Often considered the poster child of digital transformation, APIs are proliferating at enterprises making industry-leading investments in mobile, IoT, and big data. As these initiatives mature, CIOs, CTOs, and heads of development are coming together with business leaders to manage and secure companywide use of APIs using API management solutions.
Forrester recently released a report that sizes and projects annual spending on API management solutions. We predict US companies alone will spend nearly $3 billion on API management over the next five years. Annual spend will quadruple by the end of the decade, from $140 million in 2014 to $660 million in 2020. International sales will take the global market over the billion dollar mark.
In interviewing vendors for this piece of research, we discovered a vast and fertile landscape of participants:
Startups have taken $430 million in venture funding, and so far have realized $335 million in acquisition value. In April 2015, pure-play vendor Apigee went IPO and currently trades at a valuation north of $400 million.
As companies get serious about digital transformation, we see investments shifting toward extensible software platforms used to build and manage a differentiated customer experience. My colleague John McCarthy has an excellent slide describing what's happening:
Before, tech management spent most of its time and budget managing a set of monolithic enterprise applications and databases. With an addressable market of a finite number of networked PCs, spending on the front end was largely an afterthought.
Today, applications must scale to millions, if not billions of connected devices while retaining a rich and seamless user experience. Infrastructure, in turn, must flex to meet these new specs. Since complete overhauls of the back end are a nonstarter for large enterprises with 30-plus years of investments in mainframes and legacy server systems, new investments gear toward the intermediary software platforms that connect digital touchpoints with enterprise applications and transaction systems.
At Forrester, we’ve been working to quantify some of the most viable software categories that exemplify this shift. A shortlist below:
· API management solutions: US CAGR 2015-2020: 22%.
· Public cloud platforms: Global CAGR 2015-2020: 30%. (Note: We have a forecast update in the works that segments the market into subcategories.)
Software is getting smarter, thanks to predictive analytics, machine learning, and artificial intelligence (AI). Whereas the current generation of software is about enabling smarter decision-making for humans, we’re starting to see “invisible software" capable of performing tasks without human intervention.
One such example is x.ai, a software-based personal assistant that schedules meetings for you. With no user interface, you simply cc “Amy” on an email thread and she goes to work engaging with the recipient to find a date and optimal place to meet.
It’s not a perfectly automated system. AI trainers oversee Amy’s interactions and make adjustments on the fly. But over time, she becomes a great personal assistant who is sensitive to your meeting and communication preferences.
One can imagine Amy extending into new domains — taking on parts of sales/customer service operations or business processes like expense management and DevOps. Indeed, we’ll see a new generation of AI-powered apps, as predicted here.
Behind every online sale is a set of software tools to manage the shopping experience and order process: the commerce platform.
The technology itself is nothing new. Commercial software packages for digital commerce have been around for 15 years or so. However, we’ve seen commerce-related technology investments accelerate over the past couple of years. Companies are replacing legacy systems from the early 2000s with modern platforms ready to meet the demands of mobile commerce and international sales, and the buyer pool is extending from retail to virtually every industry.
The journey isn’t quite over. Forrester expects growth in commerce tech spending to continue unabated. According to our recent forecast, we expect the US market for commerce platform technology to nearly double over the next five years, growing from $1.2 billion in 2014 to nearly $2.1 billion by the end of the decade.
Peter Sheldon and I developed this forecast to help tech vendor clients identify and assess new market opportunities. For deeper insight into the target markets most ripe for growth, we segment spending projections by target industry (i.e., retail, wholesale, pharma) and quantify the shift from legacy (i.e., on-premises) to modern (i.e., SaaS/hosted) solutions. For more details, see the recent report we’ve published around the forecast results.
Vendors across the board are building tools to add context-driven personalization features to mobile apps. Specifically, we see new offerings from vendors in personalization, mobile analytics, API management, predictive analytics, artificial intelligence, and the digital agencies for product and content recommendations, in-app messages, and voice-driven digital assistance.
Marketers and developers are jumping at these solutions because creating more personalized digital experiences will be critical to remaining competitive. And as CIOs rationalize a larger software platform strategy, these solutions will plug specific mobile engagement gaps along the way.
Want to hear more? In our new brief, Vendors Scramble To Enable Contextual Mobile Moments,we examine how different groups of vendors extend their capabilities to compete in the arms race to deliver contextual mobile apps and provide guidance for CIOs on managing the myriad solutions entering their organization.
