Why have Open APIs become business critical to the CSPs future? - Neural
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NEURAL TECHNOLOGIES
CLAUS NIELSEN - PRODUCT MANAGEMENT DIRECTOR
Why have Open APIs
become business critical to
the CSPs future?
Neural
Technologies
WHY HAVE OPEN APIS BECOME BUSINESS CRITICAL TO THE CSPS FUTURE? PAPER CONTENTS Introduction 3 Telecom Industry is lagging behind Web Service Providers in API adoption 4 Where’s the money in Open APIs for CSPs? 5 CSP Advantages with OpenAPIs 5 Multiple Models of Success 6 CSPs and Third Parties 6 Conclusions 7 2 NEURAL TECHNOLOGIES
WHY HAVE OPEN APIS BECOME BUSINESS CRITICAL
TO THE CSPS FUTURE?
INTRODUCTION
Over the last decade, the telecommunications industry has laid the foundation
for many of the innovative technologies in use across the world today. Some
of these technologies are value-added services and network APIs (Application
Program Interfaces). You only have to go back a few years to reach a time when
the communications service provider (CSP) value-added services were responsible
for a large positive contribution to the financial positions of the CSPs. An example
of this that will be familiar to everyone, is the era of buying and downloading
ringtones for our mobile devices in the early 2000s - the global ringtone market
was once worth an astonishing $2.5bn-$3.5bn. Yet, according to estimates from
independent research firms, CSPs have been steadily losing content revenue
sources like these, as they have been slow to respond to applications stores and
Image source: https://inform.tmforum.org/featured-vide- the changes in expectations caused by the entry of likes of Apple, Google
os/2017/02/open-apis-give-access-worlds-best-brains/
and Amazon.
The question we should be asking ourselves is, is there a way back for CSPs
and how? The answer is “Yes, there is”. The way forward for CSPs, so that they
can regain ground once again, is through the use of the Open APIs to promote
both internal and external innovation as well as to open up untapped revenue
opportunities. But what is it that CSPs have that will be able to set them apart?
Firstly, CSPs are and always have been an important channel to the consumer
market because of their direct billing relationships. Though, more importantly, CSPs
have access to all the data records that their subscribers generate, through either
their use of services or their location. These data records can be stored and used
by both CSPs and their external partners, as long as they respect national laws on
security and privacy. Moreover, with the introduction of IoT devices to telecoms
networks, their generated data records (and with it, the monetisation of them) will
drastically increase in both the volume as well as the value of Open APIs like never
before.
So, what do CSPs need to do to embrace and maximise Open APIs and the
possibilities they bring?
The broader strategic theme that will impact all businesses is relevant here.
Enterprises recognise that to successfully execute a complete digital transformation
of their business, they need to store all data records produced by end-2-end
digitised transitions. Yet, storage is only the first step, more important is the way in
which CSPs store their data records. This is where Open APIs will play an important
and critical role for the CSPs.
This whitepaper will review the current state of the industry concerning Open APIs’
various initiatives and their importance to the CSPs. As CSPs embark on their digital
transformation journey and digitise all of their data records, they are empowered to
expose and monetise Open APIs to regain some of the lost ground in revenue. The
key, will be the use of the Microservices architecture.
3 NEURAL TECHNOLOGIES
WHY HAVE OPEN APIS BECOME BUSINESS CRITICAL
TO THE CSPS FUTURE?
TELECOM INDUSTRY IS
LAGGING BEHIND WEB SERVICE
PROVIDERS IN API ADOPTION.
There are many web service provider companies that have had incredibly
successful APIs, whereby the API is integral to driving their core business. eBay is
familiar to all, and a company in which the use of Open APIs has been extremely
fruitful - several years ago, eBay shared that over half of their item listings were
made through their APIs.
Another great example of where Open APIs have been successful is Rovi. If you
have ever used Spotify, Mog, Slacker, or Turntable.fm then you’ve used Rovi. Rovi
provides entertainment metadata for music, film, television, artists, actors - pretty
much everything in entertainment. The Rovi Cloud Services API includes resources
for: data, search, recommendations, media recognition, media management and
Image source: https://techbeacon.com/8-reasons-why-your- even advertising. Before their API, Rovi would distribute their data in flat-file or
api-adoption-so-slow
database format. Now, their API has enabled them to become extremely agile, in
a historically slow-deal market (entertainment data often carries a litany of legal
agreements/restrictions). Yet, with the use of APIs, Rovi gains full content and
distribution control.
