WHITEPAPER

2019Connectivity benchmark report

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About this report

Research for this report was conducted with IT decision makers across the U.S., U.K., Germany, Netherlands, Australia, Singapore, and China.

MuleSoft commissioned independent market research company Vanson Bourne to survey 650 IT leaders from global enterprises to discover:

› What is the state of today’s digital transformation initiatives?

› How is the role of IT evolving in the customer-centric era?

› What are the top challenges IT organizations face?

› Which strategies are enterprises adopting to get ahead of the market?

The research was conducted in December 2018 across the U.S., U.K., Germany, Netherlands, Australia, Singapore, and China. Respondents were IT decision makers from enterprise organizations with at least 1,000 employees, across both public and private sectors.

Interviews were conducted online using a rigorous, multi-level screening process to ensure that only suitable candidates were given the opportunity to participate.

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Contents

01 Digital transformation is front and center:

it’s all about the connected customer

02 IT’s new role: the business catalyst

03 The IT delivery gap widens as new technologies emerge

04 IT leaders prepare for the future

05 API programs:

the key to unlocking customer experience

Key takeaways for IT leaders

Demographics

Ninety seven percent of organizations are currently undertaking or plan to undertake digital transformation initiatives.

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01 Digital transformation is front and center: it’s all about the connected customer

In today’s connected world, businesses are competing on speed and agility to meet tremendous expectations of customers. Only 36% of IT leaders report their organization offers a completely connected customer experience. The vast majority of organizations (97%) are currently undertaking or plan to undertake digital transformation initiatives — through technologies including mobile, cloud, and analytics. Their key goals are increasing efficiency in IT (79%) and the wider business (77%) alongside improving the customer experience (71%). But in a market where digital is the threshold for competition, organizations must tackle a new set of challenges if they are to come out on top.

Looking ahead, companies will use digital technologies to better understand their customers; to fold cohesive experiences across all channels in customers’ ecosystems; and to operate so efficiently that changes can be delivered in real time.

Though the goal is clear, businesses are struggling to overcome the traditionally fragmented way of operating. To truly stand out in a market where every organization is digital, enterprises must go beyond adopting digital tools, overcome several persistent business challenges, and strive for digital maturity to shape the market.

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02 IT’s new role: the business catalyst

Digital transformation, which started as an IT initiative, has evolved into a business-wide charge with a single goal: to improve customer experience. IT and business leaders report being more aligned than ever before: 72% of IT leaders report they are aligned with the business versus 57% in 2018.

The alignment between the two functions goes as deep as shared key performance indicators (KPIs). The top two goals organizations report this year are increasing business efficiency (77%) and increasing IT operational efficiency (79%). An encouraging shift is taking place, with IT moving away from an operations-focused role into a central business role, leading the organization towards digital transformation success.

79%

83%

77%

70%

71%

71%

56%

58%

51%

51%

36%

27%

Increase IT’s operating efficiency

Increase business efficiency

Improve customer experience

Introduce new products and services faster

Improve employee experience

Improve partner experience

What are the main goals you would most like to achieve with your digital transformation initiatives in your organization? 2018

2019

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IT’s expanding roles and responsibilities are in large part driven by a greater need for support across lines of business. The vast majority (92%) of respondents say integration needs span beyond IT to a wide range of business areas. Among the most common are business analysts (49%), data science (42%), application owners (38%), support (38%), HR (37%), and marketing (36%).

49%

42%

38%

38%

37%

36%

34%

33%

8%

Business analysts

Data science

Application owners

Support

HR

Marketing

Engineering

Sales

None — only IT

Nearly all (92%) businesses report integration needs span beyond IT

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03 The IT delivery gap widens as new technologies emerge

Despite the fact that IT project demands will increase by 32% this year, the majority (77%) of IT respondents will see a budget increase

of less than 10%.

IT leaders are feeling more pressure in 2019 than ever before to rethink the way things have been done in the past. Despite the fact that IT project demands will increase by 32% this year, the majority (77%) of IT respondents will see a budget increase of less than 10%.

And already, the majority (69%) of their time remains dedicated to keeping the lights on instead of innovating new solutions for the business. This year, technology teams are facing new demands from the growing number of applications, increasing project needs from line of business owners, and implemen-tation of new technologies.