With the press overhyping 3D printing, virtual reality, and Bitcoin, it’s hard for CIOs to track the startup trends impacting business today. Below are two trends we see startups and their investors focused on, and a future trend we expect to gain interest in the next 12 to 24 months that CIOs should care about.
Self-service business models disrupting industries. Startups are coming up with creative ways to reengineer cumbersome analog business processes with technology. Uber uses cloud, mobile, and analytics to recreate and bypass parts of the taxi/private car value chain. It connects customers directly to drivers, and uses data and analytics to make more efficient use of vehicle capacity. Other examples of startups developing new approaches to old industry processes include Oscar in health insurance and Simple in retail banking. What’s next? As 3D printers and connected products become more mainstream, and digital is further embedded in the physical world, we’ll see entrepreneurs apply self-service to new markets. Sols hopes to shake up orthotics by allowing customers to customize and print custom-insoles on 3D printers.
Apple’s new "Extensibility" feature took somewhat of a backseat to a host of exciting new developer tools announced at Apple’s developer conference a week ago. I’d like to briefly highlight its importance to the enterprise.
In short, Extensibility makes it easy for apps to talk to each other, facilitating more complex mobile workflows and easy access to data stored in personal cloud services. It will spur app developers work together to speed the advancement of what employees will be able to accomplish on mobile.
To elaborate, Extensibility will enable:
Complex inter-app workflows for mobile employees. More advanced content creation apps have been slow to develop on mobile platforms, in part due to lack of app interoperability. Think of the multiple software tools we use to pull a contract from email, sign it, and send it back on a PC. Data must similarly flow across a variety of apps to accomplish this on mobile. Apple has done little to address this, until now.
Access to the personal cloud in enterprise apps. Employees rely on personal cloud services like Dropbox and Evernote to manage an expanding array of digital content online. But these repositories don’t integrate with the enterprise off the bat. Extensibility can act as a router to connect personal data with the apps your employees use every day on the job.
Now that the media hype of 2013 has settled . . . somewhat, 2014 will be a pivotal year in which we see small, tangible steps towards reality. Below are a few trends and commentary on what we’re seeing in the market:
1. Ecosystem components begin to marry. Investments, acquisitions, partnerships, and new developments will focus around unifying printers, software, and services for seamless 3D printing experiences. For example, Adobe recently announced direct integration with MakerBot and Shapeways to close the gap between 3D modeling tools and what printers need to physically produce objects. Other major software vendors like Autodesk will play an evangelist role in bringing ecosystem players together to enable interoperability across proprietary platforms.
2. New startups stretch our imaginations of business model disruption. 3D printing is a catalyst for rethinking inefficient analog processes. Startup SOLS aims to disrupt the entire orthotics value chain with an end-to-end digital service for custom shoe insoles. Customers scan a 3D model of their feet, input data on weight, lifestyle, and activity patterns, and send to print.
According to recent Business Technographics data, half of US enterprise technology management professionals report that there is 1.) no way to gain a single view of status and availability across their portfolio of cloud services, 2.) that they don’t have a clear way to assess the risk of using a third-party public as-a-service offering, and/or 3.) that they have no way to manage how providers handle their data.
An interesting debate is ensuing regarding how to best protect cloud data, given the market landscape. So far two modalities are emerging:
·A. Inserting in-line encryption between the enterprise and the SaaS provider that encrypts and/or tokenizes all data before it goes to the cloud to ensure safety interoperating within public cloud systems.
·B. The human-firewall model, in which IT closely monitors activity with context/content analytics and anomaly detection tools.
The truth lies somewhere between the two. By carefully applying Forrester’s data security and control framework, clients should incrementally encrypt data deemed sensitive to compliance or regulation, such as credit card and Social Security numbers, and closely monitor all activity across users and cloud applications.
We all use a multitude of personal cloud apps, both at work and at home. But getting meaningful tasks accomplished can be frustrating, particularly on mobile, as files, data, and workflows fragment across the various services we use. Take for example finalizing and signing a contract on iOS. This would involve fetching a document from email, annotating it, signing it, and sending it back to the client. Today, no one app can do all that, and iOS and Android offers very limited data-interoperability functionality with both Open In and Android Intent features.
We’re seeing three types of personal cloud startups emerging to offering capabilities to link across apps, services and devices:
Access: search, unified visibility, and portability for files, photos, and information.Younity networks and delivers content across your devices using P2P technology. And Otixo facilitates data interoperability across cloud services within a virtual file system-type interface. Simply drag and drop to move files from one service to another.
Interconnection: tasks and data flows that use info from multiple services.Ink facilitates workflows as an alternative to iOS’s Open In.