If the success of Open APIS is so clear among these companies and other web
services, why is it that CSPs are behind the eight ball?
For CSPs to achieve similar success as the web service provider examples above,
they need to realise that APIs expose what you do best. Therefore, CSPs must focus
on their core assets: communications, billing and most importantly: the data records
generated by end users and end devices (e.g. IoT devices). CSPs should combine
these assets with the creation of bespoke Microservices which can in turn use the
Open APIs to enable consumption of these services to create the differentiating
service offering.
Some CSPs claim that exposing APIs is difficult and risks commoditising their core
assets. They argue that there are difficulties in securely exposing the technology and
data records, which explains the delay in implementing APIs from the launch of The
Parlay Group (originator of the API exposure concept). Yet, this claim is no longer
valid since the introduction of security standards to the current industry standards
e.g. TM Forum’s Open API initiative as well as Neural Technologies Optimus Platform
implementation of APIs, will provide the CSPs with full control over what is securely
exposed and to whom.
To summarise, APIs are now a central strategy within most businesses. eBay has
demonstrated huge commercial success through its API strategy and we are simply
seeing an evolution of the web: APIs manage the device diversity problem, make it
easy to work with partners, enable open innovation, and create a positive feedback
loop around customer experience and revenue. CSPs can no longer afford delay;
they need an API strategy across their entire business, not just for third parties, but
also for innovation internally to monetise their key asset - the data records. The
utilisation of data records and the intelligence that you can derive from it through
the development of Microservices, will play a key part of their improved service
offerings so that CSPs can remain both relevant to their customers and competitive
in the market place.
4 NEURAL TECHNOLOGIES
WHY HAVE OPEN APIS BECOME BUSINESS CRITICAL
TO THE CSPS FUTURE?
WHERE’S THE MONEY IN OPEN
APIS FOR CSPS?
Any service and IoT devices a CSP offers will produce data records that can be
exposed through Open APIs for internal use or for partners to embed across
many industries. Yet, this is not a matter of build it and sell it. The landscape
has changed and requires active business development, standardised APIs and a
Microservice approach to make APIs a monetary success for the telecom service
provider.
CSP ADVANTAGES WITH
Image source: https://inform.tmforum.org/sponsored-fea-
ture/2014/07/monetizing-csp-digital-assets/ OPENAPIS
CSPs have many important advantages concerning APIs compared to other service
providers. These include the following:
• The network is critical for IoT adoption, e.g. smart networks, mHealth, and
connected car. IoT devices requires a simple, ubiquitous method of connectivity;
CSPs’ networks provide that connectivity along with many other capabilities such
as location, context, and charging.
• The network makes applications better: the network is aware of a device’s
context (presence, location, status); the network is secure; the CSP provides
a channel to market across consumer and enterprise; and everyone is not
connected by smartphones nor will they be, diversity remains. Customers
deserve choice and CSPs provide that choice.
• CSPs provide the world’s only online ubiquitous billing mechanism. Most of
Image source: https://inform.tmforum.org/news/2016/11/ the world’s population does not have credit cards or even bank accounts, yet
apis-increase-profits-research-shows/
they have prepaid balances. In addition, in-app charging provides much higher
conversion rates as it delivers a much easier and better user experience over
other payment methods.
• CSPs gather as huge wealth of data records from across the network elements
and devices connected to it. Exposing data records to be consumed by both
internal developed Microservices as well as exposed externally to partners will be
a key factor in being able to differentiate the user experience. The more you can
customise the experience the better it will be and in turn the more such services
will be consumed.