IT delivery capacity

Dem

ands

on

IT

Time

Big data/analytics

Internet of Things

Multi-cloud strategy

Today

Security

The IT delivery gap

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The growing demands on ITThe growing need for IT support across the business is reflected in the increasing number of projects that the department is involved in each year. On average, IT decision makers are being asked to deliver 32% more projects year over year. However, only 36% report that they were able to deliver all projects asked of them last year. In order to meet the increasing needs of the business, IT leaders are looking for new ways to streamline and manage systems, data, and devices across the enterprise.

Integrating hundreds of applications across the enterpriseWhile the number of individual applications in use in organizations remains high — more than half (53%) report having 800 or more applications in use, with 43% having 1,000 or more — the percentage of those that are connected or integrated remains stagnant at 29% (both this year and last year). The majority of IT decision makers (59%) find it difficult to introduce new applications or technologies or make changes to existing applications (65%) because of their IT infrastructure.

Additionally, IT is concerned with keeping up with new applications and technologies the business is investing in. Eighty four percent say that integration challenges are slowing digital transformation progress, while a similar proportion (83%) report data silos create business challenges in their organization.

The average percentage of apps that

connect/integrate

The average number of applications used in each

organization

900 29%

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Integration needs span across the businessAs the key enabler of integration within the organization, IT is being asked to deliver 32% more projects on average year over year in addition to its more traditional role of keeping the lights on. As observed earlier, what was once an IT-specific need for integration has now expanded to business units across the organization. The vast majority (92%) of respondents say integration needs span beyond IT, with each business unit requiring a unique use case for integration. While 22% of the IT budget is spent on integration each year on average, worryingly this figure has not changed year on year, suggesting that IT is expected to approach their new role as enabler with limited resources at their disposal — and need to do more with less.

Organizations struggle to meet customer expectations in their current stateWhile the vast majority (97%) of IT leaders surveyed for the 2019 Connectivity benchmark report that their organization is currently undertaking or planning to undertake digital transformation initiatives, only 36% believe that they provide a completely connected user experience across all channels. Though customer experience is a central focus of the majority (71%) of digital initiatives, this disconnect draws into question the progress that many organizations are making and whether they’re making the right investment decisions.

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Growing disconnected technology investments in 2019: security, big data, and IoTThe majority (59%) of respondents report that their team finds it hard to introduce new technologies because of their legacy technology systems while 65% report that it’s difficult to make changes to a particular system or application as a result.

As businesses invest in new and disconnected technologies, the IT delivery gap continues to widen. Many of the most common technologies in scope for investment are centered on the customer: security (57%), big data/analytics (55%), IoT (49%), and AI/machine learning (36%) — to protect, analyze, and enhance experiences for the wider benefit of the end user. Each of these technologies demand IT’s time and resourcing to implement.

57%

55%

49%

41%

36%

30%

29%

25%

25%

24%

23%

22%

21%

19%

16%

16%

Security

Big data/analytics

Internet of Things

Multi-cloud strategy

AI/machine learning

Blockchain

Streaming big data

Microservices

Virtual reality/augmented reality

API monetization

Business as a Platform

Bots (chatbots + RPAs)

Voice recognition

CI/CD and monitoring

BYO PaaS (PCF, OpenShift)

Streaming events

Top technology investments of 2019

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IT decision makers are feeling the pain

Top IT pain

points

1

2

3

Disconnected legacy infrastructure and systems

Keeping the lights on instead of innovating

Negative financial implications of failure to digitally transform

Disconnected legacy infrastructure and systemsWhen asked to rank their top three challenges, IT decision makers put legacy infrastructure and systems No. 1 on their list.

Keeping the lights on instead of innovatingThe majority (69%) of IT’s time remains dedicated to keeping the lights on instead of innovating. Further compounding the issue, IT budgets increased by less than 10% for the majority (77%) of respondents’ organizations in 2019 and are expected to do so again in the coming year.

Financial implications of failure to transformNine out of 10 (91%) IT decision makers believe that not successfully completing digital initiatives will negatively impact revenues in the future. Only 36% completed all projects requested of them last year.

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04 IT leaders prepare for the future

To address these challenges, IT teams are considering a number of initiatives. Around half plan to hire more talent (52%), use DevOps (50%), and/or reuse software components (46%), while around four in 10 will leverage APIs (39%).

What are IT teams in your organization doing to increase efficiency?

