Tag Archives: enterprise 2.0

Open Distribution Platforms

by

Open APIs are a no-brainer in the IT landscape of 2010. I have been talking myself to hundreds of people over the last years, trying to convince everybody to build and publish an API. However I’d like to share some thoughts on what I believe is next. Will we still be talking about APIs, API management, etc in a few years from now? What role do APIs play in a multi-channel distribution play?

Not having an API today is like not having a website in the 90s. There are tons of great use cases out there: e.g. ebay – $7bn worth of items on ebay were added through APIs (Mark Carges, CTO ebay). Twitter, Amazon, Salesforce.com and many other best practices. However, we have also learned that building an API is relatively easy, but its distribution is not. Not everybody is as successful as Amazon Web Services with over 300,000 customers using their API, or Google’s APIs which are in the millions. The key topic of this article is therefore to look into how the distribution issue can be solved.

First, I’d like to look at Web Service Business Models and their evolution:

  1. We initially had websites which added an API to their system, however the website remained the core traffic driver.
  2. In some successful cases, the API traffic has actually overtaken the website traffic. A good example is Twitter or Amazon WS.
  3. Recently we have seen that websites have become web services, meaning the API is the product. The website serves as no more than a marketing tool, all value add is delivered through the API. Examples are Twilio, Zemanta, Strikeiron or Xignite.
  4. But the newest trend is when Web Services become Open Platforms, when applications turn into platforms.

Open Platforms are the lever that allows to create a network effect which is required to succeed in the new distributed ecosystem.

Why should enterprises care about?

  1. Because it is critical to be indispensable in this new ecosystem
  2. New business models can be adopted and especially business opportunities shall be exploited
  3. They foster innovation
  4. And they are a new (future) model for software acquisition
  5. Last but not least, they increase customer engagement.

An overview of this new system shows the graphic below. I call it the “Open Computing Value Chain“. The sourcing part can be seen on the left where direct access to APIs and indirect generation of additional value add is derived from a developer community. On the right side I split between direct channels, such as the website or open APIs, and multi-channel platforms, such as Enterprise Platforms (Enterprise App Stores) and Consumer (mobile) App Stores which serve B2B as well as B2C customers respectively. In the end we are talking about multi-channel management represented in multi-channel platforms which will leapfrog pure API strategies in its ability to distribute to the market and increase its reach dramatically.

At Booz & Company we also call this phenomenon Social Apponomics, in which a Social OS allows the convergence of cloud functionality. The big trend is expected towards monetization. Expect only 2 to 3 social networks dominating the social landscape and a strong commercialization of social sites. While the social networks were mainly focusing on brand building today, within the next 18 months social sites will become commercial portals and e-commerce will be hosted on social sites.

Expect a “gold rush” just as we have seen it in consumer app stores where Apple has been the game changer beginning of 2009. After some early pioneers like Handango or Pocketgear, we are seeing hundreds and thousands of App Stores today, asking themselves the question “how to get a place in the game”. Almost every of the over 700+ mobile operator worldwide are thinking of launching an App Stores. This might not make sense for most of them, but it shows the upcoming abundance of players to come:

  1. Software OS vendors like Microsoft, Google but also smaller vendors like Splunk have an app store
  2. Vertical players like Apple or Nokia
  3. Mobile OEMs like RIM/Blackberry, LG, Samsung, Motorola
  4. PC OEMs like acer, Dell or IBM
  5. ISVs and fixed / mobile carriers from T-Mobile to Vodafone and Orange
  6. Independent Stores like GetApp or Mobango

In the end, all of the above have different agendas but they are competing for the same audiences – developers and customers.

On the Enterprise Platform site we have a similar picture, with Enterprise Platform Enablers like Jive Software, IBM Enterprise Application Integration or Jackbe. But also full scale Enterprise “App Stores” like IBM Smart Market, Intuit and more developer platforms and PaaS-plays like the Alcatel-Lucent Open API service, Google App Engine, Salesforce/Force.com or Windows Azure. The common goal of all is to generate competitive advantages.

With such an abundance of players it is critical to ask what the key success factors to attract both developers and customers are.

  • For attract developers, the quality of technical support, high reach and exposure (through the platform) and a generous/fair business model are important.
  • Customers are seeking powerful brands and marketing, broad and diverse offerings, a quality storefront and an easy payments engine.

The “right to win”, will have these companies that leverage their exisiting capabilities and assets in a coherent way to determine their best strategic play.

Key messages I wanted to bring across:

  • We’ve understood that APIs are important
  • APIs are easy to build but distribution is key
  • Enterprises need to engage in social networks
  • Open platforms deliver the network effect which is critical to succeed
  • B2C and B2B app stores are a preferred digital distribution model
  • Enterprises need to leverage their existing assets and capabilities

Thanks to Sam Ramji from Apigee/Sonoa who organized the API Open Mic Night where I presented these ideas first.

APIs and Beyond – Open Distribution Platforms

Related articles by Zemanta
Enhanced by Zemanta