why should c-level care about apis? it's the new economy, stupid

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Why should C-Level care about APIs? It's the new economy, stupid. In this 2013 version of our study on APIs, we identify how APIs allow companies to effectively pursue the classical triptych of business goals: business development, product development and supply chain management. Through three new practical cases, discover how 5 companies, coming from the most traditional fields, use private APIs and technologies such as cloud and data in order to renovate their business and to invent new business models. We studied the case of 5 japanese companies. 5 business cases showing the emerging business trend which consists in working on a private or partner-based API to change business models and find new paths of monetization: // RETAIL: Seven Eleven, global leader of convenience stores, optimizes its logistics almost in real time by using APIs // HEALTHCARE: OMRON, creator of connected healthcare devices, monetizes the data provided by its users to forecast epidemics // INDUSTRY: Honda, mobile constructor, connects its entire car fleet with APIs, to provide intelligent guiding services to their clients // MEDIA : Cookpad, originally a user-generated recipe website, sells its knowledge in consumer preferences to food-processing industry // AGRICULTURE: Fujitsu, is getting ready to automate Japan's agriculture, in order to cope with the loss of workforce in Japanese companies And you, how are you going to reinvent your business thanks to APIs? La version 2013 de l’étude sur les APIs par FABERNOVEL. A travers trois nouveaux cas pratiques, découvrez comment 5 entreprises, issues des secteurs les plus traditionnels, utilisent les APIs privées, les technologies cloud et la data pour renouveler leurs business et inventer de nouveaux modèles.  Nous sommes allés au Japon étudier le cas de cinq entreprises :  // RETAIL : Seven Eleven, leader mondial des conveniences stores, optimise sa logistique en temps quasi-réel grâce aux APIs // SANTE : OMRON, créateur d’appareils connectés pour la santé, monétise les données fournis par ses utilisateurs pour prévoir les épidémies // INDUSTRY :  Honda, constructeur automobile, connecte l’ensemble de sa flotte avec des APIs, pour fournir des services de guidage intelligent à ses clients // MEDIA : Cookpad, initialement un site de recettes fournis par l’utilisateur, revend son savoir des goûts consommateurs à l’agroalimentaire // AGRICULTURE : Fujitsu, s’apprête à automatiser l’agriculture Japonaise, afin de faire face à la perte de main-d’oeuvre dans les campagnes japonaises  Et vous, comment allez vous réinventer votre business grâce aux APIs ? 


  • THIS WORK WAS MADE FOR YOU TO SHARE, REUSE, REMIX, REWORK It is licensed under the Creative Commons BY-NC-SA license to allow for further contributions by experts and users in the coming months. You are free to share and remix/adapt the work. You must cite this document: FABERNOVEL, Why Should I Care About APIs, December 2013 You may not use this work for commercial purposes. You may distribute a modified work under the same or similar license. Our job is to help large organizations think and act like startups. And we believe this cannot be achieved without causing people to want to innovate and explore new business models. Our ambition is to inspire you by giving you the keys to understand new markets like Russia, new business drivers like APIs or successful companies like Apple, Amazon, Facebook or LinkedIn. // 2
  • WHAT IS AN API? An Application Programming Interface (API) is a specification intended to be used as an interface by software components to communicate with each other. An API may include specifications for routines, data structures, object classes, and variables. // 4
  • THERE ARE THREE MAIN TYPES OF APIS Open Partner Private Open APIs allow companies to publicly expose information and functionalities of one or various systems and applications to third parties that do not necessarily have a business relationship with them. Partner APIs are used to facilitate communication and integration of software between a company and its business partners Private APIs are used internally to facilitate the integration of dierent applications and systems used by a company. Advantages: Value-added service Up sell Must have for business partners Advantages: Rationalized infrastructure Reduced costs Increase exibility: realtime business Improved internal operations Advantages: Delegated R&D Increased reach, trac New revenue stream // 5
