© 2013 IBM Corporation The API-Driven Business Model Transforming Business Outcomes Through API Management 

© 2013 IBM Corporation IBM API Management The way we reach and understand customers is evolving Websites Connected Appliances Partners Websites Internet TVs Smartphones Tablets Game Consoles Connected Cars Millions 1993 - 2000 Trillions 2013+ APIs 2 

© 2013 IBM Corporation IBM API Management Our customers expect access to data anytime, anywhere, across a range of devices. 3 Of enterprises say poor integration hurts customer-facing apps Dollars in eBay transactions processed through APIs Smartphone users by 2016 1 billion 7 billion 69.1% Increase in mobile transaction volume since 2011 10x traffic Reaches Twitter through APIs than the Web 42% 126 million Tablet users by 2016 x 

© 2013 IBM Corporation IBM API Management APIs are giving rise to a new app “value chain” Big Data Assets Big data sources provide insights that are shared and monetized through APIs Social Users Social APIs fuel personalized experiences for users and new business models Cloud Web Apps Cloud services are exposed through Web APIs enabling rapid composition environments Mobile Apps Mobile applications make calls to back end services through Web APIs Externalization Consumption Integrated and enabled by an API Economy 4 

© 2013 IBM Corporation IBM API Management A complete API strategy should address API creation and consumption Creation Consumption • Assembly • Transformation • Rationalization • Discovery • Composition • Deployment Assets & Services Application End Points Grow revenue through new channels Deliver a differentiated customer experience Grow revenue through new channels Deliver a differentiated customer experience External APIs Partner APIs Internal APIs 

© 2013 IBM Corporation IBM API Management With developers at the center 6 Assets Customers Apps APIs Developers drive consumption of assets control the value chain an API is successful only if the application that uses it is successful should be treated as products APIs are used to drive adoption by developers successful applications leverages many APIs App is as strong as its weakest API 

© 2013 IBM Corporation IBM API Management Example: APIs creation extends services 7 “Better Bank’s” comprehensive API strategy reaches customers through new channels External Developers • Lending Rates API • Deposit Rates API • Neighborhood Data API • Demographics API Local Real Estate Aggregator App 

© 2013 IBM Corporation IBM API Management Example: APIs consumption powers high-value applications 8 “Better Bank’s” comprehensive API improves employee productivity Internal Developers • Customer Profile API • Risk Score API • Valuation API • Property Details API • Mortgage API Loan Origination / Processing Application • Credit Pre-qualification API • Application Submission API 

© 2013 IBM Corporation IBM API Management APIs are a path to new business opportunities and growth is accelerating dramatically 9 APIs represent a new, fast-growing channel opportunity Business models are evolving stores (800) ###s web sites web APIs By 2014, 75% of the Fortune 1000 will offer public Web APIs. By 2016, 50% of B2B collaboration will take place through Web APIs. Sources: Gartner, Predicts 2012: Application Development, 4Q, 2011; Gartner, Govern Your Services and Manage Your APIs with Application Services Governance, 4Q 2012; Gartner, Open for Business: Learn to Profit by Open Data, 1Q 2012 

© 2013 IBM Corporation IBM API Management APIs Apps Social Feedback and Communities Marketplace Self-Service Portal: Registration • Documentation • Sandbox Security, Metering and Control API Design and Integration Analytics and Monetization API Lifecycle Management Composition Infrastructure Services DevOps and App Management Mobile Services Internal Developers Partner Developers External Developers Channels: Smartphones • Tablets • Desktops • Cars • TVs • Others Services: Data • Processes • Applications API Strategy Consulting API Technical Consulting Cloud A successful API initiative requires end-to-end capabilities 

© 2013 IBM Corporation IBM API Management 11 Driving a complete business model 1 Define 2 Design 3 Communicate & Compose Plan outcome, development, and revenue strategy for API creation and consumption Transform assets for revenue generation through interface development, metering, and analytics Evangelize APIs to internal and external developers and leverage them for app development API Business Model 

