Leadership Insights: Disconnected User Experiences

Transcript

Mike Vizard: Hello, and welcome to the latest Digital CXO videocast. I’m your host, Mike Vizard. Today, we’re with Matt McLarty, who’s the Field CTO and Vice President of the Digital Transformation Office for MuleSoft. That’s one of the longer titles we’ve seen in quite a while, but Matt, welcome to the show.

Matt McLarty: Yeah, thanks. I know you only used two of my titles, there, so that’s—no, it’s great to be here, yeah. Sorry about the long title. [Laughter]

Mike Vizard: No worries. You guys just published this report about the connected user experience and what a challenge that is to make a reality, given all the systems that need to be connected together to drive some sort of digital business process—so, walk us through that a little bit. What did you guys discover?

Matt McLarty: Sure. Yeah, we’ve been doing these connectivity benchmark reports for a number of years where we’re really putting our finger on the pulse of what’s happening with real companies on how they’re doing integration, how they’re utilizing APIs and other associated trends. And I think this year is a very interesting one for the point you made, like, especially with the pandemic driving more and more focus on digital transformation and digital connectivity with customers. Everyone’s looking for connected experiences.

I know one of the things we actually asked in the report was, you know, how many—you know, what percentage of interactions are happening with customers in digital form and it’s growing year over year. I think the number is 72 percent, now, of customer interactions are happening in digital. And, you know, as more and more services are available to consumers online, people start to expect much more connected experiences. They expect that no matter what channel they’re reaching companies that they’re gonna get a consistent level of information, consistent experience, smooth experience, and so, really, we’re zooming in on all the topics related to how you actually enable that.

Mike Vizard: And what is the challenge, because theoretically, everything has an API hanging off it, maybe with the exception of a couple of things built in the ‘80s and ‘90s. And yet, we don’t seem to be able to really just have a plug and play connection to those things, so, where—are there APIs just operating on too low a level and we need to get higher up the stack a little bit, or higher levels of abstraction? What’s the core issue?

Matt McLarty: I think it’s one of those things where, like, the future’s here, but it’s not evenly distributed. There are a number of factors involved. You know, everything does have an API, but it depends on your definition of an API. And so, you know, depending on if you’re working with companies where it’s their, you know, direct to consumer channels and they’ve got a pretty robust web user experience, then yes, they’ve been able to kind of extend that to mobile channels more easily, and other digital means.

But, you know, the real—even when there’s channels and there’s APIs going on, one of the big problems is just the siloed natures of organizations and the fact, you know, a lot of it really comes back to organizational challenges. And again, another number from the report was, you know, 90 percent of companies are saying data segregation, data silos are one of their biggest challenges.

And that’s what we’re seeing. We’re seeing that, a lot of times, maybe you get a very optimized user experience on one particular task or one particular area of the business, but when you try and bring it end to end, you start to cross all these organizational silos and Conway’s Law tells us organizational silos lead to architectural silos. And, you know, that’s the business where—the good news is, though, that we’re seeing progress, and it’s evident in the report as well around people actually making strides in the space.

And I think, you know, if you look—one of the things we see in the digital space is, it’s not just about one company providing the user experience now. A lot of times, there are integrated components from other companies. So, we’re seeing good leading indicators on things like companies driving more API revenue. Last year, the report said there was 28 percent of companies seeing API as driving more revenue , this year, it’s 40 percent. So, I think, as the plumbing matures, and as the—you know, then we’ll see the ability to really cross all those silos, whether it’s inside an organization or outside.

Mike Vizard: I feel like part of the thing that’s also changing is, a lot of this integrated is supposed to be occurring in near real time. Historically, we had a bunch of applications that were batch oriented, so, they got updated every 24 hours or so. But I wonder if the APIs and the infrastructure that we have in place today isn’t really optimized for that real time experience. And this is why, when I go online and I look at a store and it tells me it has something and then I go to the store and it’s not there because it was sold two days earlier, but it’s not updated.

So, is that part of our challenge?

Matt McLarty: Well, definitely, that’s part of the challenge. And I think that in the world of operational systems, user facing applications—so, like, the inventory management challenges you’re citing, I think we’ve, that’s a fairly solved problem. Again, you know, not everybody, but if you look at companies like Walmart and other big retailers, you know, they’ll talk about just the unbelievable software sophistication they have behind complex integrated systems like inventory management and dealing with multiple parallel online orders happening.

Having said that, I used to work at a bank that is still my bank, and I get frustrated and bang my head against the wall if it’s Saturday at midnight and I happen to want to do my banking, and they say, “Sorry, we’re down because we’re running our batch”—they don’t say it, but I know they’re running their batch jobs.