  • APIS IS AN INNOVATIVE AND EFFICIENT MODEL ALLOWING COMPANIES TO MANAGE THEIR CORE BUSINESS ONLY API-DRIVEN COMPANY TRADITIONAL COMPANY Core business Finance HR HR Finance R&D vs. R&D Elastic IT Marketing Sales IT Logistics Logistics Marketing In a traditional company, all functions are internalized to support the core business In an API-driven company, support functions are externalized via an API, focus is on the core business // 6
  • GOOGLE NOW IS AN EXECUTION OF INTERNAL & EXTERNAL APIS FOR PREDICTIVE INTELLIGENCE Google Agenda & Maps APIs Flight Carriers APIs Google Weather API Travel Agency API The value of Google Nowlies in the aggregation of mostly free data external and internal data // 7
  • TODAY, OPEN API GROWTH IS SKYROCKETING... Number of public APIs listed on ProgrammableWeb Source: ProgrammableWeb // 8
  • ...AND OPEN APIS MEAN A LOT OF EXPOSURE FOR WEB GIANTS 30% $3.8B 9M tweets from Twitter ocial APIs AWS revenues (API-based) apps & websites connected 14 1 1 billion API calls / day Sources: the Verge, Gartner, Facebook, Netix, Klout, ebay billion API calls / day billion API calls / day // 9
  • HISTORICALLY, APIS WERE USED BY BIG SOFTWARE COMPANIES BUT THEIR USAGE IS BECOMING MUCH MORE STANDARD TODAY Application Services APIs Build new functionalities Trouble-free interoperability Accessible to big companies APIs for operating systems Create application for OS Attract developers Enlarge customer base Limited to big software companies 1985 - 2001 Source: 3Scale, What is an API? Web services APIs Share data or services internally and externally More unied communication protocol Accessible to any company Easy integration Infrastructure services APIs Allows companies to externalize IT infrastructures Access to computing power Available to anyone 1990s 2002 Internet of Things APIs Share data or services internally and externally Generate new data and optimize objects usage Get real-time information on objects usage 2006 2013 // 12
  • TOMORROW: THE RISE OF CONNECTED DEVICES IS THE FUEL BEHIND BOTH PRIVATE AND PUBLIC APIS GROWTH 1 billion of everyday devices are connected today Source: Ericsson (considered a conservative gure) 50 billion devices will be connected in 2020, and this gure will double every 5 years //
  • AFTER TOMORROW: THE PROGRAMMABLE ECONOMY APIs foster all web services APIs are universal infrastructure At the beginning of the 2000s there was a website for everything: APIs are the roads and railways of the information revolution. Check the weather Check in for a ight Book an hotel Like distance to natural ressources during the XXth Century, companies' ability to use APIs becomes a key factor of success today. Tomorrow, everything will be aggregated on a single application like Apple Passbook or Google Now. APIs will be the pipelines for the XXIth Century gold: data. APIs are a basic need During past years, being connected everywhere has switched from an option to a must-needed for all smartphone users. While connected objects become more and more mainstream, their users will ask for common langages to plug them. // 17
  • WHY C-LEVEL SHOULD BE INTERESTED IN APIS? Communica7on Director CEO CFO CMO COO Sales Director HR // 18
  • Case Study #1 //
  • 1// SEVEN&I: APIS & MASS-CUSTOMIZATION 7&I is a leading global company operating convenience stores. To maintain its position as world largest franchisor, surpassing McDonalds, 7&I relies on a cutting-edge IT system integrating all business departments in an elastic cloud infrastructure. Internal APIs allow 7&I to take full advantage of their big data collection. $29B+ market cap 56,000 stores globally $65B 2013 revenue // This retail giant implemented in its 15,000s Japanese stores: #1 100% points of contact connected 100% line-up optimized from big data Sources: Seven&I Annual Report 2013, The Japan Times, 7Spot, LINE campaign in 7&I shops 3X deliveries per day // 21
  • 2// CONNECTING ALL POINTS OF CONTACT THROUGH APIS 1 // ADVANCED CASHIER DATA COLLECTION PRIVATE API Push sales data 2 // ADVANCED LOYALTY PLATFORM User data (age, gender) Environment data (location, weather, time & date) Manually added information 25M card holders 15,000 shops network Digital payment platform Smartphone/NFC version Sta incentives on membership activation PRIVATE API Pull recommendations 3 // BIG DATA & ANALYTICS Real-time data processing: Stock management optimization Store line-up recommendations 4 // MASS-CUSTOMIZATION Store line-ups are changed up to 3 times/day based on data recommendations // 22