5 NEURAL TECHNOLOGIESWHY HAVE OPEN APIS BECOME BUSINESS CRITICAL TO THE CSPS FUTURE? MULTIPLE MODELS OF SUCCESS APIs impact internal innovation, innovation with partners and innovation with third party developers (for example, enterprises and simply unknown developers that will create something new using the CSPs Open APIs). An overlooked area is using APIs to speed up internal innovation. Today, most CSPs are frustrated in their attempts to launch new services since they find the processes slow and costly with projects to launch new services taking 18 to 30 months. Yet, the use of Open APIs enables the re-use of existing service components (Microservices), which have already been through the CSP’s approval processes. Hence, the product management groups can now create new services without the burden of lengthy process, thus accelerating internal service innovation to weeks rather than years. Moreover, Open APIs can speed up time to market through the interconnection of the various technical components across an ecosystem, e.g. the Internet of Things (IoT), IoT Application, IoT Platform, IoT Device etc. This action is also known as Open APIS For Vibrant IoT EcoSystem (OASIS). Work is currently ongoing within various industry groups including the TM Forum, where Open APIs standards are being defined. By adopting the IoT Open APIs, both CSPs as well as various IoT players can develop and then launch faster, more integrated, more innovative IoT applications/ services across multiple IoT verticals; for example Smart City & Smart Home though one Smart App. The opportunity is endless once the Open API framework gets adopted. Neural Technologies have successfully demonstrated these though various commercial deployments as well as TM Forum Catalyst projects like the OASIS project. CSPS AND THIRD PARTIES CSP’s recent developer initiatives have been quite consumer application focused – this is due to the reaction to Apple and Google (Android). The focus on ‘developers’ misses a critical point: it’s as important to explain the business opportunities presented by services delivered through APIs as it is to explain the technical details; A business person pays the developer’s salary, so they need to be convinced of the opportunity. CSPs are currently utilising a number of business models when exposing their networks and data records though Open APIs. Etisalat Sri Lanka is attracting interest because they pay developers to use their APIs. As the customer pays, they share that stimulated revenue with the developers. “Developer pays” is another option. There is not one right answer. Different business models are valid and the formula for success varies depending on the developers’ needs and market conditions as well as the revenues generated from the applications developed, which may be: end user pays or paid through advertising, and more. Open APIs make business sense as demonstrated by web services providers. The “train has left the station” and CSPs must act quickly to catch up with the rest of the market. APIs are fundamental to all aspects of the Telecommunications business; the key is exposing their key assets in a safe and secure manner and building a business around it. 6 NEURAL TECHNOLOGIES
WHY HAVE OPEN APIS BECOME BUSINESS CRITICAL TO THE CSPS FUTURE? Business models are moving fast and the game has moved beyond just exposing interesting Open APIs. Don’t focus on the developer, focus on the business / customer that can save money or win new revenue through using CSP Open APIs. Identify specific targets where your Open APIs solve a pain point for which the business is prepared to pay (in their time to integrate your API). For each target, build a bundled Open API so their job is even easier. APIs are just a piece of technology. As such, success will only be achieved through focusing on the business and delivering a solid value proposition to those using your Open APIs. CONCLUSIONS Open APIs solve significant business challenges in managing device diversity and working with partners as well as exposing data records under a variety of business models as demonstrated by likes of eBay and other adopters of Open APIs. In addition, given the introduction of IoT as well as the successful digital transformation of various CSP services, we will see a large demand for innovations made possible by developers of various applications through CSPs exposing such Open APIs. Even if this exposure is across its own lines of business. However, developers encompass many different segments, e.g. system integrators, enterprise customers, eco-systems - they are not just consumer application development geeks. CSPs must segment their Open APIs as well as target these different segments to meet their diversified requirements. In other words, ensure that for internal use each Line of Business has Open APIs that addresses their business needs. The same applies for external use towards partners where they need to be industry specific. Business model flexibility is another essential ingredient for success. Developer pays, customer pays etc. are all valid models. The key is to understand the partners’ and service provider’s needs and can provide such flexibility in how such are handled and exposed. Even for internal consumption in where you do not have a direct billing relationship with your own lines of business you still need to ensure that the “value” of the exposed data records through Open APIs in turn create value for the end user application developed & offered to the market. CSPs must also look beyond just exposing Open APIs. They must promote innovation so that new businesses will emerge built on top of the APIs where significant value resides. Just as Google fosters innovation and then acquires promising new businesses, so must CSPs. The Open API initiatives must be focused on enabling open innovation and open ecosystems rather than simply just providing connectivity even if this within the CSPs own line of business. It is clear that we have only just begun the Open API treasure hunt. Yet, if CSPs manage this correctly it seems only logical to predict that those CSPs that successfully combines all of the various ingredients of the Open APIs paradigm will find the gold. For more information on how Neural Technologies can help you go on this Open API treasure hunt, please contact us today at info@neuralt.com 7 NEURAL TECHNOLOGIES
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