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.

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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 ? 

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WHY SHOULD C-LEVEL CARE ABOUT APIS? IT'S THE NEW ECONOMY, STUPID.

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THIS WORK WAS MADE FOR YOU TO SHARE, REUSE, REMIX, REWORK…

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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.

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DIVE IN THE API ECONOMY PART #1

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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.

WHAT IS AN API?

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THERE ARE THREE MAIN TYPES OF APIS

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Partner

Partner APIs are used to facilitate communication and integration of software between a company and its business partners Advantages: •  Value-added service •  Up sell •  Must have for business

partners

Private

Private APIs are used internally to facilitate the integration of different applications and systems used by a company. Advantages: •  Rationalized infrastructure •  Reduced costs •  Increase flexibility: “real-

time” business •  Improved internal

operations

Open

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. Advantages: •  Delegated R&D •  Increased reach, traffic •  New revenue stream

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APIS IS AN INNOVATIVE AND EFFICIENT MODEL ALLOWING COMPANIES TO MANAGE THEIR CORE BUSINESS ONLY

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TRADITIONAL COMPANY

HR Finance

IT Logistics Marketing

Core business

R&D

R&D

Finance

HR

Sales

API-DRIVEN COMPANY

Logistics

Marketing

vs. “Elastic” IT

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

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« GOOGLE NOW » IS AN EXECUTION OF INTERNAL & EXTERNAL APIS FOR PREDICTIVE INTELLIGENCE

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Google Weather API

Travel Agency API Flight Carriers APIs

Google Agenda & Maps APIs

The value of Google Now lies in the aggregation of mostly free data external and internal data

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TODAY, OPEN API GROWTH IS SKYROCKETING...

8 Source: ProgrammableWeb

Number of public APIs listed on ProgrammableWeb

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...AND OPEN APIS MEAN A LOT OF EXPOSURE FOR WEB GIANTS

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30% tweets from Twitter official APIs

$3.8B

AWS’ revenues (API-based)

9M apps & websites connected

14 billion API calls / day

1 billion API calls / day

1 billion API calls / day

Sources: the Verge, Gartner, Facebook, Netflix, Klout, ebay

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THE RISE OF THE PROGRAMMABLE ECONOMY

PART #2

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MOST APIS ARE PRIVATE AND THUS INVISIBLE TO THE PUBLIC

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Open APIs

Private APIs

10 332 APIs

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HISTORICALLY, APIS WERE USED BY BIG SOFTWARE COMPANIES BUT THEIR USAGE IS BECOMING MUCH MORE STANDARD TODAY

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2002 2006

Application Services APIs •  Build new functionalities •  Trouble-free interoperability •  Accessible to big companies

Infrastructure services APIs •  Allows companies to

externalize IT infrastructures •  Access to computing power •  Available to anyone

Web services APIs •  Share data or services internally

and externally •  More unified communication protocol •  Accessible to any company •  Easy integration

1990s

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

2013

APIs for operating systems •  Create application for OS •  Attract developers •  Enlarge customer base •  Limited to big software

companies

Source: 3Scale, What is an API?

1985 - 2001

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IN THE 90’S APIS ALLOWED PROGRAMMERS TO DEVELOP APPLICATIONS FOR OS

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TODAY, APIS CONNECT SMARTPHONES, COMPUTERS, TABLETS, ETC.

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TOMORROW, ALL OBJECTS AND PEOPLE WILL BE ABLE TO EXCHANGE RESOURCES THROUGH APIS

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1 50 billion of everyday devices are connected today

billion devices will be connected in 2020, and this figure will double every 5 years

TOMORROW: THE RISE OF CONNECTED DEVICES IS THE FUEL BEHIND BOTH PRIVATE AND PUBLIC APIS GROWTH

Source: Ericsson (considered a conservative figure)

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APIs foster all web services

AFTER TOMORROW: THE PROGRAMMABLE ECONOMY

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APIs are universal infrastructure APIs are a basic need

At the beginning of the 2000’s there was a website for everything: •  Check the weather •  Check in for a flight •  Book an hotel

Tomorrow, everything will be aggregated on a single application like Apple Passbook or Google Now.

APIs are the roads and railways of the information revolution. Like distance to natural ressources during the XXth Century, companies' ability to use APIs becomes a key factor of success today. APIs will be the pipelines for the XXIth Century gold: data.