Hiring more talent 52.3%

DevOps 49.8%

Reusing software components to create new products and services 45.5%

Outsourcing contractors 43.8%

Leveraging APIs 38.9%

Implementing a microservices architecture 37.7%

Other 0.5%

Base 650

Hiring more talent and outsourcing to contractorsMore than half (52%) of respondents’ IT teams plan to hire more talent to support their growing needs. However, 29% of respondents report a lack of skills and experience within the existing IT team as one of their biggest challenges to digital transformation. Hiring additional headcount alone will likely propagate existing issues. Similarly, while 44% of respondents plan to solve their pains by outsourcing projects to contractors, this short-term fix is likely to create more problems in the long run.

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Using DevOps to improve efficiency of application production and deploymentHalf (50%) of IT decision makers are using DevOps to improve the efficiency of application production and deployment. When DevOps is done right, it enables developers to automate processes, such as security, patching, configuration management, performance testing, and monitoring throughout various environments.

Most commonly, respondents’ organizations are currently using a hybrid software development life cycle (SDLC) methodology (44%) — a combination of automated and manual processes — to develop and deploy software. However, the scale is beginning to tip toward automated methodologies: 31% have successfully automated most or all of their software development and deployment, while only the minority have a primarily manual (18%) or unstandardized (6%) methodology.

DevOps alone isn’t enough to meet increasing demands of customers and the business; its ultimate focus is on application production and deployment. To increase speed of delivery to market and value to the business, enterprises are attaching APIs to the artifacts produced through DevOps to make them discoverable and reusable. When enterprises enable DevOps with APIs, they are able to deploy an application-development model, which includes automated multifaceted testing and reporting ingrained in their SDLC, with continuous integration and delivery that allows the organization to quickly test and launch new features and applications. In their most mature states, organizations tightly couple SDLC metrics with project funding to measure and prioritize projects with the highest business impact.

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Reusing software components to create new products and servicesIT teams are increasingly reusing software components (46%) to improve efficiency of their application development process. When IT creates reusable assets rather than just delivering on projects, they enable the organization to use these existing assets for future project work, thus increasing overall delivery speed and capacity.

To support and promote the reuse of APIs or integration-related information, best practices, and assets, many organizations are establishing processes and structures to more effectively share between teams — one in five (19%) have a dedicated team in the company driving it, while others are doing so via shared resource wikis (29%) or hosted workshops (13%). And yet, only around a quarter (23-27%) report that sharing is completely effective across any of these areas — many have taken a step in the right direction, but further and bigger leaps are needed.

Almost all (94%) IT leaders state that their organization is reusing software assets to some extent, with 72% saying they are always or frequently doing so. On average, 39% of software assets are available for reuse, representing a small but steady growth year on year (37% last year).

Leveraging APIs to increase productivity, agility, and innovationAPIs are the glue that connect the digital world. For organizations to deliver digital transformation and innovate at the speed of market leaders, it is critical to discover, connect, and reuse software assets using APIs. Those that own APIs report an array of business results, from increased productivity (53%), greater agility across teams to self-serve IT (46%), to increased innovation (40%), all of which serve to better connect and integrate the business.

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Organizations see significant financial rewards for leveraging APIs — on average, 25% of organizational revenues are generated from APIs and API-related implementations, according to those that own them.

While leveraging APIs is essential to participate in the digital economy, fully capitalizing on the value of APIs requires a combination of an enterprise-wide API strategy that treats APIs like products and a network to enable connectivity throughout the enterprise. Only 15% of IT leaders report their organization has such a strategy mandated across the entire company.

When APIs are treated like products, they are packaged as applications with a full SDLC, making it much easier to standardize, discover, reuse, and secure them. Respondents who manage their APIs like products are up to 26% more likely to report benefits such as increased innovation and greater ability across teams to self-serve IT.

When it comes to organizations’ approach to integration, software development, and API strategies, there are positive signs that many are starting to establish the correct leadership and structure across the business.

53%

46%

40%

34%

33%

30%

29%

Increased productivity

Increased innovation

Increased employee engagement and collaboration

Increased speed in meeting LOB demands

Greater agility across teams to self-serve IT

Decrease in operational costs

Experienced revenue growth as a direct result

What business results has your company realized from leveraging APIs?

