last year. This could be one of the reasons groups are turning toward increased DevOps automation and low-code development options.
IT’s attention is split between change and routine maintenance, and the latter is by far the most substantial commitment. IT leaders report that 71% of their efforts are devoted to simply keeping the lights on, as opposed to innovative projects. The majority of organizations report that pre-existing IT infrastructure gets in the way of introducing new technologies. Legacy infrastructure is often highly coupled and resistant to change.
It’s no news that user expectations are high. Studies show apps have just one shot at winning users, after which, they’re bound to turn to alternatives. As a result, the goal of many IT projects is to create smart and reliable user experiences. As of 2022, 70% of organizations have developed a completely connected user experience across all channels, found the MuleSoft report.
Connecting user experiences doesn’t come without its challenges, however. 55% of organizations report that it’s difficult to integrate end-user experiences across applications. Top challenges incurred here include security and governance, outdated IT infrastructure, and data silos.
API Strategy Goes Mainstream
APIs have become ubiquitous in modern software development, so much so that some pundits say sprawl issues present a looming threat. According to MuleSoft data, 98% of organizations now use APIs. On the whole, this is positive, as APIs can be building blocks to reuse microservices and present a solid foundation for modernization. API-first design thinking is now commonly applied to new projects and integration endeavors. Some are even treated as products, exposed to third-parties and monetized in that fashion.
Evidence also demonstrates that leadership is on board with API strategy — over a quarter of organizations now require a company-wide API integration strategy. This is up 15% from just a year ago. A significant reason behind API-first designs is the ability for reuse, following the Bezos mandate of externalization from day one. As such, on average, 46% of an organization’s internal software assets are designed for developers to reuse.
Interestingly, this API-driven reuse isn’t just targeting developers — 55% of organizations say non-technical business users can easily integrate apps and data sources powered by APIs. This figure is up a whopping 20% from just one year prior. Evidently, the low-code/no-code approach is more than marketing hype, gaining traction with production use.
“A modern strategy that combines integration, API management, and automation is central to achieving digital agility,” says Kurt Anderson, Managing Director and API Transformation Leader, Deloitte Consulting LLP.
APIs are both enabling increased agility to self-serve IT and opening up a foundation to build abstraction layers for business users. They can supercharge the back office too. A rise in responses indicates API strategies are rising to better operationalize employee management. For example, SCIM is an IETF standard REST API for programmatically managing identities within an organization.
The 2022 Connectivity Benchmark Report was assembled using interviews with 1,050 IT leaders worldwide at companies of 1,000 or more employees. For deeper insights, you can pick up the report here in exchange for some personal information.