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.

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WHY C-LEVEL SHOULD BE INTERESTED IN APIS?

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CMO   Sales  Director  

COO  

HR  

CEO   CFO  

Communica7on  Director  

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BECAUSE APIS ARE ALREADY DISRUPTING ALL TRADITIONAL INDUSTRIES

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Retail Health Car Industry Media Farming

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Case Study #1

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1// SEVEN&I: APIS & MASS-CUSTOMIZATION

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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.

#1

100% points of contact

connected

100% line-up

optimized from big data

3X deliveries per day

// This retail giant implemented in its 15,000’s Japanese stores:

56,000 stores globally

$29B+ market cap

$65B 2013 revenue

Sources: Seven&I Annual Report 2013, The Japan Times, 7Spot, LINE campaign in 7&I shops

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2// CONNECTING ALL POINTS OF CONTACT THROUGH APIS

1 // ADVANCED CASHIER DATA COLLECTION •  User data (age, gender) •  Environment data (location,

weather, time & date) •  Manually added information

2 // ADVANCED LOYALTY PLATFORM •  25M card holders •  15,000 shops network •  Digital payment platform •  Smartphone/NFC version •  Staff incentives on membership activation

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

PRIVATE API Ø  Push sales data

PRIVATE API Ø  Pull recommendations

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3// THE VALUE OF APIs: INCREASING SALES REVENUE AND COMPETING WITH E-COMMERCE

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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 can’t 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

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Case Study #2

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1// OMRON: DATA RESELLING

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Since 2012, OMRON partnered with DOCOMO and operated a business model switch, based on APIs. Their new offer, Wellness LINK by OMRON, is a B2B service aggregating the Cloud data from 15 OMRON devices (Bluetooth, NFC and USB).

Growth of OMRON B2B activities in 2013. Target revenue: $130M in 2015

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.

Until 2012 Data accumulation and visualization for users

From 2013 New business model: creation of reference data sets for external partners, sold through APIs.

+30%

Sources: WellnessLINK (jp), Aninews.in, Docomo

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2// FROM DEVICE MANUFACTURING TO DATA RESELLING THROUGH PRIVATE APIs

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1// eHEALTH DEVICES •  Blood pressure monitor •  Thermometer •  Scale Body Composition

monitor •  Pedometer •  Sleep monitors

3// PERSONAL DASHBOARDS •  Cloud processing •  Multi-device service •  Context-based analytics

2// PUBLIC API •  10+ mobile device applications •  Stronger engagement with tech

communities •  Real-time data availability •  Custom segmentation

4// PARTNERSHIP THROUGH PRIVATE APIs •  Real-time health data access for

practitioners •  Home monitoring for hospitals •  Disease and epidemics patterns

prediction for the State

PRIVATE API Ø  Push health data

PUBLIC API Ø  Pull health data

PRIVATE API Ø  Pull health data

PARTNER API Ø  Pull Patterns Ø  Pull Predictions

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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

1,500 hospitals subscribed to Wellness LINK to optimize treatment efficiency

40 million Japanese suffer high blood pressure

16 million patients take a treatment

Today:

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Case Study #3

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1// HONDA INTERNAVI: FUTURE OF DRIVING

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Honda was the first 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 traffic conditions

Entertainment features

Car conditions Applications SDK

Sources: Honda Connecting Lifelines, Honda Silicon Valley Lab

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2// IN THE FUTURE CARS WILL BE MORE SIMILAR TO SMARTPHONES: CONTENT PLATFORMS WITH APPLICATIONS FOR EVERY USAGE

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3// PARTNER APIS PUSH CONTENT ON INTERNAVI •  Weather information •  Parking availability •  ...

2// PARTNER APPLICATIONS •  Music (Pandora,

aHaradio) •  Navigation (Smartloops,

Waze) •  ...

1// HONDA OFFICIAL APIs •  Real-time car

informations on your computer

•  Mobile devices applications

PRIVATE API Ø  Push location & speed Ø  Pull informations

PUBLIC API Ø  Pull cars information

PARTNER API Ø  Push media content

PARTNER API Ø  Push environment

information

2M connected cars

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3// THE VALUE OF APIS: CREATING NETWORK EFFECT IN THE CAR INDUSTRY

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•  HONDA opened a Silicon Valley Innovation Lab to work with potential partners and find 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.

