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.

The Internet of Things (IoT) has jumbled the agenda of CIOs and CTOs faster than expected and with a breathtaking velocity. As of shortly cloud, big data and social topics occupied center stage. However, in the meantime we are talking more and more about the interconnection of physical objects like human beings, sensors, household items, cars, industrial facilities etc. Who might think that the “Big 4” now disappear from the radar is wrong. Quite the contrary is the case. Cloud infrastructure and platforms belong to the central drivers behind IoT services since they are offering the perfect preconditions to serve as vital enabler and backend services.

Public Cloud Workloads: 2015 vs. 2020

The demand for public cloud services shows an increasing momentum. On the one hand it is due to the requirement of CIOs to run their applications more agile and flexible. On the other hand most of the public cloud providers are addressing the needs of their potential customers. Among the varying workload categories that are running on public IaaS platforms standard web applications (42 percent) still represent the major part. By far mobile applications (22 percent), media streaming (17 percent) and analytics services (12 percent) follow. Enterprise applications (4 percent) and IoT services are still playing a minor part.

The reason for the current segmentation: websites, backend services as well as content streaming (music, videos, etc.) are perfect for the public cloud. On the other hand enterprises are still sticking in the middle of their digital transformation and evaluate providers as well as technologies for the successful change. IoT projects are still in the beginning or among the idea generation. Thus in 2015, IoT workloads are only a small proportion on public cloud environments.

Until 2020 this ratio will significantly change. Along with the increasing cloud knowledge within the enterprises IT and the ever-expanding market maturity of public cloud environments for enterprise applications the proportion of this category will increase worldwide from 4 percent to 12 percent. Accordingly, the proportion of web and mobile applications as well as content streaming will decrease. Instead worldwide IoT workloads will almost represent a quarter (23 percent) on public IaaS platforms like AWS, Azure and Co.

Public Cloud Provider: The perfect IoT-Backend

The Internet of Things will quickly become a key factor for the future competitiveness of enterprises. Thus, CIOs have to deal with the necessary technologies to support their enterprise business technology strategy. Public cloud environments – infrastructure (IaaS) as well as platforms (PaaS) offer perfect preconditions to serve as supporting backend environments for IoT services and devices. The leading public cloud providers already have prepared their environments with the key features to develop into an IoT backend. The central elements of a holistic IoT backend are characterized as follows (excerpt):

• Global scalability
• Connectivity/ Connectivity management
• Service portfolio and APIs
• Special services for specific industries
• Platform scalability
• Openness
• Data analytics
• Security & Identity management
• Policy control
• Device management
• Asset and Event management
• Central hub

Public cloud based infrastructure-as-a-service (IaaS) will mainly be used to provide compute and storage capacities for IoT deployments. IaaS provides enterprises and developers inexpensive and almost infinite resources to run IoT workloads and store the generated data. Platform-as-a-service (PaaS) offerings will benefit from the IoT market as they provide enterprises faster access to software development tools, frameworks and APIs. PaaS platforms could be used to develop control systems to manage IoT applications, IoT backend services and IoT frontends as well as to integrate with third party solutions to build a complete “IoT value chain”. Even the software-a-as-service (SaaS) market will benefit from the IoT market growth. User-friendly SaaS solutions will facilitate users, executives, managers as well as end customers and partners to analyze and share the data generated by interconnected devices, sensors etc.

Use Cases in the Internet of Things

digitalSTROM + Microsoft Azure
digitalSTROM is one of the pioneers in the IoT market. As a provider of smart home technologies the vendor from Switzerland has developed an intelligent solution for connecting homes to communicate with several devices over the power supply line via smartphone apps. Lego kind bricks form the foundation. Each connected device can be addressed over a single brick, which holds the intelligence of the device. digitalSTROM early evaluated the potentials of a public cloud environment for its IoT offering. Microsoft Azure provides the technological foundation.