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05 API programs: the key to unlocking customer experience

Enterprises are making progress toward connecting the customer experience through digital transformation initiatives. Encouragingly, technical and business leaders are becoming increasingly aligned on their business objectives. The most mature organizations are partnering with customers to co-create their digital strategies.

There are significant financial benefits to API adoption — the average revenue gain attributed to API adoption is 25%. However, simply owning APIs is not enough to stay ahead of the market. Developing and driving an enterprise-wide API strategy is essential to fully realize the organizational benefits of API-led connectivity. Those who treat APIs like products — including agile software development and deployment — are most likely to see increased productivity (62%), greater ability across teams to self-serve IT (58%), and increased innovation (49%).

As the use of APIs becomes more prevalent, protecting APIs with API security will come to the forefront of digital transformation priorities. Currently, the top three concerns for IT decision makers when it comes to API security are data exfiltration (57%), compliance (53%), and network encryption/certificate management (51%).

54%

54%

48%

43%

28%

27%

27%

They are used to build integrations

They are part of the development process for new projects

They are reusable

They are managed like products

They are monetized

They are discoverable

They are exposed to third parties

Key API characteristics include reusability and being managed like products

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Key takeaways for IT leaders

What is the state of today’s digital transformation initiatives?Nearly all (97%) organizations are currently undertaking or plan to undertake digital transformation initiatives. The key goals are on increasing efficiency in IT (79%) and the wider business (77%) alongside improving the customer experience (71%). However, challenges do remain — disconnected infrastructure and systems (37%), resources and budget allocation (32%), and a lack of skills or experience in the IT team (29%) are all inhibitors of digital progress. Finally, as the amount of data, applications, and devices within organizations grows, IT teams are increasingly bogged down by data silos and lack of integration.

How is the role of IT evolving in the customer-centric era?In the race to meet growing customer expectations, IT and the business are more aligned than ever — only the minority (28%) report misalignment as a challenge compared to last year (43%). Demands for integration now span beyond the IT department for almost all (92%) organizations, and IT leaders report a 32% increase in the number of projects they are currently being asked to deliver.

What are the top challenges IT organizations face?While the organizational DNA of today’s enterprises is shifting to become increasingly digital, IT organizations face several persistent business challenges. IT and business inefficiencies, disconnected systems and applications, and limited resources are three of the top concerns for IT organizations in 2019. With the growing investment in disconnected technologies, such as such as security (57%), big data/analytics (55%), IoT (49%), and AI (36%), the IT delivery gap continues to widen.

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Which strategies are enterprises adopting to get ahead of the market?IT departments are undertaking a number of formalized initiatives and processes in their expanding role as a catalyst for digital development. Of the organizations that have begun to adopt API management and integration strategies across the business — only 15% report having a leadership-mandated API-led strategy. Additionally, organizations are shifting toward agile software development with the reuse of assets and the leveraging of APIs. Many have experienced significant business benefits as a result, such as increased productivity (53%), greater agility (46%), and increased innovation (40%).

Of the organizations that have adopted an API strategy, those that treat APIs like products — including agile software development and deployment — are even more likely to see benefits such as increased productivity (62%), greater agility across teams to self-serve IT (58%), and increased innovation (49%).

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Demographics

250

100

75

75

50

50

50

Respondents by country

U.S.

U.K.

Germany

China

Netherlands

Australia

Singapore

327

323

1,000—2,999 employees

3,000 or more employees

Respondents by organization size

84

84

81

61

56

51

50

44

33

30

11

65

Healthcare (including public and private)

Retail

Financial services

IT, technology, and telecoms

Manufacturing and production

Business and professional services

Public sector (excluding healthcare)

Energy, oil/gas, and utilities

Media, leisure, and entertainment

Construction and property

Consumer services

Other

Respondents by sector

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About MuleSoft

MuleSoft, a Salesforce companyMuleSoft’s mission is to help organizations change and innovate faster by making it easy to connect the world’s applications, data and devices. With its API-led approach to connectivity, MuleSoft’s market-leading Anypoint Platform™ empowers over 1,600 organizations in approximately 60 countries to build application networks. By unlocking data across the enterprise with application networks, organizations can easily deliver new revenue channels, increase operational efficiency and create differentiated customer experiences.

For more information, visit mulesoft.com

MuleSoft is a registered trademark of MuleSoft, LLC., a Salesforce company. All other marks are those of respective owners.