Organizations are changing the way they do business to increase revenue, lower costs, improve efficiency and better compete through the use of emerging technology like APIs, mobility, B2B innovations and cloud. In many cases, these new technologies make use of existing enterprise computing interfaces, data and middleware programs. These changes are taking place as part of the cycle of change, disruption and transformation that has been fostered by IT for more than a half century.
Change, Disruption and Transformation
Fifty years ago, IT began as a force for change in many companies. Business leaders supported IT-driven change to lower transaction costs, reduce errors associated with manual processes and explore innovative ways of doing business through the use of master file and transaction data. While new enterprise applications supported day-to-day operations, advances like database management systems were a disruption to the status quo, creating pressure to convert existing files. Early, companies would offload a copy of the master file to a database supplying query tools that required no programming. End users would execute the queries against the data looking for new business opportunities. Later, the applications themselves were transformed using database technology considered mature for the time.
Disruption emerged as a force to be understood and handled in IT. Files gave way to databases, batch systems were replaced by real-time systems, and fixed function display screens gave way to web-enabled windows processed by ubiquitous web browsers. There were other changes. Development processes evolved as waterfall methodologies were replaced by more agile approaches and highly integrated methods like DevOps
. Today, the pace of disruption is increasing, driven by new technologies including API programs, mobile devices, B2B innovations, and cloud infrastructure and applications. This level of technology disruption is creating new business opportunities while threatening the status quo for some companies.
Impact of Today’s Technology
A good way to examine the impact of today’s technology is to look at its impact on three different industries—retail, banking and insurance. The retail industry is experiencing tremendous disruption because of new technology. Online shopping, the mobile revolution and ever-growing competition are transforming retail domestically and globally. New retail models such as peer-to-peer buying and selling
are also bringing about change. This rapid disruption is creating a tumultuous environment for incumbent retail companies. Shopping malls and retail chains alike are struggling to compete with online competitors and retail startups. Technological breakthroughs are one of five megatrends identified by PwC
fueling the need for retail companies to rethink their value propositions.
There’s a dramatic shift in customer expectations for banking and other financial institutions. This is fueled by their experiences in other businesses like retail, where shopping and buying online has challenged brick and mortar stores. According to PwC
, a 38 percent decline is expected in branch visits and phone calls while a 157 percent increase is anticipated in online, social and mobile banking contact. This new way of buying provides greater choice and more transparent pricing. Customers now expect to use the bank’s mobile app to scan a check and transfer money on any day at any time.
The insurance business is also changing quickly. According to KPMG
, the insurance industry is making significant technology investments. Legacy systems will be overhauled and technology will play a crucial role as insurers support digital channels and self-service options. Customers who expect real-time information whenever and wherever they are, without the assistance of an agent or a call center representative are driving this change. According to Ernst & Young
, almost 80 percent of companies say their customers are changing how they access goods and services. And more than 51 percent of these companies are changing their pricing and delivery models. Innovative new insurance firms have emerged and some are achieving rapid growth.
However, the challenging situations for retail, banking and insurance present plenty of opportunity for growth and expansion for companies who are able to develop new consumer technology in an agile fashion and create experiences that will delight their customers and employees.
New Business Opportunities
Today, new financial services companies are taking payments on mobile devices and charging lower rates than traditional providers. The payment processing systems supported by these new financial services companies are using APIs
to provide a way to access the systems supporting both REST and Simple Object Access Protocol (SOAP) approaches.
Insurance companies are using mobile applications for information, transactions like payments and features like taking photos to initiate claims. Manufacturing and distribution companies are providing B2B access to their systems to support onboarding of retailers finding new ways to partner and increasing the depth of the business relationship.
Government agencies, like the Federal Aviation Administration
are providing data through web services like live airport status. The travel industry is using APIs to encourage outside use of their platform by developers. Established financial services companies are unbundling services like payment, credit, investment, loyalty and loan services to compete with new entrants.
Four Technologies to Help Realize These Opportunities
1. API programs:
Organizations are using APIs for many reasons. Companies and organizations are doing more with APIs than just generating revenue. They are lowering costs, improving operational efficiency and responding to competition through the use of APIs. REST in the Cloud
is a useful primer on REST, APIs and their use in the cloud.
2. Mobile devices:
According to Forbes
, 81 percent of CEOs see mobile technologies as being strategically important for their enterprises. Additionally, 86 percent of CEOs indicate a clear vision of how digital technologies, including mobile, can create competitive advantage is key to the success of their investments. However, the use of mobile devices is not without challenges to business and IT.
3. B2B innovations:
According to B2B Marketing
, “It is expected that the global B2B eCommerce market will reach $6.7 trillion by 2020, completely dwarfing B2C.” This tremendous potential, and the demand to support borderless company-to-company trade, will foster B2B market transformation in new and significant ways. Data partnerships and APIs will propel innovation across the supply chain, customer service and fulfillment leveraging partnerships that offer greater customer choice and suppliers faster time to market.
4. Cloud infrastructure and applications: According to the business impact of the cloud
, the majority of businesses are using cloud computing; 38 percent have already adopted cloud computing, and another 29 percent are making plans to adopt it. Finance decision-makers believe that each of the listed traits of cloud computing (e.g., the latest versions of applications available everywhere, cost reductions, increased flexibility) could provide real benefits to their company. Furthermore, 96 percent believe that cloud computing provides their business with reduced IT maintenance costs, reduced IT spend, reduced operational costs and improved process efficiency. Leaders also believe cloud computing enables the IT department to contribute to the business more. For example, 61 percent believe cloud computing increases the IT department’s ability to innovate.
Technologies and Change, Disruption and Transformation
APIs, mobility, B2B and cloud are not the only innovations introducing disruption and fostering transformation, but they are top-of-mind for many executives. It is often difficult to determine if need is driving innovation or innovation is creating demand, but the cycle of change, disruption and transformation continues within and outside businesses worldwide.