General Electric (GE) + Amazon Web Services
General Electric (GE) has created an own IoT factory (platform) within the AWS GovCloud (US) region to interconnect humans, simulator, products, sensors etc. with each other. The goal is to improve collaboration, prototyping and product development. GE’s decision for the AWS GovCloud was to fulfill legal and compliance regulations. One customer who already profits from the IoT factory is E.ON. When the demand for energy increases in the past GE typically tried to sell E.ON more turbines. In the course of the digital transformation GE early started to change its business model. GE is using operational data of turbines to optimize the energy efficiency by performing comprehensive analyzes and simulation. E.ON gets real-time access to the interconnected turbines to control the energy management on demand.

ThyssenKrupp + Microsoft Azure
Together with CGI ThyssenKrupp has developed a solution to interconnect thousands of sensors and systems within its elevators over the Microsoft Azure cloud. For this purpose they are using Azure IoT services. The solution provides ThyssenKrupp several information from the elevators to monitor the engine temperature, the lift hole calibration, the cabin velocity, the door functionality and more. ThyssenKrupp records the data, transfers it to the cloud and combines it in a single dashboard based on two data types. Alarm signals that indicate urgent problems and events that are only stored for administrative reasons. Engineers get real-time access to the elevators data to immediately make their diagnostics.

IoT-Backend: Service Portfolio and Development Capacities are central

All use cases above show three key developments that determine the next five years and will significantly influence the IaaS market:

1. IoT applications are a central driver behind IaaS adoption.
2. Development tools, APIs, and value added services are central decision criteria for a public cloud environment.
3. Developer and programming skills are crucial.

Thus, several public cloud providers should question themselves whether they have the potential respectively the preconditions to develop their offering further to become an IoT backend. Only the ones who provide services and have development capacities (tools, SDKs, frameworks) in the portfolio will be able to play a central role in the profitable IoT market and being considered as the infrastructure base for novel enterprise and mobile workloads. Note: more and more public cloud infrastructure is used as an enabler and backend infrastructure for IoT offerings.

Various enablement services are available in the public cloud market that can be used to develop an IoT backend infrastructure.

Amazon AWS services for the Internet of Things:

• AWS Mobile Services
• Amazon Cognito
• Simple Notification Service
• Mobile Analytics
• Mobile Push
• Mobile SDKs
• Amazon Kinesis

Microsoft Azure IoT-Services:

• Azure Event Hubs
• Azure DocumentDB
• Azure Stream Analytics
• Azure Notification Hubs
• Azure Machine Learning
• Azure HDInsight
• Microsoft Power BI

Amazon AWS didn’t start any noteworthy marketing for the Internet of Things so far. Only a sub website explains the idea of IoT and what kind of existing AWS cloud services should be considered. Even with Amazon Kinesis – predestinated for IoT applications – AWS is taking it easy. However, taking a look under the hood of IoT solutions one realize that many cloud based IoT solutions are delivered via the Amazon cloud.

Microsoft considers the Internet of Things as a strategic growth market and has created Microsoft Azure IoT Services, a specific area within the Azure portfolio. However, so far this is only a best off of existing Azure cloud services that are encapsulating a specific functionality for the Internet of Things.

Public Cloud Providers continuously need to expand their Portfolio

From a strategy perspective IoT use cases are following the top-down cloud strategy approach. In this case the potentials of the cloud are considered and based on that a new use case is created. This will significantly change the ratio from bottom-up to more top-down use cases in the next years. (Today’s ratio is about 10 percent (top-down) to 90 percent (bottom-up)) More and more enterprises will start to identify and evaluate IoT use cases to enhance their products with sensors and machine-2-machine communication. The market behaviors we see for fitness wearable’s (wristbands and devices people are using to quantify themselves) today will exponentially escalate to other industries.

So, the majorities of the cloud providers are under pressure and can’t rest on their existing portfolio. Instead they need to increase their attractiveness by serving their existing customer base as well as potential new customers with IoT enablement services in terms of microservices and cloud modules. Because the growth of the cloud and the progress of the Internet of Things are closely bound together.