But I think where we’re gonna see a lot more—you know, and this really goes back to the data silo question—I think where we’re really gonna see a lot of movement as well is in the silos of data analytics and real time operational data systems. So, we, you know, when you talk about the batch stuff going on, there is huge movement and huge investment going on in data warehouses, cloud data warehouses, and still, ETL is big business, and there’s a lot—you know, it’s more of a solved problem to move the data out of the user facing applications into the analytics and the data warehouse and that.

But now, as we get more sophistication around machine learning and predictive analytics, I think a really interesting space to watch is how you’re gonna inject those insights back into the user facing applications. And really, that, to me, is the big—you know, that’s gonna be the big space that is going to evolve rapidly just as we’ve seen big data and analytics and machine learning evolve like crazy since the Hadoop boom of the late 2000s, there. I think we’re gonna see, now, once we can get access to those insights and we start to inject them into the customer experiences, I think that’s the next big wave of APIs as enablers of the connected experience.

So, as I said, in the report, we kinda see some of the leading indicators there, but certainly, in my work with a lot of companies, that’s definitely a big area where everyone’s wondering—okay, now, how do we bring the analytics world and the operational world of data together, and APIs are gonna be at the forefront of that.

Mike Vizard: Do you think we’re also approaching a point where the end customer has a new level of expectation and if you can’t meet that and you’re providing them these user experiences that are disjointed? Or that can’t get to the level of insight they’ll go somewhere else because it’s becoming a criteria that they judge whether or not to do business with you by?

Matt McLarty: Yeah, completely. And it’s, you know, in some cases, it’s a competitive necessity. Like, even in—we see this even with government right now where, I’m sure you as a citizen, me as a citizen, we get frustrated with our experience as citizens dealing with digital channels in government. But in the private sector, it’s as evident as, if you just look at the companies that have been the big digital disruptors in the last, you know, since the web came along, that’s where they started. They started with customer experience where they’re saying, “Okay, we’re gonna own the customer experience, build a business model around that.” And then from there, they kind of extend down into the other, they start to knock off other areas of the competencies in the business. So, that’s definitely what we’re seeing out there.

But again, I think the good news is that, for companies that are incumbent and established, that we are seeing the pattern that, to defend against the disruption is to digitally enable those core competencies that are the differentiators or these businesses. And when you kind of decompose them in a way through APIs or other composable mechanisms, we’re seeing a lot with being composable through event-driven means, or even through automation and bots as composable pieces. Just something in an area that MuleSoft is extending into deeply now.

The more that you can make yourself composable and consumable in different ways opens up those channels, and then you—you know, being able to drive a better customer experience is easier when you’ve got the foundation sorted out and you can kinda defend yourself against those disruptors, but that’s certainly where the consumer expectations are. And again, good news is that we are working with lots of customers who are solving that problem and providing the end to end connected experience. But it really starts by getting those core competencies developed in a composable way.

Mike Vizard: One of those things you hear about a lot is, people are eventually moving the integration point up into the cloud. But I have to wonder, does that create a single choke point? And maybe you need to think about a series of integration points or hubs or whatever where that integrated hub may be closer to the point of consumption at the edge and then there’s one in the middle and then there’s one up in the cloud? I mean, do we need a more federated approach versus trying to stick all the integration up into a single cloud service somewhere?

Matt McLarty: Yeah, and it definitely—like, there’s lots of ways to look at that sort of choke point view, right? Like, there’s the run time choke point potential of, you know, don’t wanna really, at run time, all eggs in one basket. But then there’s also, just from a development velocity standpoint, I think when it comes to scalability for organizations, the challenge isn’t so much run time scalability, it’s usually the velocity of delivery that can be a big pain point for them.

But even from all those dimensions, I think—you know, I think that we’re at a level of sophistication with cloud capabilities where the run time problem is fairly solved. But what we’ve experienced is that, you know, just because—because I said before, you know, the future’s here, it’s just not evenly distributed. Even within a single organization, that’s true. And for lots of different reasons, the companies are running multi-cloud, they’re running some stuff on premise. We’re working with manufacturing companies who have a need for having composable digital components on the factory floor, right, where cloud is not gonna be an option.

So, you know, we’ve just learned a lot from working with all these complex customers. And one of our big focus areas is what we’re calling universal API management, but can certainly look at it as really kind of just getting that visibility into that complex landscape, where that is gonna be multi-cloud and, in some cases, on premise. But where you need to start by at least seeing all the stuff that you have and plugging into it, and I think that, as I said, you know, our experience has been that the run time, choke point problem is pretty much gonna be solved by all the distributed nature of cloud-based computing and a lot of companies deciding that they’re gonna hedge and have multiple deployments. But dealing with all the resulting complexity of that and being able to still facilitate high velocity delivery is the bigger challenge.

