At a time when almost three-quarters (72 percent) of organizations’ customer interactions are now digital, organizations could lose on average $7 million ($6,846,979) in revenue if they fail to successfully complete digital transformation initiatives, reveals new research from integration and API platform MuleSoft, which finds that 70 percent of organizations struggle to provide completely connected user experiences across all channels.
To grow in today’s competitive environment, companies need to deliver connected digital experiences—for both customers and employees, according to the firm’s newly released 2022 Connectivity Benchmark Report, in collaboration with Deloitte Digital.
“In this all-digital world, customers and employees expect truly connected experiences,” said Brent Hayward, CEO of MuleSoft, in a news release. “However, siloed applications and data continue to hinder customer experience and digital transformation—and it is now costing businesses millions of dollars per year. Companies need to be able to easily integrate a growing number of apps and data sources to automate their business, create seamless digital experiences, and drive growth.”
Based on a global survey of 1,050 CIOs and IT decision makers, the report highlights the challenges and opportunities for organizations as they look to unlock their data to create and automate seamless experiences:
Customers expect seamless user experiences
Applications lie at the center of digital transformation and efforts to enhance the user experience. On average, organizations are using 976 individual applications (compared to 843 a year ago). Yet only 28 percent of these applications are integrated on average, indicating there is still an enormous opportunity to improve connected user experiences. MuleSoft’s report indicates that:
- Creating connected user experiences has become increasingly difficult: More than half (55 percent) of organizations said they find it difficult to integrate user experiences. This is up from 48 percent a year ago, showing there is increasing complexity for companies to meet their customers’ digital needs.
- Overcoming security and governance challenges is a hurdle: Security and governance (54 percent) was cited as the biggest challenge to integrating user experiences, ahead of outdated IT infrastructure (46 percent) and an inability to keep up with ever-changing processes, tools, and systems (42 percent).
- Integrating user experience delivers business benefits: Of the organizations that have integrated user experiences, more than half said it had enhanced visibility into operations (54 percent) and increased customer engagement (54 percent). Other benefits realized included innovation (50 percent), improved ROI (48 percent), and increased automation adoption (45 percent).
Integration challenges hinder digital experiences and initiatives
Data silos remain a significant barrier to creating integrated user experiences, with the number of organizations citing silos as a challenge (90 percent) remaining unchanged from a year ago. The report shows:
- Integration headaches: The biggest challenges to digital transformation are integrating siloed apps and data (38 percent) and risk management and compliance (37 percent). Eighty-eight percent of respondents said integration challenges continue to slow digital transformation initiatives.
- Too much is being spent on custom integration: In their efforts to integrate apps and data from across the enterprise, organizations appear to be focusing more resources in the wrong areas, such as custom integration. As a result, they are increasing their technical debt. On average, organizations spent $3.65 million on custom integration labor in the last 12 months, a 4% increase from last year ($3.5 million).
- IT budgets are up, but so is demand: Eighty-five percent of organizations said IT budgets have increased year-on-year (compared to 77 percent last year). At the same time, the number of projects IT is asked to deliver increased by 40 percent on average, a big jump from 30 percent a year ago. Despite the extra budget, IT is finding it difficult to meet the demands of the business. On average, more than half (52 percent) of projects weren’t delivered on time over the past 12 months.
Organizations turn to APIs to drive digital transformation and revenue
Despite these integration challenges, the vast majority (98 percent) of organizations use APIs. By using APIs to connect data and applications, organizations can digitally transform in a more sustainable manner and accelerate business success. The report indicates:
- A top down integration and API strategy: Most (90 percent) organizations now have a clear integration and API strategy. Over a quarter (26 percent) said leaders now demand that all projects abide by a company-wide API integration strategy, up from just 15 percent a year ago.
- Reuse is on the rise: Organizations are increasingly creating and using reusable IT assets and APIs to create new experiences and accelerate projects, rather than building from scratch each time. On average, 46 percent of organizations’ internal software assets and components are available for developers to reuse—an increase from 42 percent a year ago. Nearly half (48 percent) of organizations said IT is actively reusing these components, versus 41 percent in the 2021 report.
- Empowerment of business users: Enabling non-technical users to harness low-code tools to drive their own automation and digital transformation projects can take huge pressure off IT teams. More than half (55 percent) of organizations now have a ‘very mature’ or ‘mature’ strategy to empower these users to integrate apps and data sources powered by APIs (compared to 36 percent last year).
- APIs drive revenue: Two-fifths (40 percent) of organizations said they have experienced revenue growth as a direct result of leveraging APIs (compared to 28 percent a year ago).
“Digital agility is essential to successful transformation, allowing organizations to drive innovation at scale, deliver new initiatives faster, and create the experiences that customers want,” said Kurt Anderson, managing director and API transformation leader at Deloitte Consulting LLP, in the release. “A modern strategy that combines integration, API management, and automation is central to achieving digital agility. It enables organizations to easily connect and integrate their data, applications, and devices to create new digital capabilities and drive transformation projects.”
For the seventh-annual Connectivity Benchmark Report, MuleSoft, in partnership with Vanson Bourne, surveyed 1,050 IT leaders from global enterprises. The goal was to uncover how much value businesses actually gain from digital transformation, and to understand IT leaders’ most successful strategies for achieving digital transformation goals. The online survey was conducted between October 2021 and November 2021 across the United States, the United Kingdom, France, Germany, the Netherlands, Australia, Singapore, Hong Kong, and Japan. Only suitable candidates participated in the survey and were verified by using a rigorous, multi-level screening process. All respondents work at an enterprise organization in the public or private sector with at least 1,000 employees and hold a managerial position or above in an IT department.