Digitalization, simply put, is the use of digital technologies to change a business model. The goal ... [+]
We’re always hearing talk of digitalization. If you don’t possess digital skills in this new economy, you’re told that you’ll be left behind. It's one of those corporate buzzwords where you feel you should know more about it, but haven’t got around to it. The reason may be due to the complexity and enormous undertaking required with the reshaping of the corporate landscape.
Digitalization, simply put, is the use of digital technologies to change a business model. The goal is to make this pivot to unlock value, provide new revenue and improve the flow of communications and interactions. Done correctly, it will serve both customers and employees.
Matt McLarty, global field chief technology officer and vice president of the digital transformation office at MuleSoft, a Salesforce company, says that data integration strategy has been on the top of mind for many of the enterprise technology leaders he’s been working with.
Every organization is looking for ways to capitalize on the opportunities presented by the digital economy, whether they consider themselves to be “digitally transforming” or not. Businesses that want to succeed in the digital economy need to change their mindset on data. He suggests that businesses should have mental models of how they see the required changes, embrace complexity by tackling issues one at a time and have a holistic approach toward reimagining how business can be brought online and into the future.
There is a race in which organizations are under increased pressure to transform themselves. Companies could lose “on average $7 million by failing to complete digital transformation initiatives.” To stay competitive and lead the pack, business leaders now demand a companywide application programming interface (API) strategy to unlock data and create connected experiences. An API is simply software that sends information back and forth between a website or app and a user.
Enterprises are heavily investing in technologies that enable the automation of repetitive processes to further drive productivity and efficiency. The challenge is that data and systems are highly fragmented—with the average digital interaction involving almost 40 different systems—creating an expectation gap with employees, customers and partners. There’s a lot of work to do as business enterprises have over 800 individual applications or systems, with only one third of them being integrated.
MuleSoft, a division of Salesforce, in collaboration with Deloitte Digital, surveyed 1,050 global IT leaders on the state of connectivity and digital transformation. The study revealed that IT teams continue to struggle with a surging volume of projects, as an increasing number of business leaders demand a companywide API strategy.
MuleSoft provides an integration platform to help businesses connect data, applications and devices across on-premises and cloud computing environments, and is the world’s No. 1 integration and API platform. The company helps people connect more easily to applications, data and devices they need to accelerate change and drive innovation.
Customers expect seamless user experiences
Applications lie at the center of digital transformation and efforts to enhance the user experience. On average, organizations are using 976 individual applications (compared to 843 a year ago). Yet, only 28% of these applications are integrated on average, indicating there is still an enormous opportunity to improve connected user experiences.
MuleSoft’s report indicates:
• Creating connected user experiences has become increasingly difficult. More than half (55%) of organizations said they find it difficult to integrate user experiences. This is up from 48% a year ago, showing there is increasing complexity for companies to meet their customers' digital needs.
• Overcoming security and governance challenges is a hurdle. Security and governance (54%) was cited as the biggest challenge to integrating user experiences, ahead of outdated IT infrastructure (46%) and an inability to keep up with ever-changing processes, tools and systems (42%).
• Integrating user experience delivers business benefits. Of the organizations that have integrated user experiences, more than half said it had enhanced visibility into operations (54%) and increased customer engagement (54%). Other benefits realized included innovation (50%), improved ROI (48%) and increased automation adoption (45%).
Integration challenges hinder digital experiences and initiatives
Data silos remain a significant barrier to creating integrated user experiences, with the number of organizations citing silos as a challenge (90%) remaining unchanged from a year ago.
The report shows:
• The biggest challenges to digital transformation are integrating siloed apps and data (38%) and risk management and compliance (37%). Eighty-eight percent of respondents said integration challenges continue to slow digital transformation initiatives.
• Too much is being spent on custom integration. In their efforts to integrate apps and data from across the enterprise, organizations appear to be focusing more resources in the wrong areas, such as custom integration. As a result, they are increasing their technical debt. On average, organizations spent $3.65 million on custom integration labor in the last 12 months, a 4% increase from last year ($3.5 million).
• IT budgets are up, but so is demand. Eighty-five percent of organizations said IT budgets have increased year-on-year (compared to 77% last year). At the same time, the number of projects IT is asked to deliver increased by 40% on average, a big jump from 30% a year ago. Despite the extra budget, IT is finding it difficult to meet the demands of the business. On average, more than half (52%) of projects weren’t delivered on time over the past 12 months.
Organizations turn to APIs to drive digital transformation and revenue
Despite these integration challenges, the vast majority (98%) of organizations use APIs. By using APIs to connect data and applications, organizations can digitally transform in a more sustainable manner and accelerate business success.
The report indicates:
• Most (90%) organizations now have a clear integration and API strategy. Over a quarter (26%) said leaders now demand that all projects abide by a companywide API integration strategy, up from just 15% a year ago.
• Reuse is on the rise. Organizations are increasingly creating and using reusable IT assets and APIs to create new experiences and accelerate projects, rather than building from scratch each time. On average, 46% of organizations’ internal software assets and components are available for developers to reuse—an increase from 42% a year ago. Nearly half (48%) of organizations said IT is actively reusing these components, versus 41% in the 2021 report.
• Enabling non-technical users to harness low-code tools to drive their own automation and digital transformation projects can take huge pressure off IT teams. More than half (55%) of organizations now have a “very mature” or “mature” strategy to empower these users to integrate apps and data sources powered by APIs (compared to 36% last year).
• APIs drive revenue. Two-fifths (40%) of organizations said they have experienced revenue growth as a direct result of leveraging APIs (compared to 28% a year ago).
“Digital agility is essential to successful transformation, allowing organizations to drive innovation at scale, deliver new initiatives faster and create the experiences that customers want,” said Kurt Anderson, managing director and API transformation leader at Deloitte Consulting. Anderson added, “A modern strategy that combines integration, API management and automation is central to achieving digital agility. It enables organizations to easily connect and integrate their data, applications and devices to create new digital capabilities and drive transformation projects.”
