Are CIOs Ready to Mine the API Gold Rush?
The New Reality for Customer Engagement
APIs are at the heart of new business models and ecosystems driving today’s enterprises.
By Aaron Sandeen, Phil Manfredi and Kiran Chinnagangannagari
APIs are the new gold rush. And just like the California gold rush 166 years ago, there will be winners and losers. Fortunately, unlike that earlier push, luck isn’t a big part of the equation. Instead, CIOs who implement a comprehensive strategy, encompassing the business, technology and cultural requirements of the enterprise, can successfully mine APIs to increase profitability, create new business models and create closer, more productive interactions with customers and partners.
We understand the opportunities and challenges of adopting an API-driven business model first hand.
When the three of us began our journey as the IT leadership team for the state of Arizona, we immediately recognized the massive challenges we faced. The state of IT was highly decentralized, the systems and data were in silos, and little to no data sharing was taking place. Budgets were tight, and only a fraction of the $23 billion statewide budget was being spent on IT modernization. We knew the state could not afford to continue this level of inefficiency, so we defined our strategy, changed the culture and then turned to technology to address these challenges.
In the first of a two-part series, we will highlight best practices and lessons learned so that you can successfully use digital platforms and APIs to drive change in your organization. Part one will focus on the business behind APIs and how to develop an API-centric culture, while part two will dive deeper into the technology needed to make it happen.
Change is inevitable, especially in the context of today’s business environment. It is no secret that many organizations face constant disruption, and only those that embrace change, and adapt, will survive. It is no longer sustainable for companies to allocate the majority of their budget, resources and energy to simply running the business. Instead, corporate leadership must maintain a balance between running the business and changing it. As Socrates so elegantly said, “The secret of change is to focus all of your energy on building the new.”
In this context, the CIO represents a central agent in initiating, maintaining and sustaining change. Automation is great, but firms must invest in the tools to unlock the enterprise data for the business to leverage it. The enterprises that can successfully tap into the data and use it to change the way it provides services to customers will win the battle. So where do you start leading this charge?
Stop acting like a traditional CIO
Although this story is primarily focused on our recent experiences with public sector, our private-sector research and experience tells us that the majority of CIOs are presented with the same challenges we faced.
The enterprise has spent years investing in a variety of systems on which the business depends for its operations. You, as the CIO, are responsible for ensuring the continuity of those mission-critical systems. There are pockets of innovation where business units are sharing data, but there is no enterprise approach, and the integrations are simply one-off implementations. You, as the CIO, have been told that leadership needs access to all the enterprise data, and they need it today. And finally, the business is feeling external pressures from new platform-based companies (we like to call them “next generation giants”) and needs to become more nimble. And yes, you, as the CIO, have now been tasked with solving that problem with the little budget you have left.
As the CIO, your effectiveness in the organization will come not from being a technology expert. It will not come from being knowledgeable in the areas of scrum or agile development. And it will not come from writing and enforcing technology policies that simply slow down the business. As the CIO, your effectiveness will come from intricately understanding the enterprise’s business and marketing objectives, while leveraging technology to enable the enterprise to meet those objectives. In other words, you must stop acting like a traditional CIO.
Align with the business and become a partner
It’s true that APIs are at the heart of new business models and ecosystems driving today’s enterprises. However, CIOs who want to transform their business using APIs must go beyond the technology and start with strong program management. First, clearly define, document and communicate to the business how an API strategy and program will help the organization meet its objectives. Provide use cases of how APIs can allow the organization to create new customer experiences, positively change operational models, and frankly, disrupt how the organization has always run its business. No tech-speak. No architecture diagrams. No fancy mobile apps. Just focus on business outcomes.
At the state of Arizona, there were pockets of innovation happening within some agencies, but a major part of our statewide strategy was to use APIs to enable the state to change the way it provides services to its citizens, businesses and employees. We announced our Big Hairy Audacious Goal (BHAG) as “every service available to every Arizonan, anywhere, any time.” For the middle tier, we outlined our plan to deploy an API-centric enterprise services platform called the Arizona Enterprise Services Platform (AESP). In addition, we defined a roadmap to build an information hub that would allow citizens, businesses and employees to get personalized information from all state agencies in one place.
We soon realized that implementing the technology was going to be the easy part. The real challenge was going to be communicating the value of data sharing through APIs while ensuring we had the right people, processes and funding to make it a sustainable program.
Collaborate, prioritize and develop a plan
Once the business has bought in to your strategy, collaborate (notice we didn’t say “have a meeting”) with the business to assess business risks, prioritize the initiatives, develop a budget, and agree on a sustainable action plan. Explain that in order to ensure transparency and collaboration across the entire enterprise, you must have total support from the leadership team. Then work closely with them to develop a communication plan for rolling out the API strategy across the enterprise.
This proved to be one of our biggest challenges at the state. With a completely decentralized enterprise, it was difficult to establish any sort of mandate to drive API adoption. Instead, we often had to work with individual agencies. For example, as an agency took on a new project, our organization would insert itself into the project approval process to explain the value to the enterprise if it deployed the agency’s services on the new platform and exposed the data via our API store. Although we had some success with this approach, we knew it was not going to drive real change across the enterprise. We also needed to change the culture.
Change the culture
Driving digital transformation requires everyone to embrace a culture of inquiry and continuous process improvement. Automating bad processes just gives you faster bad processes. Instead, ask questions like: How might we use APIs to create new customer experiences and expectations? How can we use APIs to develop innovative business and operational models? How can we employ APIs to disrupt how a process has always been done?
One of our inspirations has always been Peter Drucker, an educator and author whose work greatly impacted the business and culture foundations of the modern-day corporation. Drucker was once quoted as saying, “Culture eats strategy for breakfast.” This became our clarion call in an attempt to change the culture at the state.
We turned to the private sector for examples of organizations that deliver quality services to their customers. One of the companies we researched was Amazon, which started as merely a Website for selling books. However, around 2002, Jeff Bezos issued a mandate that all internal teams must communicate with each other via service interfaces, and all the interfaces must be made available to the outside world. Although it took a couple of years for Amazon to complete the transformation, it changed from an online bookstore, to a powerful digital platform.
We turned to the head of our Digital Government program to lead the change, and we jointly developed a communication strategy. This small team became the Center of Excellence for digital transformation and began “selling” the API approach to the agency CIOs. We empowered them and provided them with the time, budget and tools they needed to drive the program. On the other hand, we held them accountable for the success (or failure) of the program. The terms APIs, enterprise services platform, digital transformation, process automation, and digital capabilities all became part of our everyday language.
By the end of 2014, the digital platform was deployed in a private cloud and was being used by more than 75 agencies. Examples of API-driven services being leveraged across the enterprise include agency Websites, agency directory, agency services, employee directory, corporation information, and city and town information. The digital transformation program continues to grow today.
Once you have defined your digital strategy and have begun to change the culture, then, and only then, should you begin to look at technology. Part two of our journey will go into more detail about how we developed AESP, built on open-source technologies, to begin to digitally transform the state.
Authors Aaron Sandeen, Phil Manfredi and Kiran Chinnagangannagari, co-founded IT consulting firm Zuggand in 2015. Collectively, they bring more than 50 years of experience in IT strategy, management and transformation for private and public sector organizations. Most recently, they served as chief information officer, chief strategy officer, and chief technology officer, respectively, for the state of Arizona.
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