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API Economy as a competitive factor: iPaaS in the Age of the Internet of Things (IoT) and Multi-Cloud Environments

What do APIs, integration and complexity have in common? All three are inseparable during the growth process of an IT project. Integration projects among two or multiple IT systems often lead to a delay or even the failure of the whole project. Depending on the company size, on-premise environments mostly consist of a relatively manageable number of applications. However, the use of multiple cloud services and the rise of the Internet of Things (IoT) scales to an excess of integration complexity.

The ever-growing use of cloud services and infrastructure across several providers (multi-cloud) makes a central approach necessary to preserve overview. In addition, it is essential to ensure a seamless integration among all cloud resources and the on-premise environment to avoid system and data silos. The variety of cloud services is rising incessantly.

The cloud supports the Internet of Things and its industrial offshoot – the Industrial Internet. Cloud infrastructure and platforms are providing the perfect foundation for IoT services and IoT platforms and will lead to a phenomenal rise of IoT business models. This will end in a market with ongoing new devices, sensors and IoT solutions whose variety and potential cannot be foreseen. However, the demand for integration also increases. After all, only the connection of various IoT services and devices leads to an actual value. At the same time analytics services need access to the collected data from different sources for analyzing and connection purposes.

The access typically happens via the cloud and IoT service APIs. As a consequence the term API economy comes in the spotlight. Integration Platform-as-a-Services (iPaaS) exposed as good candidates to ensure the access, integration, control and management in the cloud and in the Internet of Things.

iPaaS and API Economy: It’s all about the API

Enterprise Application Integration (EAI) was the central anchor in the age of client server communication to ensure business process integration within the whole value chain. The focus is on the tight interaction of a variety of applications that are distributed over several independent operated platforms. The goal: the uniform and integrated mapping of all business processes in IT applications and thus to avoid data silos.

However, the transition into the cloud age leads to a change in the usage behavior of on-premise interfaces to a mainly consumption of web APIs (Application Programming Interfaces). Finally almost each cloud and web services provider offers a REST or SOAP based API that enables to integrate services in the own application and thus benefit directly from external functions. Along with the increasing consumption of cloud services and the ever-growing momentum of the Internet of Things, the importance of APIs will rise significantly.

API Economy

The cloud native Internet companies are reflecting this trend. APIs are a central competitive factor for players like Salesforce, Twitter, Google, Amazon and Amazon Web Services and represent the lifeline of their success. All mentioned providers have created an own API ecosystem around them, which is used by their customers and partners to develop own offerings.

In this context the term “API economy” is used. The API economy describes the increasing economic potential of APIs. Thanks to mobile, social media and cloud services, APIs are no longer popular only under developers but also find their ways on the memos of CEOs and CIOs who have identified the financial impact. Providers typically benefit from APIs by:

  • Selling (premium) functions within a free of cost service.
  • Charging the sharing of content through an application or service of a partner.

CIOs benefit from the API economy by getting access to a quasi endless choice of applications and services they can use to expand their websites, applications and systems without developing, operating or even maintaining these functionalities on their own. Furthermore, APIs enable partner, customers and communities to get an easy access to own applications, data and systems to let the CIO’s company become a part of the API economy.

Everything works using pretended “simple” API calls. However, the devil is in the details. Integration and API management have a big significance in the API economy.

iPaaS = Integration Platform-as-a-Service

Over the last years many vendors have been originated that are specialist on the API management and integration of different services. These, so called, Integration Platform-as-a-Services (iPaaS) are cloud based integration solutions (in pre cloud times known as “middleware”) that support the interaction between several cloud services. Thus, developers and enterprises get the opportunity to create own “integration flows” that connect multiple cloud services among each other but also on-premise applications.

The iPaaS market splits in two camps: The wild startups and the IT majors who have developed respectively rebuild their portfolios. iPaaS vendors to watch are (excerpt):

