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- How to lead in the OPEN API ECONOMY
How to lead in the OPEN API ECONOMY
Authors: Dawn Bushaus, Managing Editor and Tim McElligott, Senior Analyst
Editor: Mark Newman, Chief Analyst
Application program interfaces (APIs) are vital in every digital business, and for communications service providers (CSPs) they could mean the difference between realizing and squandering the opportunity to monetize innovative 5G services. APIs are simple coding instructions that allow disparate software systems to communicate without the need for costly, time-consuming integration, and they are essential to enabling companies to interconnect with external partners in platform business models.
By now, the story of how Jeff Bezos used APIs to turn Amazon Web Services into a half-trillion dollar business seems trite, but there are still lessons to be learned, particularly in the telecommunications industry. As a whole, communications service providers (CSPs) have not yet figured out how to turn APIs into platform gold. Or perhaps it is more accurate to say they know how but are only beginning to execute on the plan.
They must move more quickly. As Stéphane Richard, Chairman and CEO of Orange, explained during his keynote address at TM Forum’s Digital Transformation World Series in October, the way telcos operate IT is too complex, rigid and costly. He believes that monolithic core IT systems and legacy processes and technologies are “a systemic part of the problem,” and he suggests that CSPs are not transforming fast enough.
“Progress in addressing these challenges is so slow that some studies predict that by 2025 technical debt will consume more than 40% of operators' current IT budgets,” Richard said.
Adoption grows
Orange is one of the pioneers of the TM Forum Open APIs, along with BT and Vodafone Group (see page 4). Since the formal launch of the Open API program in 2016, they have been joined by dozens more CSPs and suppliers pushing for the Open APIs to become the de facto standard in the telecoms industry.
It has not been an easy sell with every company. Most CSPs and suppliers have invested heavily in developing their own APIs, and the value of adopting an industry standard is not always readily apparent to everyone working inside a company.
But as understanding grows about how industry fragmentation impedes innovation and the ability to compete (see page 26), so does adoption of the Open APIs. Today, most of the world’s largest CSPs and telecoms suppliers are pledging their support not only for the interfaces, but even more importantly the Open Digital Architecture (ODA).
Are you a technology company with a Telco license?
How are you leading with your APIs today?
There is potential, as we have been told through numerous research reports and surveys, about digital technology – IoT, Industry 4.0, intelligent networks etc. each offering a whole new way, equipping you to better service your customer needs, now easier to realize and more low-hanging with the advent of 5G.
According to a world economic forum whitepaper, the digital transformation of telecommunications represents a $2 trillion opportunity for industry and society. Yet, we find the number of CSPs extending their revenue streams beyond connectivity to be minimal. Key areas where APIs seem to make a difference include:
- SDN / NFV APIs, an area that could be worth $220 billion in the near future
- API-driven marketplaces, generate up to 90% revenue for enterprises like Expedia and eBay but barely 5% (if that!) for CSPs
- APIs in IoT (home automation, connected cars etc.)– the number of connected devices is slated to reach 30 billion this year. CSPs can add more than $400 billion in operating profits by 2025 according to the world economic forum’s findings
- API ecosystems with adjacent businesses such as healthcare, insurance, energy and retail, offering services like credit scoring, inventory tracking, insurance-risk management etc. can add a substantial 35% to CSP profit margins, apart from significantly expanding your offering portfolio
A complimentary copy of the report can be downloaded below:
