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Roberto Medrano

Cloud, mobile, big data, on demand, social…and the list goes on. Buzzwords are meant to help as a mental shortcut, but they obscure the depth and impact of the topics they convey. So it’s not too difficult to make predictions that suggest that mobile will be big, or that enterprises will rely more on cloud. There’s a big, fat, “duh” that comes in response to statements like that – they’re not really predictions, but rather general observations.

But anyone who cares about the field they’re in should be able to accurately take into account the basic trends they see and translate them into some fairly reliable projections. Maybe you just watch those to track your business objectives, but for some, actual planning and business objectives are set based on intelligently-discerned predictions.

Some are ruled by their passions, and their predictions are subject to scrutiny (like, say, when I predicted that USC would be BCS champion this year…but there’s always next year, Trojan fans), but since we deal in the business of enterprise applications and infrastructure management, I am convinced that our insight truly provides a unique view of what we can expect in 2013. Let’s take a closer look at what we can expect this year and what trends will be ruling enterprise technology:

1. The “nation-state” of API: The API economy will be given the attention it deserves

Enterprises are making heavy investments in an effort to beef-up their online business offerings and extend their core assets to a wider network of partners and customers. While they’re spending, they’re also being more astute about how to spend their money. Whereas huge installments of middleware and back-end software used to be the norm, the general economic situation of the last few years has encouraged leaner business practices. For some that translates to minimizing spending, but for smart organizations, it means a shift to using existing software assets and leveraging them, not as a part of the business, but as the business itself. Doing that allows an organization to be leaner and more focused. It also means that the barrier to entry for new companies is much lower. Economically, that also means that competition is more intense, but those who effectively use technology as a differentiator will be the ones who ultimately prevail.

How? Well, consider what used to be a typical scenario for a company with an online service. There were a series of servers, each doing a different thing that had to move processes, data and rules up and down the data supply chain. It worked, and it delivered, but it required a lot of development time, effort and maintenance. We’re enabling a model that’s giving businesses a much, much faster time to market, and an easier framework in which to operate; all of this is done through APIs. With easy access to the API and the ability for others to develop with it, enterprises are easily able to take a function and make it accessible to other enterprises who want to leverage its capabilities. This means that the API originator is effectively opening its doors to anyone who thinks they can benefit from “partnering” with them; and ultimately, these open doors mean that your business is being used by an exponentially greater universe of users. It’s what we call the “API Economy”, and for good reason. Smart organizations realize that they’re sitting on a pile of intellectual property and capabilities – they key to making a profit on that is finding a way to get those things into the hands of users as quickly and efficiently as possible. Considering development time, cost and management, there isn’t a much more effective way than by using the simplicity of an API.

2. Execs pay attention: API strategies will be initiated in the CEO’s office

The recognition of the API economy means that execs will have no choice but to become savvy about what to do with the inherent opportunities living among their software intellectual property. The time has also come for them to realize that APIs leverage a delivery model that is drastically more efficient than what it had previously been. Whereas entire departments were running ecommerce, online operations and the like, the efficiencies that can be realized by using APIs to provide customer-centric solutions will encourage execs to push for an easier experience for enabling commerce-driven transactions. This will likely mean less need for highly trained (and expensive) development teams; in fact, it will mean that much of the decision-making about how to run an online business will happen among C-level employees.

Gartner pointed out the need for financial services companies to rapidly respond to customer needs and to be flexible in what, when, and how those needs are met, online. What’s significant about their insight, however, is the fact that technology doesn’t hinder these goals. As they put it, “… IT governance, extreme reuse, service-oriented architecture governance, and API management” are what are most essential. These are things a CEO can understand, and when they recognize how easy they are to implement and manage, we’ll see a lot of directives coming down directly from on top.

3. A billion is just another number: Companies doing online commerce will NEED to be conducting at least a billion transactions on a regular basis.

Salesforce.com now generates more than half of its $2.3 billion in revenue through its APIs, not its user interfaces. Twitter is said to process 13 billion transactions a day through its APIs. Google is around 5 billion transactions a day. For it’s part, Amazon is rapidly closing in on a trillion transactions. John Musser of Programmable Web noted that Expedia’s affiliate network counts $2 billion worth of business a year via APIs.  He has said that Expedia executives have indicated that 90% of what they do is business through APIs.

We tout the API Economy, and that’s really manifested in these companies who, in some ways, are running their own mini-economies, all through APIs. A billion in revenue, a billion in API calls, a billion in any sort of online transaction is nothing to sniff at. SOA Software alone enabled more than 50 billion API transactions in 2012, and we’ll do far more than that this year. When we see that degree of activity at a point where the market is still young, one can only imagine what will happen when other organizations really start to use APIs as their primary economic mover. We don’t see that it will be long before start-ups and nascent niche companies are doing a billion transactions regularly to support even narrow audiences.

4. (Bigger) Rise of the developer: Developers who focus on APIs will dramatically increase in numbers, and will overshadow, in importance, developers who are doing legacy integration work.

The thinking in developer communities used to be (with all due respect to Guy Kawasaki, who used to love to say this), “let a thousand flowers bloom.” Given enough tools and support, the thinking went, a lot of developers will start to play with your stuff; some will fail, but some will build on your platform and with a successful product, will carry you along for a successful ride. And even if only a handful of those flowers bloomed, you were going to be the beneficiary of their success and watch your software empire grow due to the work of someone else.

That concept hasn’t changed much, but time to market and ease of development mean that the ability to have your platform and solutions extended through the work of others has never been easier. And it’s APIs that are making that happen. The big gorillas (like Amazon, Netflix and others mentioned above) are the big guys who can drive trends simply by leveraging what works for them into a workable model where third-party developers must develop on their platforms in order to exist. But we’re going to see a huge emphasis from virtually all organizations who do any type of transaction (financial, content, registration, etc) to provide APIs to developers. And those APIs will come with minimal documentation – the goal will be to get the API into the hands of developers and enable them to deliver as quickly as possible. APIs allow for this speed and because developer communities are truly becoming more and more like true communities and not just Web sites, you’ll see an increase in peer-to-peer support. In some cases (Twilio and Box are but two examples), we’ll even start to see organizations incentivizing developers financially to build on their APIs.

We brought to market the concept of the API Economy in 2012. In this next year, look for sweeping progress as smart companies realize that through effective use of their application intellectual property (in the form of their APIs), there’s enough to leverage into huge channels for user engagement and revenue.


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