  • 3// THE VALUE OF APIs: INCREASING SALES REVENUE AND COMPETING WITH E-COMMERCE Seven&I optimizes line-up with Big Data technologies. Seven&I challenges Amazon and its peers by becoming a data-driven company and building the infrastructure to create personal shopping experiences. [ [ ] ] (in seconds) (now in hours) Seven&I cant beat e-commerce giants and real-time customization. But strong and determined Big Data and intraday restocking strategies help them stay competitive with e-commerce execution speed. APIs help retail giants reach e-commerce speed // 23
  • Case Study #2 //
  • 1// OMRON: DATA RESELLING OMRON is a Japanese manufacturer of health-related connected objects. OMRON is historically an automation and electronic components company, which recently entered the eHealth services business through private proprietary APIs. +30% Growth of OMRON B2B activities in 2013. Target revenue: $130M in 2015 Since 2012, OMRON partnered with DOCOMO and operated a business model switch, based on APIs. Their new oer, Wellness LINK by OMRON, is a B2B service aggregating the Cloud data from 15 OMRON devices (Bluetooth, NFC and USB). Until 2012 Data accumulation and visualization for users From 2013 New business model: creation of reference data sets for external partners, sold through APIs. Sources: WellnessLINK (jp), Aninews.in, Docomo // 25
  • 2// FROM DEVICE MANUFACTURING TO DATA RESELLING THROUGH PRIVATE APIs 1// eHEALTH DEVICES PRIVATE API Push health data Blood pressure monitor Thermometer Scale Body Composition monitor Pedometer Sleep monitors PUBLIC API Pull health data PARTNER API Pull Patterns Pull Predictions PRIVATE API Pull health data 2// PUBLIC API 10+ mobile device applications Stronger engagement with tech communities Real-time data availability Custom segmentation 3// PERSONAL DASHBOARDS Cloud processing Multi-device service Context-based analytics 4// PARTNERSHIP THROUGH PRIVATE APIs Real-time health data access for practitioners Home monitoring for hospitals Disease and epidemics patterns prediction for the State // 26
  • 3// THE VALUE OF APIs: DEVELOPPING A NEW HEALTH INTELLIGENCE BUSINESS MODEL By reselling its health data, OMRON monetizes massive user data and has found a new revenue channel. B2C NEW: B2B Personal data visualisation Disease & epidemics intelligence Today: 40 million Japanese suer high blood pressure 16 million patients take a treatment 1,500 hospitals subscribed to Wellness LINK to optimize treatment eciency // 27
  • Case Study #3 //
  • 1// HONDA INTERNAVI: FUTURE OF DRIVING Honda was the rst car manufacturer to release a navigation system in 1983. Internavi Floating Car is Honda connected navigation service using mobile networks launched in 2003. The service gather 2 millions enabled cars in Japan. Honda uses an internal API linked to its connected cars and navigation system (InterNavi), allowing to pull/push information to/from vehicles: Each car pushes real-time data with location and speed Honda archives data related to more than 1B km in Japan Data are processed and shared real time Services included: Real-time trac conditions Entertainment features Sources: Honda Connecting Lifelines, Honda Silicon Valley Lab Car conditions Applications SDK // 29
  • 2// IN THE FUTURE CARS WILL BE MORE SIMILAR TO SMARTPHONES: CONTENT PLATFORMS WITH APPLICATIONS FOR EVERY USAGE PRIVATE API Push location & speed Pull informations 2M connected cars PUBLIC API Pull cars information 1// HONDA OFFICIAL APIs Real-time car informations on your computer Mobile devices applications 2// PARTNER APPLICATIONS Music (Pandora, aHaradio) Navigation (Smartloops, Waze) ... PARTNER API Push media content PARTNER API Push environment information 3// PARTNER APIS PUSH CONTENT ON INTERNAVI Weather information Parking availability ... // 30
  • 3// THE VALUE OF APIS: CREATING NETWORK EFFECT IN THE CAR INDUSTRY HONDA opened a Silicon Valley Innovation Lab to work with potential partners and nd new usages. Lately, HONDA developped new prospectives use cases: Share of internal APIs data to predict road conditions after a disaster (crowd sourcing) Dedicated hacthakon with partners to test and develop new usages (the 1st Open API for a car) Like Apple that turned the AppStore as a strong selling point, Honda is developing an ecosystem around the Navi System. // 31
  • Case Study #4 //