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Case Study #4

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1//COOKPAD: THE COOKING DATA PLATFORM

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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

500M+ pageviews/month

Marketing

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.

Advertising

1M+ paying members

$42M marketing revenue

Sources: Coockpad, Cookpad Engineering Blog, ITMedia

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2// ON TOP OF CLASSICAL REVENUE STREAMS, COOKPAD’S GROWTH IS SUSTAINED BY A SYSTEMATIC USE OF PROPRIETARY APIs AND ADVANCED USE OF BIG DATA TECHNOLOGIES

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PRIVATE API Ø  Push logs Ø  Push traffic data Ø  Push search data

1// RETAIL Food department layout is adjusted with Cookpad analytics

2// RESTAURANT Insight and analytics on client tastes

3 // FOOD INDUSTRY Crowd sourced recipes for brands

Dashboards Analytics & monitoring

User choice and taste Crowd sourced by search criteria Reporting Recipe analysis

PARTNER API Ø  Pull layout

recommendations

PARTNER API Ø  Pull taste

insights

PARTNER API Ø  Pull taste

insights

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3// THE VALUE OF APIs: A UNIQUE NEW REVENUE CHAIN AND BIG DATA EXPERTISE

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$55M

2013 revenue Market cap

$860M 50%+

Profit margin

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:  

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

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Case Study #5

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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 fields 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.

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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 field ;

•  Farmers can look back on the results of previous plans and modify the farming schedule for the future.

Services included:

Recommendations based on history and

environnement

Advanced stats visualistations

Full farming data Cloud storage

200,000

Expected customers in 2016

Sources: CNET, Akisai Video Presentation, OpenToExport.com, DaiwaHouse

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2// THE RURAL FLIGHT TOWARD DATA INTELLIGENCE AND AUTOMATION

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2// MOBILE DEVICE Smartphones enrich Cloud data to improve feedback quality

3// FARMING INTELLIGENCE Recommendations for saving resources and increasing revenue

4// AUTONOMOUS FARMING Since 2010, autonomous tractors are using satellites to follow recommendations bases on history analysis

PRIVATE API Ø  Push production harvest data Ø  Push meteorological data

PRIVATE API Ø  Push production

quality metrics

PRIVATE API Ø  Pull farming recommendations

PARTNER API Ø  Pull tractor

directions

1// SENSORS

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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

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Tomorrow

•  Fully data-driven and computer-processed farms. •  System using advanced data computation to optimize

resources, from electricity, humidity or hydroponic fertilizers

•  Computer assisted traditional farming: computers helps famers to take decisions

Daiwa House Agri-Cube

After-Tomorrow

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THESE COMPANIES RE-INVENTED BUSINESS MODELS WITH APIS WHAT ABOUT YOURS ?

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1// SALESFORCE, CRM IN PLATFORM-AS-A-SERVICE MODE

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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 workflow.

Performance management

Enterprise social network

Using Salesforce requires no software installation at customer companies sites.

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2// WHAT WOULD IT COST IF THERE WERE NO APIS?

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Salesforce has 104 000 clients

If Salesforce did not have an API, it would have to install its software at each client’s site, which means sending out staff to install the software.

What would it cost?

Salesperson

3 meeting/day

200 days/year 1 salesperson

= 600 meetings/year

To reach that client target in 3 years Salesforce would need around:

60 salespersons $9 million

Let’s assume that:

=

Salesforce is able to handle a large basis of clients while maintaining low costs. Delivering services through an API is far more cost effective than running software locally on clients IT

infrastructures

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3// SALESFORCE API EASES IT SERVICES INTEGRATION

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Thanks  to  its  API,  Salesforce  can  easily  integrate  with:  

Applica7ons  

Web  services  

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1// EXPEDIA, MARKETING THROUGH APIS

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Expedia is a travel booking company (train, plane, hotels, etc.). Before, their web marketing would be done thanks to an HTML framed window

that affiliates would embed in their website.

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 Affiliate Network includes 10,000 partners and makes $2 billion revenue per year, 90%

of which comes from its API.

Today, Expedia opened up an API for their affiliates to enable them to pick up:

Source: RWW, How an API Can Transform Your Enterprise

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2// EXPEDIA, MARKETING THROUGH APIS

47

Links redirecting to Expedia website

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.

