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July 19, 2017

What CIOs really need to know about Partner Ecosystems and Integrations

Eike Malavasi
Product Manager - Zup Innovation
o que é ecossistema de parceiros | Sensedia API Management | Integrações com parceiros através de APIs

Imagine if everything your company needed to create was a platform, working as a means of communication so that a range of users could add content and create value to your business.

Or that your company could fully focus on a super specialized service, providing really high value. Complementary and support features, such as payments, data/resources management and integration etc. would be other companies' responsibilities.

Is it hard to imagine these scenarios?

Of course not.

The first one is basically how social networks and marketplaces work, while the second situation exemplifies business of all kinds, in all areas, through integrations with suppliers and partners.

How do these integrations happen? Well, there are many ways: since the most archaic means of file transfers to the modern RESTful APIs. We’ve already traced a “timeline” of the integrations’ revolution.According to Gartner

"A digital ecosystem is an interdependent group of enterprises, people and/or things that share standardized digital platforms for a mutually beneficial purpose (such as commercial gain, innovation or common interest). Digital ecosystems enable you to interact with customers, partners, adjacent industries — even your competition."

There are several examples of Digital Ecosystems, such as

  • Social networks (Facebook, YouTube, Twitter, Instagram, etc.), working as a means for exchanging content created by their users;
  • Marketplaces (Amazon, Extra.com.br, Netshoes, etc.), where 3rd-party merchants can advertise their products and take advantage of the portals’ traffic to acquire new customers, whereas the portals get a commision and provide a better customer experience;
  • Apps that make possible the creation of plugins and complements (WordPress, Google Chrome, Salesforce, Photoshop, AutoCAD, etc.), allowing new functionalities to be provided to their users;
  • Multiple types of SaaS (Uber, Netflix, Dropbox, Evernote), which deploy integrations to make their own services more complete, providing deeper value and a more complete experience, being able to take advantage of features created by other teams, with no need to develop more features.

An interesting consequence of the Partners’ Ecosystems are the emerging companies that provide their services only through APIs, charging for the quantity of calls to the API or per license.

There’s also the phenomenon of content creators on social networks, who are those who help obtaining customer popularity and loyalty, for example, the “Youtubers” boom.

This way, we can list some of the Partner’s Digital Ecosystems advantages:

  • Possibility to provide more value to customers;
  • Business expansion in terms of revenue/users, even from industries beyond their original reach;
  • Flexibility and sustainability, as a company can focus solely on its core business;

According to a poll carried out by Accenture, with 561 executives, 95% say that they count on partners’ collaboration over the next five years, using this strategy to support innovation, research and development.

The poll indicates even more: companies must change their way of thinking, creating shared value with partners, so they don’t compete as isolated companies, but as “clusters” - therefore, Ecosystems.Can you notice that companies must change? After all, the traditional model of business is not compatible with the Ecosystems’ reality (which we normally call API Economy).

Digital Transformation

Partners’ Ecosystems are a stepping stone for effective Digital Transformation

Whether you like it or not, the world is going through a major Digital Disruption.

In the current moment of global economy, we can state that every business is a digital business.

What varies amongst them is the “digital footprint”: how much digital services certain business uses/provides.

For instance, that small bakery in your neighborhood might not have a Facebook page or a website, but if they don’t accept credit cards, you probably will go mad, because you don’t have enough cash on you to buy whatever you need.

To other categories, it might be an absurd not to have a website or a social network profile - many restaurants and tattoo studios make their entire marketing via Instagram pictures.

On another perspective, larger companies and enterprises are going deeper every day in their use of technology.

According to Forrester, by 2020 companies will either become a Digital Predator or a Digital Prey.

The rise of customer expectations drives digital transformations and, one by one, changes business models. Initiatives powered by digital transformations have been the most effective in changing how businesses operate and drive value.

2 Types of Digital Ecosystems

Despite all the new possibilities and agility, there is an increased dependency of suppliers’ specialized services.

Taking Uber and Netflix as an example, they have both innovated in their respective sectors, but you still pay for either with credit cards. In other words, features of virtual payments were used in the applications, deployed by Developers of payment companies, and not by Uber’s or Netflix’s developers.

Therefore, the market for this type of supplier, which is ultra-specialized and “accessible” via API, only increases. Nowadays it’s possible to have a profitable business by providing services that were before only a block or part of a traditional service.

The second type of partnership is commonly known as “Sharing economy”.

It’s the case of companies such as YouTube, Airbnb and (again) Uber. Those services create only the platform, and the means where people provide their services or create and share content.

In this case, companies treat their users like partners and suppliers. After all, if the users don’t like the way the platform works, they will migrate to a competitor.

It’s something that happened a few times with social networks (e.g. MySpace, Friendster): a new one comes up that better meet the users’ current needs. As the one that had the highest popularity didn't evolve with its users needs, it became irrelevant.

The assets of a social network are the users: they are the partners.

How to create your Digital Ecosystem

As already mentioned, there’s a common denominator in all these services: APIs.

They are the glue that integrates different services.

Do you remember the ultra-specialized functionalities coming from the suppliers?

They can be accessible with a few code lines, calling the APIs of those suppliers.

Or the merchants, who want to sell their products on marketplaces?

They can make everything in an automated way, just by accessing marketplace’s APIs.

As already mentioned in an article published on CIO.com, Digital Transformation requires APIs.

Besides the technology, the decision of creating and cultivating your ecosystem depends a lot on structuring culture and processes that engage your business with the partners’ businesses.

Consequently, you will be able to establish open and collaborative operational models, having your partners not only as data suppliers, users or code lines, but also as true partner -- creating shared value.

How Sensedia can help your company with the first step: APIs

Sensedia has great expertise in creating API Strategies and putting them into practice, with both a state-of-the-art API Management Platform and leading Professional Services.

By the way, Sensedia API Platform has been positioned as a Visionary on the Gartner Magic Quadrant and a Strong Performer on the Forrester Wave.

Get in touch so we can talk about more about your API Strategy

Thanks for reading!