  • 3scale
    The 3scale platform consists of two areas. The API Program Management gives an overview and information of the used APIs. The API Performance Management analyzes the API traffic in the cloud as well as in on-premise infrastructure. Together they enable to control and manage the API traffic within an own system and application architecture.
  • elastic.io
    The elastic.io iPaaS is offered as a cloud service as well as an on-premise installation in the own infrastructure. Based on the programming languages Node.js, Java and JSON, elastic.io provides a development framework that can be used to integrate several CRM, financial, ERP and ecommerce cloud services to ensure data integrity. Therefore necessary connectors are provided e.g. for SAP, SugarCRM, Zendesk, Microsoft Dynamics, Hybris and Salesforce.
  • SnapLogic
    The SnapLogic iPaaS is provided as a SaaS solution and helps to integrate data of cloud services as well as to let SaaS applications interact among each other and with on-premise applications. Therefore SnapLogic provides ready connectors (Snaps and Snaplex) that can be used for the integration and data processing. The iPaaS provider primarily focuses on the Internet of Things to connect data, applications and devices among each other.
  • Software AG
    The central parts of Software AGs iPaaS portfolio are webMethods Integration and webMethods API-Management. webMethods Integration Backbone integrates several cloud, mobile, social and big data services as well as solutions from partners via a B2B gateway. webMethods API-Management contains all tasks to get an overview and the control of the own and external used APIs. Among other things the functional range includes design, development, cataloging and version management.
  • Informatica
    The Informatica cloud integration portfolio contains a large service offering specifically for enterprise customers. This includes Informatica Cloud iPaaS, which is responsible for the bidirectional synchronization of objects among cloud and on-premise applications as well as the replication of cloud data and the business process automation. The Integration Services support the consolidation of different cloud and on-premise applications to integrate, process and analyze operational data in real-time.
  • Unify Circuit
    Unify Circuit is a SaaS based collaboration suite that combines voice, video, messaging and screen- and file-sharing – everything organized in “conversations”. However, Unify introduced a new PaaS category – cPaaS (Collaborative Platform-as-a-Service). This is an iPaaS that consolidates PBX, SIP as well as external cloud services like Box.com, Salesforce or Open-Xchange into a uniform collaboration platform. All data is stored at the external partners and is consolidated on the Unify Circuit platform at runtime.

IoT and Multi-Cloud: The future belongs to open platforms

Openness is a highly discussed topic in the IT and especially in the Internet. The past or rather Google have taught us: The future only belongs to open platforms. This is not about openness that should be discussed in terms of open standards – even or especially Google runs diverse proprietary implementations, e.g. Google App Engine.

However, Google understood from the very beginning to position itself as an open platform. Important: Openness in the context of providing access to its own services via APIs. Jeff Jarvis illustrates in his book „What Would Google Do?“ how Google – based on its platform – enables other companies to build own business models and mashups. Not without a cause – of course. This kind of openness and the right use of the API economy quickly lead to dissemination and made Google to a cash cow – via advertising.

Companies like Unify are still far away from the status to become comparable with the Google platform. However, the decision makers at Unify apparently realized that only an open architecture approach helps to turn the company from a provider of integrated communication solutions to a cloud integration provider and thus to become a part of the API economy. For this purpose Unify Circuit doesn’t only consolidates external cloud services on its collaboration platform, but rather enables developers to integrate Circuit’s core functions like voice or video as mashups in their own web applications.

From a CIO perspective integration is crucial to avoid system and data silos. A non-holistic integration of multiple and independent systems can harm the overall process. Therefore it is vital that cloud, IoT and Industrial Internet services are seamlessly integrated among each other and with existing systems to completely support all business processes.

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About the Author

About the Author: Rene Buest is Director Market Research & Technology Evangelism at Arago. Prior to that he was Senior Analyst and Cloud Practice Lead at Crisp Research, Principal Analyst at New Age Disruption and member of the worldwide Gigaom Research Analyst Network. Rene Buest is top cloud computing analyst in Germany and one of the worldwide top analysts in this area. In addition, he is one of the world’s top cloud computing influencers and belongs to the top 100 cloud computing experts on Twitter and Google+. Since the mid-90s he is focused on the strategic use of information technology in businesses and the IT impact on our society as well as disruptive technologies. Rene Buest is the author of numerous professional technology articles. He regularly writes for well-known IT publications like Computerwoche, CIO Magazin, LANline as well as Silicon.de and is cited in German and international media – including New York Times, Forbes Magazin, Handelsblatt, Frankfurter Allgemeine Zeitung, Wirtschaftswoche, Computerwoche, CIO, Manager Magazin and Harvard Business Manager. Furthermore Rene Buest is speaker and participant of experts rounds. He is founder of CloudUser.de and writes about cloud computing, IT infrastructure, technologies, management and strategies. He holds a diploma in computer engineering from the Hochschule Bremen (Dipl.-Informatiker (FH)) as well as a M.Sc. in IT-Management and Information Systems from the FHDW Paderborn. .

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