Gartner Application Strategies & Solutions Summit

Summit 2017
4 – 6 December 2017 / Las Vegas, NV

From APIs to Digital Platforms: API Economy

Lessons for Building an Ecosystem
Paolo Malinverno

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 What is more deadly for your business
(and you) than NOT having a digital
1
platform in the next few years?
© 2017 Gartner, Inc. and/or its affiliates. All rights reserved.
Having built one,
and not having
anybody using it
Key Issues

1. How are ecosystems built in the API economy?

2. What makes them successful?
3. What else do companies need to do to build an ecosystem to serve a
digital strategy?

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 Basic Facts

 Very few people today have a clue as

to how to build a digital platform:
– However, 1 client out of 3 is building one

 There is too much of undisciplined

trial and error in digital strategies today
 Acceptance of failure is very low in
enterprises today

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What Is an Ecosystem Anyway?

Individuals
Public Things
Partners Competitors
Startups Vendors

Private
Number and Customers Supply Chain Potential
Diversity of Things
Benefit and
Connections Risk
Internal
Employees
Things
Source: "Three Styles of Digital Business Platforms" (G00317581)

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 Fundamental Starting Points (I)

 Platforms only make sense when they have

an ecosystem using them
 Platforms and the ecosystems need to be
built at the same time

 The APIs are where ecosystems and

platforms meet

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 So, How About APIs?
(Fundamental Starting Points [II])
 APIs are scale accelerators/network effect
technologies, but NOT just technology:
– They open new business channels
– They are the embodiment of the blur
between physical and virtual
– CIOs and CD(igital)Os will need to know
and govern their most valuable APIs

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Where Do You Start?
Customer-Facing Enterprise-Run
& Public APIs Ecosystems

Industry &
Partner-Run
Ecosystems

Partner-Facing
Public APIs

Your Enterprise Digital Business Technology Platform

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Bimodal for Applications Hinges on APIs — Build Agility
and Start Your Digital Platform
1. Prepare the ground:
– Set project filters to choose the initial pilot projects,
catalog existing APIs, and clarify by who/how they
will be used.
2. Get going:
– Apply filters, run several hackathons, see which APIs
enable the capabilities your company's digital strategy
needs, and pin down the value enabled by the APIs.
3. Work on live data:
– Give tightly managed APIs to developers, take their
good ideas, and multiply the value.
4. Optimize:
– Filter the ideas, discard those that did not work, and get on the API economy.
5. Make Mode 2 an enterprise capability:
– Consolidate ways of syncing Mode 1 and Mode 2, renovate the core legacy, and keep few APIs.

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 1. Portal to Marketplace

 A developers' portal is the part of API

management where you: Start With a
Developer Portal and
– Document your APIs
Work Your Way Into a
– Manage developers who want to consume them Digital Marketplace,
 It is a great start, but it is not enough for a by Adding More
digital platform Programmable
Components to APIs
 To industrialize it and transform add
programmable components

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A Sample Digital Marketplace (Banking)
Ecosystems Employees Customers
Business

Partners
Customers
Marketplace
Built by Deposits
the Bank Loans
Payments

Built by Integration Corporate

Ecosystem Partners With Partners Clients
Platform

Portal and Other

Smart Current Account Fintechs
Partners
Digital Advisor Blockchain

PSD2 APIs

Source: Gartner (July 2016)

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 2. Hackathons (Internal, Private
or Public)
 Don't do hackathons to follow a fashion
wave, they will backfire Manage Your
Hackathons Wisely
 Hackathons are great tools to test ideas
by Planning Their
and identify non-starters: Scope, Putting
– Failing fast has a lot of value Processes in
 Hackathons jump-start platforms and
Place and Learning
From Their Success
ecosystems:
or Failure
– And steer them in the right direction, from the
very beginning

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Hackathons jump-start Platforms and Ecosystems
— Plan their Scopes

New customer experience API innovation

Govtech Fintech

Edutech
(Mode 2 Initiatives)
Big Data Innovation

Digital Service
Employee-facing
Digital Product Innovation

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Hackathons jump-start Platforms and Ecosystems
— Plan their Scopes

