Integration Challenges Are Slowing Down Digital Transformation Efforts for Majority of Companies
MuleSoft Inc. (NYSE: MULE), provider of the leading platform for building application networks, today announced the findings of its Connectivity Benchmark Report 2018 on digital transformation initiatives and the business impact of APIs. This year’s study specifically looks at how IT decision makers (ITDMs) are handling digital transformation, IT operations and change management.
The global survey of 650 ITDMs reveals that four out of five businesses (81 percent) are expected to see a negative impact on revenue in the next 12 months if they fail to complete digital transformation initiatives. While IT budgets have remained relatively static, ITDMs have seen project volumes grow, on average, by 27 percent. As a result, IT departments are being stretched even thinner. Most concerning, the research reveals an IT delivery gap, with two-thirds of ITDMs admitting they were unable to deliver all projects asked of them last year.
Among the key results of the survey:
Integration headaches are creating an IT delivery gap and hindering innovation
One of the main contributors to the growing IT delivery gap is integration, which continues to be a significant drain on time, budget and resources. The survey results show the vast majority (89 percent) of ITDMs believe that integration challenges are slowing or hindering digital transformation within their organizations.
- According to Gartner, “Worldwide IT spending is projected to total $3.7 trillion in 2018, an increase of 4.5 percent from 2017.”* Based on our survey results, organizations are spending nearly a quarter (22 percent) of their annual IT budgets on integration and thus could equate to over $800 billion spent on integration in 2018.
- On average, organizations are using 1,020 individual applications across their business. However, on average, a relatively small number (29 percent) of these applications are currently integrated or connected together.
- A significant number (81 percent) of ITDMs admit that point-to-point integration has created some of the biggest headaches their organizations have ever seen. This is clearly a source of frustration for many ITDMs; in fact, at least 80 percent agree “point-to-point integration must die in the next five years if organizations are to reduce costs, deliver on business needs faster, remain competitive, deliver innovation faster, and extract more value from data.”
“When it comes to digital transformation, it is no longer a case of ‘if’ but ‘when’ for organizations. However, there is growing impatience at a business level to make the goals of digital transformation a reality right now, as those that fall behind will start to lose revenue and market share fast,” said Ross Mason, founder and vice president of product strategy, MuleSoft. “Today, CIOs and IT decision makers are under a huge amount of pressure to meet business expectations, but it’s clear that they are struggling to keep up. Integration challenges are creating an IT delivery gap, and organizations can no longer afford to let it drain time, resources and budget.”
Inefficient IT operating models are slowing the pace of change
It is clear that organizations need to adopt a more efficient IT operating model. Yet, this is easier said than done as ITDMs continue to face the age-old dilemma of ‘keeping the lights on’ versus innovating. Furthermore, when it comes to building new applications and services, it is very common for development teams to work in isolation, meaning organizations are unable to discover and reuse the assets that have been created.
- ITDMs continue to spend the majority (63 percent) of their time on “running the business” activity compared to innovation and development projects.
- 93 percent of ITDMs admit that their application development process could be more efficient.
- Just a third of organizations’ internal IT software assets and components are available for developers to reuse.83 percent of ITDMs say their organization does not always reuse software assets when it comes to developing new products and services.
API strategies are delivering greater efficiency, innovation and revenue
For organizations to deliver digital transformation and innovate quicker, they need to enable self-serve IT, where the wider business can do more on its own without relying on central IT for each project. By making IT assets discoverable and reusable via APIs, organizations can become more agile and competitive to drive revenue.
- 93 percent of ITDMs believe that IT self service will be critical to their digital transformation success. From those organizations that own APIs, more than half (58 percent) have been able to leverage them to increase productivity; while nearly half (48 percent) have increased innovation.
- By leveraging APIs, organizations have been able to increase employee engagement and collaboration (43 percent), meet line-of-business demands quicker (35 percent), increase IT self service (35 percent) and decrease operational costs (34 percent).
- On average, ITDMs reported that a quarter of their organization’s revenue is now generated from APIs and API-related implementations. More than a third (35 percent) of respondents stated over a quarter of their organization’s revenue came from APIs.
Marshall Van Alstyne, MIT digital fellow and Boston University professor, commented: “As the digital economy continues to grow, more organizations are starting to realize the benefits of an API strategy and the financial benefits it can bring. MuleSoft’s Connectivity Benchmark Report corroborates our own findings that there is a positive relationship between the intensity of API usage and financial performance.”
“Digital transformation isn’t just a matter of buying new software and hoping it solves all problems. In today’s digital economy, more data, applications and devices need to be connected than ever before – yet organizations are suffering from the chronic integration issues of the past. However, through application networks, organizations can make more of their IT assets reusable and make application development much more efficient. This will truly transform how IT functions in the modern enterprise and deliver greater value to the business,” added Mason.
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