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3// EXPEDIA, MARKETING THROUGH APIS

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Thanks  to  its  API,  Expedia  affiliates  do  the  partnership  and  marke9ng  work  for  Expedia  at  a  

low  marginal  cost  for  Expedia.    

Drives  more  traffic  to  Expedia  

Generates  new  revenues  sources  

New  distribu7on  channels  

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1// MANY USE CASE SCENARIOS ARE BUILT ON THE NETFLIX API

NeMlix  offers  subscrip9on  to  unlimited  streaming  movie  and  TV  shows  

In October 2008, Netflix 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

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2// MANY USE CASE SCENARIOS ARE BUILT ON THE NETFLIX API

51

devices can stream Netflix content

developers use the Netflix API 800+ 20 000

Source: Redesigning the Netflix API, Daniel Jacobson

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3// WHAT WOULD IT COST IF THERE WERE NO APIS?

52

If Netflix 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 Netflix developed these apps themselves?

Developer

Let’s assume that:

Netflix allows third party developers to build applications for all sorts of devices, thus catering to many needs without involving

high development costs.

50 000$/year =

20 000 developers use Netflix API

Having these developers in-house would cost Netflix:

$1 billion/year

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1// FITBIT API, EXTERNALIZING R&D

54

Fitbit is a fitness tracker that records health and fitness 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 fitness apps using Fitbit health data such as daily steps, calories burned, food eaten and weight.

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2// THRIVING INNOVATION BASED ON THE FITBIT API

55

20 apps were built on the Fitbit API creating innovative uses of fitness and health data

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3// THRIVING INNOVATION BASED ON THE FITBIT API

56

MapMyRun  uses  FitBit  health  data  to  provide  joggers  with  sta9s9cs    such  as  calories  burned,  heartbeat,  speed,  al9tude  

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4// WHAT WOULD IT COST IF THERE WERE NO APIS?

57

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?

1 application

Let’s assume that: $50 000 =

$1 million

20 applications are using fitness data from Fitbit API Developing these apps would have cost FitBit:

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.

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A COMPANY YOU MAY BE INTERESTED IN.

58

WORK WITH US.

http://www.fabernovel.com

Page 59: Why should C-Level care about APIs? It's the new economy, stupid

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Together, we craft the future of your industry Our main areas of expertise  

TRANSPORT & UTILITIES

CULTURE, MEDIA, ENTERTAINMENT

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FOOD BEAUTY &

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Vinci NY MTA

Cartoon Network Radio France

Canal+ Lagardère

PagesJaunes Group Hearst Magazines WomanJournal.ru

Wikipedia Arte

Verizon AT&T SFR

Orange Twitter

Intel 4D

OZON.ru

Toys “R” Us Leroy Merlin / Adeo

Danone Groupe Auchan

Yves Saint Laurent Sonia Rykiel

FNAC SEB

Biomerieux L’Oreal Sanofi Essilor UCSF

Laboratoires Pierre Fabre

Page 60: Why should C-Level care about APIs? It's the new economy, stupid

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THANK YOU

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To the fabernovel team

Benoît Talabot Partner & Art Director

Anne-Audrey Gounot Junior Art Director

DESIGN

Amélie Pauvert Communication manager

COMMUNICATION

Cyril Vart Partner & VP Strategy

Julien Rialan Project Analyst in Paris

ANALYST

And also…

Francis Perrin Digital Strategy Consultant

Page 61: Why should C-Level care about APIs? It's the new economy, stupid

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Facebook, The Perfect Startup. 

And more.

LinkedIn, the serious Network. 

Amazon, The Hidden Empire.

Expanding to Russia with Love.

•••

Three digital engines to reshape and dominate retail

mazon.com THE HIDDEN EMPIRE

OUR WORK.

Page 62: Why should C-Level care about APIs? It's the new economy, stupid

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// NEW YORK 150 West 25th St. , Suite 503 New York, NY 10001 +1415 298 02 09 [email protected] // MOSCOW 3-iy Monetchikovskiy Peureulok 17, Stroenie 2 Moscow 11054 Russia +7(999) 639 80 82 [email protected]

// PARIS 17 rue du faubourg du Temple 75010 Paris +33 1 42 72 20 04 [email protected] // SAN FRANCISCO 169 11th St. San Francisco, CA 94103 USA +1415 626 6406 [email protected]

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