© 2013 IBM Corporation IBM API Management 12 An API project, like any business initiative, must begin with strategy 1 Define Plan outcome, development, and revenue strategy for API creation and consumption API Business Model  Determine business goals  Inventory assets and services  Develop a business model  Establish success criteria  Partner for strategy and technical support 

© 2013 IBM Corporation IBM API Management A comprehensive API strategy begins by defining business objectives 13 API Business Goals • Grow revenue through new channels • Increase brand recognition • Speed integration with partners • Accelerate delivery of mobile apps • Improve customer satisfaction 

© 2013 IBM Corporation IBM API Management Take a thorough asset inventory to unlock existing value 14 Asset checklist  Will this business asset support the API goal or objective?  How would the developer or end user get value from this asset being exposed?  What types of applications can be made from this asset?  How will the exposition of this asset affect my business? Beginning Inventory + Ending Inventory + Enterprise assets, services, and information, can deliver new revenue streams 

© 2013 IBM Corporation IBM API Management Determining the right monetization model is crucial to revenue generation  Drives Adoptions of APIs  Typically low valued assets  Drive brand loyalty  Enter new channels For Free Facebook Login API provides free authentication for any Web / mobile app Example: Developer Pays  Business Asset must be of high value to the Developer  For example, marketing analytics, news,  Capabilities such as credit checks Amazon EC2 Web Services – APIs charge per usage to launch and manage virtual servers. Example: Developer Gets Paid  Provides incentive for developer to leverage web API  Ad placements  Percentage of revenue sold product or services Google AdSense APIs pay developers who include advertising content into apps Example: Indirect  Use of API achieves some goal that drives business model.  E.g. Increase awareness of specific content, or offerings eBay Trading APIs offer developers access to trading services extending the reach of listings and transactions Example: 15 

© 2013 IBM Corporation IBM API Management Identify measuring criteria to determine success of an API program • Number of transactions • Number of clicks • Number of Ads displayed • Revenue generated • % increase in customer satisfaction • Number of partners you were able to on board quickly New Channels Brand Recognition Revenue Generation Faster Integration Customer Satisfaction Drives API Business Goals Success Criteria Case Study: Large media organization and syndicator of news API Usage: Internal (largest), member stations, partners, general public Objective: To get content in front of as many consumers of information as possible Metrics Gathered • Request, Response, Impression, Loyalty Monthly Growth of Total Stories Requested 16 

© 2013 IBM Corporation IBM API Management The right expertise can significantly accelerate an API strategy 17 Monetization strategy 2-Design Implementation 1-Strategy Definition Distinctive value Asset rationalization and Integration 3-Operational Readiness 4-Outreach and Ecosystem Development Industry and competitive APIs Security, Metering and Control Assessment Usage Analytics and Billing Entitlement and User Mgmt Self-service portal References & Sales process Marketplaces Documentation and samples Feedback and evolution Ecosystem Engagement Support API Implementation Production Platform & scalability Business track Technical track Release Policy Regulatory / Privacy Environment Technical Roadmap Pricing & Licensing model Support Policy DevOps API Design Architecture Business Controls Evangelism & Thought Leadership 

© 2013 IBM Corporation IBM API Management 18 Key capabilities transform services into revenue generating API products 2 Design Transform assets for revenue generation through interface development, metering, and analytics API Business Model  Rapid and simple assembly  Hardened security and authentication  Metering  Analytics and monitoring  Lifecycle management 

© 2013 IBM Corporation IBM API Management Core assets need a simple interface to prepare them for exposure as external APIs Most organizations are sitting on goldmine of potential high value information assets • Product Catalog • Customer Records • ATM / Retail Locations • Payment Services • Shipping and Fulfillment • Job Openings • Risk Profiles These assets can be transformed into lightweight, RESTful API’s through a simple mapping exercise 19 Creation APIs • Assembly • Transformation • Rationalization Assets & Services Grow revenue through new channels Grow revenue through new channels Transforming high value assets 