New customer experience API innovation

Govtech Fintech

Edutech
(Mode 2 Initiatives)
Big Data Innovation

Digital Service
Employee-facing
Digital Product Innovation

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 3. Think Outside the Box
(aka Your Industry Vertical)
 Digital strategies are about looking for new
"business moments" Discover Value
Scenarios Well
 Challenge boundaries, leverage your
Beyond Your Current
legacy, expand your reach Business Horizon by
 The most powerful digital value chains are Mixing Your APIs
multivertical: With APIs From
Another Vertical
– Get on your competitors'/role
models' hackathons
– But take into account you are not Netflix

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 The best ideas come
from your ecosystem

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 4. Consolidate Requirements
and Innovate
 The API product manager must perform a
fine balancing act
Listen to Your
 Platforms (including APIs) are products Developers, but Look
 Developers range from code splitters to for Innovation
hungry business developers Opportunities That
Go Beyond Tactical
 Mutual creation of value is the fuel Requirements and
that powers platforms, marketplaces Could Open New
and ecosystems Business Channels
– An API that produces that fuel is a successful API

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The Fine Artist Called API Product Manager

Developers API Product Manager Developers

API Consumers Obtain visibility into API usage API Producers

Manage the API roadmap Create APIs
Create solutions Prepare for API monetization Create services
using APIs
Optimize developer experience (DX) behind APIs

See: "Create the Role of API Product Manager as Part of Treating APIs as Products" (G00320767)

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Identify Your API Monetization Strategies

Subscription Upgrade

Faster Time
Revenue Sharing
to Revenue

Platform as
API Calls
a Channel

Monetization
Revenue per … X Opportunity New Products
(Next 3 Years)

Lower Higher

Source: "Choosing the Right API Pricing (and Funding) Model" (G00326763)

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 5. Bimodal, Choice and Surprises

 Digital needs both Mode 1 and Mode 2 —

working together:
Treat Your Platform
– Stable APIs and programmable components will trickle or Marketplace Like a
from Mode 2 down to Mode 1
Mode 2 Product
 Developers will have a choice of platforms: Initially, but Evolve It
– They will engage with the one that's easiest to to Mode 1 to Fully
work with Scale Your Digital
 The benefits of interactions with an ecosystem
Business
may not be the benefits you expect:
– That is both good and bad:
 but the balance is generally positive

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Buffalo Wild Wings

 Introduced "BeerBoard" IoT system which

provides APIs to monitor tap flow and track
how much beer is left in kegs
– APIs link to ServiceNow and restaurant
point-of- sale systems
 Previously, the traditional approach was
lifting and shaking kegs to determine how
much beer is left in a keg
 Unintended consequence: The new APIs
halved workman's compensation claims
associated with employees who hurt
themselves lifting heavy kegs:
– APIs are now doing the heavy lifting!
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 Now You Can Look at the Basic Facts
in a Different Way
 How to build a digital platform:
– Learn the 5 lessons, whether you are already
building a digital platform or not
 Too much of undisciplined trial and error:
– A hackathon's plan and the appreciation of
failing fast will minimize trial and error
 Acceptance of failure is very low:
– ʺA winner is just a loser who tried
one more timeʺ — (George M. Moore, Jr.)
– Introduce that notion in your company culture
and your own career path

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 Ultimate, Walk-Away-With,
Mega-Recommendation

Don't wait till your platform is perfect

It probably never will be, and you will never be done anyway

Build/Participate in an ecosystem TODAY

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Recommended Gartner Research

 From APIs to Ecosystems: API Economy Best Practices for Building a Digital
Platform
Paolo Malinverno, Mark O'Neill and Kristin R. Moyer (G00331662)
 Bimodal for Applications Hinges on APIs
Paolo Malinverno, Simon Mingay and Mary Mesaglio (G00292792)
 Use Ongoing Hackathons to Accelerate Digital Transformation
Kristin R. Moyer, Paolo Malinverno and Others (G00302409)
 Create the Role of API Product Manager as Part of Treating APIs
as Products
Mark O'Neill, Paolo Malinverno and Others (G00320767)
 Top 10 Things CIOs Need to Know About APIs and the API Economy
Paolo Malinverno, Kristin R. Moyer and Others (G00318859)
For more information, stop by Gartner Research Zone.

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