  • 1//COOKPAD: THE COOKING DATA PLATFORM Cookpad started as a web recipe sharing portal (Marmiton) and has since become a global intermediation platform dedicated to food. Revenue was coming from traditional online revenue streams such as: Membership Advertising Marketing 1M+ 500M+ $42M paying members pageviews/month marketing revenue Thanks to proprietary APIs and advanced use of Cloud architecture, Cookpad also developed innovative revenue streams such as monetizing analytics tools used by brands and business partners to gain better understanding of user behavior and most preferred ingredients. Sources: Coockpad, Cookpad Engineering Blog, ITMedia // 33
  • 2// ON TOP OF CLASSICAL REVENUE STREAMS, COOKPADS GROWTH IS SUSTAINED BY A SYSTEMATIC USE OF PROPRIETARY APIs AND ADVANCED USE OF BIG DATA TECHNOLOGIES User choice and taste Crowd sourced by search criteria Reporting Recipe analysis PRIVATE API Push logs Push trac data Push search data Dashboards Analytics & monitoring PARTNER API Pull layout recommendations PARTNER API Pull taste insights 1// RETAIL Food department layout is adjusted with Cookpad analytics 2// RESTAURANT Insight and analytics on client tastes PARTNER API Pull taste insights 3 // FOOD INDUSTRY Crowd sourced recipes for brands // 34
  • 3// THE VALUE OF APIs: A UNIQUE NEW REVENUE CHAIN AND BIG DATA EXPERTISE Having built a cloud API-friendly platform allows Cookpad to launch new products and innovate faster on mobile and abroad: API-enabled recipe suggestions based on physical lists Strong links with the tech community Crowd sourced translation With APIs and a cloud infrastructure to leverage its data, Cookpad turned itself from a user-generated recipes platform into a big data company with the associated metrics: $55M $860M 50%+ 2013 revenue Market cap Prot margin // 35
  • Case Study #5 //
  • 1// FUJITSU: AUTOMATING ALL FARMS Futjitsu has launched a new service called AKISAI that aggregates nationwide data from a network of sensors and cameras installed in elds and farms. The records include various data like soil temperature, moisture, rainfall, or humidity. Futjitsu wants to address the new farmer market: young ex-urbans with no farming experience. AKISAI uses Cloud technologies to store and process all farming data: Production schedules, production history, harvest volume, and planting information pushed through APIs ; Analytics give daily visualization of quality and cost for each planted eld ; Farmers can look back on the results of previous plans and modify the farming schedule for the future. Services included: 200,000 Recommendations based on history and environnement Advanced stats visualistations Full farming data Cloud storage Sources: CNET, Akisai Video Presentation, OpenToExport.com, DaiwaHouse Expected customers in 2016 // 37
  • 2// THE RURAL FLIGHT TOWARD DATA INTELLIGENCE AND AUTOMATION PRIVATE API Push production harvest data Push meteorological data 1// SENSORS PRIVATE API Push production quality metrics PRIVATE API Pull farming recommendations 2// MOBILE DEVICE Smartphones enrich Cloud data to improve feedback quality 3// FARMING INTELLIGENCE Recommendations for saving resources and increasing revenue PARTNER API Pull tractor directions 4// AUTONOMOUS FARMING Since 2010, autonomous tractors are using satellites to follow recommendations bases on history analysis // 38
  • 3// THE VALUE OF APIs: EMPOWERING THE NEW GENERATION OF FARMERS WITH DATA TECHNOLOGY The current situation in Japanese farming creates opportunities for automation and intelligence 60% of farmers are over 65 and the average age is over 70 Only 420,000 out of 1.5 million farmers are engaged in full-time farming Ageing of Japanese agriculture pushed the topic of farming knowledge management Tomorrow After-Tomorrow Daiwa House Agri-Cube Computer assisted traditional farming: computers helps famers to take decisions Fully data-driven and computer-processed farms. System using advanced data computation to optimize resources, from electricity, humidity or hydroponic fertilizers // 39
  • // 41
  • 1// SALESFORCE, CRM IN PLATFORM-AS-A-SERVICE MODE Salesforce provides a range of CRM services in the cloud via an API, on a subscription basis Sales force automation Customer service, support, helpdesk Social media monitoring and also some products related to companies workow. Performance management Enterprise social network Using Salesforce requires no software installation at customer companies sites. // 42