© 2013 IBM Corporation IBM API Management Design is a critical consideration 20 A well-designed system can present a simple and intuitive interface to what often are complex inner workings. The external view of your enterprise must work the same way. API Design • Design from the outside-in. Understand the target market and how APIs will be consumed • Simplicity is key. Limit coding. Manage the asset, not the code • Keep measurement in mind. Strong analytics is a must with any API 

© 2013 IBM Corporation IBM API Management In addition, the edge of the enterprise needs to be protected 21 Companies cannot afford abuse of their information or assets exposed by an API Encrypt Traffic Protect Against Attacks • Buffer Overruns • Denial of Service • Malformed Data Throttle Traffic Enforce Quotas • Based on Agreements • Based on Priorities 

© 2013 IBM Corporation IBM API Management A hardened security gateway appliance is required to handle additional requests and provide authentication As application services are extended beyond enterprise walls, securing a customer’s identity and information is critical through: • Authoring and management of service level agreements (SLA’s) • Enforcement of contracts and policies • Fine-grained authorization (OAuth) • Web services access control Why a purpose-built, hardened, DMZ-ready gateway appliance? 22 API Access: JSON, XML, REST Enterprise Application A Application B Mobile, Web users Business partners Hacker 

© 2013 IBM Corporation IBM API Management While throttling the usage of back end services by defining developer entitlements to ensure quality of service Entitlements are required to meter and administer proper service levels • Limit based on number of calls • Per period of time • Specify requirements for App Key, and Secrets 23 

© 2013 IBM Corporation IBM API Management Acting on API analytics means pinpointing key market fluctuations and finding correlations related to business objectives Key questions: • What is the top traffic producing APIs? • What are the top apps producing traffic? • What is the geo location of the traffic? Robust analytic capabilities maximize the value of API products 24 

© 2013 IBM Corporation IBM API Management Like any product, APIs must be adjusted based on market and business conditions Feedback Customers Business Processes Product Development and Innovation Customization Enhanced services and products API To keep pace with developers, APIs need fine tuning and require • Updates with minimal to no interruption to consumers • The ability to test and push them to production in a rapid manner • The ability to revert to previous snapshot and restore to the last known good configuration 25 

© 2013 IBM Corporation IBM API Management 26 As a product, APIs must be marketed and developers are your customer 3 Communicate & Compose Evangelize APIs to internal and external developers and leverage them for app development API Business Model  Internal evangelism  External evangelism  Developer Outreach  Marketplace 

© 2013 IBM Corporation IBM API Management Determine developer outreach and marketing strategy 27 Developer marketing strategy is not just about marketing to external developers, but also marketing to internal, and partner developers • Determine developer motivation • Develop co-marketing programs (hackathons, meetups, blogs) • Provide the right API documentation and resources 

© 2013 IBM Corporation IBM API Management Socialize APIs through a branded developer portal 28 Communicating key information • Access to API documentation • Developer sign-up and management • Application management and analysis of API usage 

© 2013 IBM Corporation IBM API Management Product Catalog by MAX Buy Value to providers Access to a large developer community • API and mobile components Providers Value to developers Find, evaluate and integrate APIs and components in a few clicks • Mobile app developers • Cloud-centric developers The ability to stand up a API marketplace extends reach and provides additional revenue generation opportunities 29 

© 2013 IBM Corporation IBM API Management Challenge A regional transit authority needed to challenge software developers to use APIs and data to create new apps to improve the transit experience of millions of daily riders “It was inspiring to see so many talented teams turn out…and put forth ideas that have the potential to transform the transit experience for millions of riders every day” Hackathon To drive interest they hosted a hackathon—a 2 day challenge with judging and prizes that asked participants to develop apps using APIs to make transit work better in a single, 30-hour sit-down Results • Creation of 17 App concepts, 3 winning teams announced • Grand Prize Winner: Leverages transti data to allow customers to identify favorite subway musicians that perform, locate them, and buy their singles. 30 Improving transit through developer outreach 