And so, we’re finding that step one is just being able to see all the stuff, plug into and see all the stuff that you have, and have a centralized control point for observability, security, seven just routing and instituting all those system-wide things. So, definitely, lots of dimensions of complexity out there, and I think one of the things that companies are doing is, they’re just learning that they have to somewhat embrace the complexity, embrace the chaos, and that they’re not gonna find a silver bullet that just simplifies everything away. So, really living within that world.

Mike Vizard: Alright, so, it’s all about embracing the mess. Do you think that the non-technical Digital CXOs out there—the CMOs and the CROs and the whoever else happens to be a C level officer appreciates that level of complexity and understands what the challenge is? Because sometimes I feel like, you know, they’re issuing commands without understanding the real challenge that the IT side of the house is facing.

Matt McLarty: Yeah, definitely. I think, you know, what we’ve seen, especially in the last, this pandemic period that we’re in, you know, we’re not out of it yet, we’re still in it, there is more empathy now, I think, between IT and business leaders. And we’re seeing that, we’ve seen that in our study results as well where, even if there’s not total alignment and total cross functional perfection going on, people are understanding each other more.

And so, I think the CIOs have been pulled into, you know, “We gotta think with a business mind, here,” because a lot of the collision point of the pandemic and people just having to change their priorities on a dime, they have to think more in business terms. But similarly, the CMOs and the CEOs are definitely more in the mindset of, “We recognize that digital is our future,” and maybe it’s not the biggest future of the company they’re running, but it’s definitely the biggest part of the growth that they’re having and the biggest part of the customer interactions that they’re having.

So, the intentions are there. In terms of how they learn, like, I think this is actually a learning exercise for the CIOs as well. Because I have kind of a tagline I’m using when I’m working with companies around—you know, digital transformation starts with digital thinking. And how we’ve, I use the analogy of when the Industrial Revolution switched from steam power to electrical power, we may look back at that and think that one day it was steam and the just plugged in a new electrical power source and they changed their business. But it took, like, 30, 35 years for that to take hold, because they had to restructure these companies, rebuild the factories to take advantage of electrical power and all that. And I think we’re going through the same thing here with digital, which is—there’s just a different structure for companies to succeed in the digital economy. And, you know, even with, in our MuleSoft journey, we’ve gone from really focusing on these application integration problems to recognizing that modularizing through APIs having this idea of API enabled business capabilities was really the best way to approach integration.

But now we’re seeing that being extrapolated to the whole business and saying, you know, “Composable business is the right structure for the digital transformation economy.” And a lot of those, you know, the mentality, the manufacturing, or the kind of physical business mentality of the 20th Century where you’d have end to end assembly lines and very much own the ecosystems end to end, it’s just a different model that works in digital where you’re dealing with more partners and digital ecosystems. And so, establishing that composable structure is fundamental for business. And it’s not just a techie thing, it’s a business and technical problem.

Mike Vizard: So, the business reflects the IT architecture and vice versa. So, do you think that the divide between IT and the business that’s been around for decades is starting to really narrow.

Matt McLarty: I think it is starting to narrow, and I think it’s also starting to transform. Even, you know, a couple years ago, I remember meeting with a big industrial company in Texas and really working through what their organization was. And I think this is something for CIOs to pay attention to. Because a lot of their core products, customer facing products were becoming more digitized, they had actually—I wouldn’t even call it shadow IT. They built up product teams within their business units to build the core digital products, and IT was kinda being relegated to just handling more of the back office stuff, right? And I’m seeing that a little bit more often. I’ve seen other models, though, where the CIO is very much at the business, you know, C-suite being the driver of innovation and having more alignment and kind of cross functional teams embedded.

So, the patterns that, I think there’s a book called Team Topologies where they’re describing these cross functional teams, supporting teams as a vision statement, I’m seeing that happening more where you’re—you know, it’s not just, I think Gartner used the term fusion teams. Definitely seeing that in the wild where companies are recognizing that because their core products and capabilities are more and more digital, they have to build these hybrid teams of engineers and product managers and have them working just at the ground level together. So, I think that there’s more alignment happening, but I think there’s also even a transformation happening of the organizational template.

Mike Vizard: Alright. Well, as Ben Franklin one said, if we don’t all hang together, we’re all gonna hang separately, right? So, hey—Matt, thanks for being on the show.

Matt McLarty: Awesome. Thanks very much, Mike.

Mike Vizard: Alright, and thank you, all, for spending some time with us, and there’s plenty more of these videos on DigitalCxO.com, so, check ‘em out.