  • 2// WHAT WOULD IT COST IF THERE WERE NO APIS? If Salesforce did not have an API, it would have to install its software at each clients site, which means sending out sta to install the software. What would it cost? Lets assume that: = 3 meeting/day 200 days/year 1 salesperson Salesperson 600 meetings/year Salesforce has 104 000 clients To reach that client target in 3 years Salesforce would need around: 60 salespersons = $9 million Salesforce is able to handle a large basis of clients while maintaining low costs. Delivering services through an API is far more cost eective than running software locally on clients IT infrastructures // 43
  • 3// SALESFORCE API EASES IT SERVICES INTEGRATION Thanks to its API, Salesforce can easily integrate with: Applica7ons Web services // 44
  • // 45
  • 1// EXPEDIA, MARKETING THROUGH APIS Expedia is a travel booking company (train, plane, hotels, etc.). Before, their web marketing would be done thanks to an HTML framed window that aliates would embed in their website. Today, Expedia opened up an API for their aliates to enable them to pick up: Bookings Photos Search results User reviews It allowed developers who needed a piecemeal access to Expedia content to integrate it seamlessly in their interfaces and experiences. Today, Expedia Aliate Network includes 10,000 partners and makes $2 billion revenue per year, 90% of which comes from its API. Source: RWW, How an API Can Transform Your Enterprise // 46
  • 2// EXPEDIA, MARKETING THROUGH APIS Room 77 is a hotel reservations aggregator Users perform a hotel reservation search. Several options are suggested; they all redirect to the matching hotel booking partner websites. Links redirecting to Expedia website // 47
  • 3// EXPEDIA, MARKETING THROUGH APIS Drives more trac to Expedia Generates new revenues sources New distribu7on channels Thanks to its API, Expedia aliates do the partnership and marke9ng work for Expedia at a low marginal cost for Expedia. // 48
  • // 49
  • 1// MANY USE CASE SCENARIOS ARE BUILT ON THE NETFLIX API NeMlix oers subscrip9on to unlimited streaming movie and TV shows In October 2008, Netix opened an API to allow developers to use its resources: Movie database Queue management Rental history The API is free and allows for commercial use // 50
  • 2// MANY USE CASE SCENARIOS ARE BUILT ON THE NETFLIX API 800+ devices can stream Netix content Source: Redesigning the Netix API, Daniel Jacobson 20 000 developers use the Netix API // 51
  • 3// WHAT WOULD IT COST IF THERE WERE NO APIS? If Netix did not have an API, it could not have developed thousands of applications for hundreds of devices on its own. What would it cost if Netix developed these apps themselves? = Lets assume that: 50 000$/year Developer 20 000 developers use Netix API Having these developers in-house would cost Netix: $1 billion/year Netix allows third party developers to build applications for all sorts of devices, thus catering to many needs without involving high development costs. // 52
  • // 53
  • 1// FITBIT API, EXTERNALIZING R&D Fitbit is a tness tracker that records health and tness data. Originally, there was only one application using the data developed by Fitbit. In 2011, Fitbit created an API to allow third party developers to create tness apps using Fitbit health data such as daily steps, calories burned, food eaten and weight. // 54
  • 2// THRIVING INNOVATION BASED ON THE FITBIT API 20 apps were built on the Fitbit API creating innovative uses of tness and health data // 55
  • 3// THRIVING INNOVATION BASED ON THE FITBIT API MapMyRun uses FitBit health data to provide joggers with sta9s9cs such as calories burned, heartbeat, speed, al9tude // 56
  • 4// WHAT WOULD IT COST IF THERE WERE NO APIS? If Fitbit had not had an API, they would have had to develop applications internally to create innovative use cases. Without an API, it would not be able to leverage third party developers creativity. What would it cost if Fitbit had developed these apps themselves? Lets assume that: = $50 000 1 application 20 applications are using tness data from Fitbit API Developing these apps would have cost FitBit: $1 million Fitbit lets developers create new apps with its data, which results in higher usage of Fitbit device. It only cost Fitbit the maintenance the API. // 57
  • A COMPANY YOU MAY BE INTERESTED IN. WORK WITH US. http://www.fabernovel.com // 58
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  • OUR WORK. mazon.com THE HIDDEN EMPIRE Three digital engines to reshape and dominate retail Facebook, The Perfect Startup. Amazon, The Hidden Empire. And more. LinkedIn, the serious Network. Expanding to Russia with Love. // 61
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