© 2013 IBM Corporation IBM API Management 31 Drive socialization and adoption beyond the developer portal 4 million Unique visitors a month 1 million Registered Users 40,000 Resources in dW library 93 Countries 34 Industry Awards IBM API Management provides embedded access to developerWorks – collaboration with millions of developers to drive adoption of APIs 

© 2013 IBM Corporation IBM API Management Business Challenge Solution Result Types of APIs Example Apps • Create an “easy to do business with” environment for partners • Establish a secure digital wallet for online purchases so personal financial data is not transmitted on the internet. • Provide a 360°view of the end user for member banks • Implement an API Management solution that provides: 1. An easy to use developer portal 2. Rapid assembly of new Restful APIs for online merchants 3. Extensive real-time analytics • Coupon redemption • Payment options • Partner Loyalty Programs • Account status • Improved relationships with members and partners • Increased transaction volumes and revenue generation • Gained real-time views of buying behavior and accelerated the timing of new, targeted offers to buyers • Groupon: Daily Merchant coupons to help drive new customers • PayPal: Account linkage to banks, credit and debit cards • Tripit Point Tracker: aggregates points from various travel industry merchants. Financial Services: Leading Payments Processor 

© 2013 IBM Corporation IBM API Management Business Challenge Solution Result Types of APIs Example Apps • Establish a secure digital wallet for subscribers • Create ecosystem for Near Field Communication (NFC) transactions including banks and merchants • Leverage existing loyalty programs • Implement an API Management solution that provides: 1. An easy to use developer portal 2. Rapid assembly of new Restful APIs for merchants to access transaction data 3. Extensive real-time analytics to better understand customer behavior • Payment options (credit/debit) • Partner Loyalty Programs • Merchant specific promotions • Access to payment account information • Launched new service with “sticky” application generating more ARPU • Gained a closer relationship with subscribers and merchants • Provided real-time views of buying behavior and accelerated the timing of new, targeted offers to buyers via loyalty programs • Groupon: Daily Merchant coupons to help drive new customers • PayPal: Account linkage to banks, credit and debit cards • Tripit Point Tracker: aggregates points from various travel industry merchants. Telecom: Leading Wireless Carrier 

© 2013 IBM Corporation IBM API Management Business Challenge Solution Result Types of APIs Example Apps • Increase revenue from in-flight services. • Improve customer satisfaction for passengers riding in economy class • Combine travel information from partners in an easy to use app. • Implement an API Management solution that provides: 1. An easy to use developer portal to create effective apps 2. Establish a partner ecosystem to combine customer specific info 3. Extensive real-time analytics to better understand customer behavior • Partner reservation data access • Inventory look up and order processing for airline caterers. • Aircraft services list (i.e WiFi on board) and order processing before boarding • Access to map sources • Created an app that incorporates travel info combined with map mash up • Economy passengers can now pre order food and beverage up to 2 hours before the flight which has increased in flight revenues by 6% in early trials. • Google Maps: for directions once on the ground • Tripit: for aggregating travel information • Pizza Hut: food ordering and payment processing Travel & Transport: Leading Airline Carrier 

© 2013 IBM Corporation IBM API Management Business Challenge Solution Result Types of APIs Example Apps • Streamline claims processing for cost reduction. • Improve customer satisfaction by speeding up claim resolution. • Grow customer base. • Implement an API Management solution that provides: 1. Exposes customer policy information on mobile devices 2. Enable claims adjustors to include images of claim to verify damage estimate. 3. Include select repair partners to exchange data for fast resloution. • Customer policy coverage access • Multimedia uploads to claim form • Repair estimate data exchange with select partners • Direct deposit banking approval • Eliminated paper based claims and reduced processing time by 3 days • Customers had the option of having the claim check direct deposited to their banking account. • Overall Customer Satisfaction rating improved significantly and then used as central marketing theme. • Google Maps: for directions once on the ground • Tripit: for aggregating travel information • Pizza Hut: food ordering and payment processing Insurance: Leading Property & Casualty Insurance Firm 

© 2013 IBM Corporation IBM API Management Business Challenge Solution Result Types of APIs Example Apps • Establish a secure digital wallet for consumer banking customers • Create ecosystem for partners including global credit card companies and merchants • Leverage international brand loyalty programs • Implement an API Management solution that provides: 1. A secure/encrypted environment for maintaining and transmitting sensitive card holder data 2. An easy to use developer portal 3. Extensive real-time analytics to better understand customer behavior and payment patterns • Payment options (credit/debit) • Partner Loyalty Programs • Bank and merchant specific promotions • Access to banking account information • Launched new service maintaining multiple payment options • Increased use and revenue from branded debit and credit cards • Provided real-time views of buying behavior and accelerated the timing of new, targeted offers to buyers via bank and merchant loyalty programs • PayPal: Account linkage to banks, credit and debit cards • Tripit Point Tracker: aggregates points from various travel industry loyalty programs. • PasKey Mobile banking (Monte Dei Pashi Di Siena) account access. Banking: Leading Commercial Bank 

© 2013 IBM Corporation IBM API Management Business Challenge Solution Result Types of APIs Example Apps • Improve the efficiency of energy consumption across consumer, commercial and industrial customers. • Increase utilization of self-service portal to reduce operational costs • Reduce power outage time caused by extraordinary events. • Implement an API Management solution that provides: 1. A secure/encrypted environment for transmitting usage data to demand systems and models. 2. An easy to use developer portal 3. Extensive real-time analytics to better understand customer behavior and payment patterns • Energy consumption & management • Service requests including new service, repair, and rate management • Location services for mobile repair teams • Inventory management for field repair depots and teams • Launched multichannel app to monitor and control energy usage • Increased use o self-service portal by 15% resulting in operational cost savings of 3% • Improved response and power restoration time by mashing up location data of repair teams and outage failure point. • MobileIron SmartHome: remote control of home electrical devices • Southern California Edison: customer support for service transfer. • Scottish Power XDA repair centre. Energy & Utilities: Leading Electric Utility 

© 2013 IBM Corporation IBM API Management Business Challenge Solution Result Types of APIs Example Apps • Manage partner ecosystem leading up to major a movie release • Control ticket distribution for selected premier venues • Effectively manage IT infrastructure for cyclical demand loads • Implement an API Management solution that provides: 1. An easy to use and access developer portal for partners 2. Traffic management to control demand for access to ticket outlets 3. Scalable cloud based infrastructure to meet demand • Ticket purchase • Product placement promotions • Access to sound track recordings • Tiered access (i.e. gold, silver, bronze etc.) • Launched new developer portal for partners to add tie in promotions for new movie releases • Smoothed message traffic and incorporated a tiered access program for high value customers • Augmented an on premise implementation with on-demand cloud expansion as needed. • Moviefone pre-release ticket ordering • ComingSoon.net: movie trailers and latest news on stars • Sony Pictures Brand Placement on YouTube, webpages etc. Media & Entertainment: Leading Movie Producer 

© 2013 IBM Corporation IBM API Management Business Challenge Solution Result Types of APIs Example Apps • Create a multi-channel business license application process • Reduce the steps and shorten the time process the application • Ensure license renewals are executed on time. • Implement an API Management solution that provides: 1. A secure/encrypted environment for maintaining and transmitting sensitive applicant data 2. An easy to use developer portal for accessing legacy systems during the approval process 3. Analytics for measuring usage • Access to variety of legacy systems inlcuding: • Building permits • Food and liquor licenses • Neighborhood variances • Fire inspections • Property and casualty insurance verification • Launched new license application portal that automatically populated forms during the approval process • Automated the insurance verification process required for license issuance • Reduced the time to process by 15% and minimized applicant clerical data input by 45% • Chicago Business Affairs: License application and zoning guide • New York City Restoration Permits: post Hurricane Sandy rebuilding • Slate.com link to TerraEarth observatory showing Moore, OK after EF5 tornado Government: Business License Bureau 

© 2013 IBM Corporation IBM API Management Business Challenge Solution Result Types of APIs Example Apps • Streamline procurement process when on-boarding new trading partners • Minimize reliance on VANs (Value Added Networks) to reduce costs • Maintain accurate real-time location and inventory usage data. • Implement an API Management solution that provides: 1. A secure/encrypted environment for maintaining and transmitting sensitive purchasing data 2. An easy to use developer portal 3. Extensive real-time analytics to better understand location and usage patterns • Payment options • Catalog/inventory availability • RFID location based services • Shopping cart services • Tiered access • Eliminated need for sending and receiving purchase order and invoice documents for new vendors • Provided catalog access and “shopping cart” order process • Generated extensive analytics tracking individual products for location, shelf life and consumption statistics. • Amazon shopping cart • IBM® Emptoris® for supplier on- boarding and qualification • PINC Solutions Real Time Location Systems for GPS enabled RFID asset tracking Aerospace & Defense: Supply Chain 

© 2013 IBM Corporation IBM API Management Business Challenge Solution Result Types of APIs Example Apps • Allow patients, physicians and medical personnel secure multi- channel access to patient data including: • Appointments • Insurance coverage • Prescription refills • Patient/physician email • Implement an API Management solution that provides: 1. A secure/encrypted environment for maintaining and transmitting sensitive patient data 2. An easy to use developer portal 3. Rapid assembly of new APIs to access legacy applications without extensive app rewrite. • Appointment book access • Insurance coverage requests • Pharmacy order entry • Secure messaging/email • Released new REST enabled applications for mobile devices in under 90 days. • Created reusable APIs for pretreatment authorization from multiple insurance carriers • Provided patients a mobile app to refill prescriptions via mobile devices. • Merck Medicus: Patient handouts • Greenway PrimeMOBILE: Electronic Health Record access • BC/BS NC: HealthNAV, provides an urgent care finder • WellDoc Diabetes Manager: connecting patient readings with physicians Healthcare: Leading Healthcare Provider 

© 2013 IBM Corporation IBM API Management Business Challenge Solution Result Types of APIs Example Apps • Create additional sticky services for auto owners • Expand the ecosystem for dealers and partners including road service and hospitality brands. • Generate higher dealer traffic volume • Implement an API Management solution that provides: 1. A secure messaging environment between the auto manufacturer and the partners. 2. An easy to use developer portal 3. Extensive real-time analytics to better understand customer behavior and usage patterns • Location based services • Sensor data to warranty systems • Alerts to dealers • Service record access • Launched new service utilizing sensor data from the car, GPS coordinates and roadside service stations to minimize breakdowns and locate nearby repair facilities. • Generated multiple customer testimonials that helped increase dealer traffic by 8% • Google Maps: GPS location mapping • GM OnStar: vehicle diagnostics online monitoring while you drive • BMW Connected Drive: intelligent emergency call for assistance Automotive: Leading Automobile Manufacturer 

© 2013 IBM Corporation IBM API Management 44 Only IBM delivers these comprehensive capabilities APIs Apps Social Feedback and Communities Marketplaces Self-Service Portal: Registration • Documentation • Sandbox Security, Metering and Control API Design and Integration Analytics and Monetization API Lifecycle Management Composition Infrastructure Services DevOps and App Management Mobile Services Internal Developers Partner Developers External Developers Channels: Smartphones • Tablets • Desktops • Cars • TVs • Others Services: Data • Processes • Applications API Strategy Consulting API Technical Consulting Cloud 

© 2013 IBM Corporation IBM API Management 45 For a complete API business model 1 Define 2 Design 3 Communicate & Compose Plan outcome, development, and revenue strategy for API creation and consumption Transform assets for revenue generation through interface development, metering, and analytics Evangelize APIs to internal and external developers and leverage them for app development API Business Model 

© 2013 IBM Corporation IBM API Management Get started with your API business today Sign-up for a free trial of our Web API Builder 46 1 2 3 Learn more at www.ibm.com/systems-of-interaction Talk with your IBM representative or Business Partner to find the right next step for you