Earlier this month I had the opportunity to speak at Apidays, London. Apidays is a set of conferences and events that are hosted globally throughout the year and focus on the use of APIs and API first platforms to make smarter business decisions.
This was my first experience speaking at a conference. I have been offered various opportunities over the years but was always head down in a project and would never spare the time for ‘extra curricular’ work. It has proven to be something I have immensely enjoyed and now as they say, I have the itch.
Picking a topic was easy, over the last 6 years I have seen massive amounts of change in the retailers that I have worked with directly and indirectly. Whereas previously various CTOs appeared to have an assured direction of travel, I now see tentative and risk adverse behaviour when looking at the roadmap for the next 12-24 months. Of course, it’s not without reason as we are now in a period that has been coined “The Age of Uncertainty”. But how can it be countered? In my talk I looked at the use of API-led architecture and composability, something that has become the cornerstone of my career in the last 5 years as an architect.
So what do we mean by the age of uncertainty?
There are a number of reasons we are where we are. None will surprise.
McKinsey publish an annual report, “The State of Fashion”. In the latest iteration they focus on breaking down the impact of uncertainty on the global market. It is a great read and outlines a lot of what I speak about below.
Retailers are attempting to counter economic fragility with limited budgets and to reinvigorate their brands. Some of the points I took as food for thought;
Building Pricing Muscle
Being able to hone profitability by dynamic and market reactive pricing models. Ensuring that margins are kept healthy while offering best in class promotions and attractive loyalty schemes.
Overhaul of Org Structures
In an attempt to keep costs low but ensure that the best talent is still available, retailers are embracing remote working. Whereas before the commute was an important factor we now consider that talent can be hired further afield.
Reacting to Two Track Spending
Consumers now look towards the second hand market and 3rd parties selling heavily discounted stock. Retailers need to embrace “pre-loved” selling channels to keep engagement with clients who can no longer afford to buy new and to control the narrative in regards to brand marketing via these emerging channels.
Being green is no longer a differentiator and is now considered a hygiene factor. Consumers now look towards proof of carbon footprint and traceability of a product. Digital ID platforms like eon.xyz can be utilised to aid customers with a single pane of glass to see the history of a product all the way from factory to purchase.
Diversification of Channels
Being able to roll out new channels quickly and efficiently is a game changer for a retailer who has historical only managed traditional selling channels. A good marketplace strategy and the technology foundations to support a faster rollout are required for retailers who need to react quickly.
Retailers are taking advantage of SaaS solutions to reivigorate their Marketing stack. The emergence of CDP/CDXP solutions has enabled retailers to quickly build up powerful 360°customer profiles and orchestrate complex AI driven marketing journies.
What are we seeing in the market?
So, what are we seeing amongst retailers? Most are far more risk-adverse in recent times. This of course is a knock on effect of the reduced spending power that they now have. There is no ask to replace large legacy systems but all have a need to level-up and are looking towards the power of SaaS solutions on the market and the desire to follow the MACH principles while keeping their existing core stack in place.
There is also an increasing amount of retailers being acquired by private equity groups. This is often when they are close to administration already and have underlying issues. The new owners look to cut costs and reinvigorate the business by realigning their operations and their technology stack to enable new capabilities as a business and cut TCO.
Finally, unfortunately there are retailers who are forced to close their doors. An emerging pattern amongst these from a technology perspective behind the scenes being rigid monolithic stacks with a number of bespoke applications and P2P interfaces. They have become a poor investment proposition with little supportability and in-house knowledge to migrate. Of course this is not the only reason that businesses are failing.
Countering Uncertainty with an API-led approach
Focusing soley on utilising APIs to decompose the legacy estate we can begin to counter uncertainty by adding the building blocks to connect into new emerging technology and create reusable services.
Allows a retailer to sweat the assets they have
By introducing APIs it removes the immediate need to migrate larger legacy business critical systems such as the ERP to evolve. We expose functionality in applications externally by adding connectivity that didn’t previously exist natively.
Enables agility and scale
APIs enable agility and scale for a business whose ownership, internal activity and position in the market is in a state of flux. They have the need not only to scale application performance but to introduce change quickly and adjust to a business that can grow (or shrink) quickly.
Futureproofs the IT estate for evergreening
An API led approach enables composability and value in incremental building blocks this in turn makes it easier to evergreen and adopt solutions quickly
Introduces new modern capabilities
We can add modern functionality to an aging stack – the use of microservices and APIs from cloud providers allow us to quickly leverage on new tech like AI and connect to services that do the heavy lifting for us.
Secures the retailer as a better investment prospect
We can separate the stack into modular capabilities that can be sold off or supported by a parent should the retailer be acquired. Moving away from bespoke legacy interfaces.
Foster innovative thinking!
Enables business teams to connect to existing systems in new ways. This could take the form of citizen integrations or by promoting data democracy and evangelising APIs. An example of this working could be the enablement of digital teams to level up with the current back office systems
Decomposing the ERP – Becoming Best of Breed
An example of where APIs can be utilised to add value to an aging technology estate.
A large retailer has been struggling and aspires towards headless commerce and enabling omnichannel journeys to raise revenue. They are operating an 18-year-old, highly customised ERP that has limited out of the box integration capabilities and is highly customised towards their historical business.
They have also just been purchased by a private equity group who are looking to transform the prospects of the business without hedging their bets on replacing large systems therefore a multi-million-pound project to move from their current solutions is off the table.
Rather than rebuilding the world in a day; We look towards building up a series of APIs to connect their existing stack to new cloud native, API based platforms.
This is ideally done in logical phases that enable business value at each release.
Value is of course then realised through reusability and API adoption spawning new ideas and the update of existing endpoints. Every decision made should be backed by tangible business outcomes. When working in uncertainty there are very small margins of error for the success or failure of an implementation.
Enabling Scalability & Agility
Focusing on scalability and agility within the organisation now we have decomposed the ERP we can look towards three outcomes.
Assured Scalability for the future
Decoupling the stack and moving towards composability we are giving a retailer the opportunity to scale up and down as required. A common question posed, are we ready for peak trading? A good API-led architecture ensures that core systems are protected and traffic is load balanced as required.
Are they aiming to roll out to a jurisdiction that requires certain policies/security assurances/encryption? Do we need to ensure that the API instances are geolocated to enable low latency if they are customer facing? Everything becomes feasible.
Platform Agnostic APIs
They now have a series of platform agnostic APIs that can be utilised and are not restricted by the connectivity and capabilities of the core systems they front. This enables reusability, and we see the new APIs not as one-off technical implementations but reusable and valuable services. We have generated value in the form of new intellectual property for the company.
Agility to evergreen when ready
We have set the foundations for a modular, composable architecture! When appropriate, solutions can be replaced without a full rebuild.
Should a change be required the move can now be managed with relative ease and the retailer can now evergreen utilising API first MACH compliant platforms without the worry of their aging yet robust legacy platforms that are now enhanced with API connectivity.
If we consider the potential exit route of a retailer being that of acquisition, their business is now a far more attractive proposition given the modular nature of the architecture.
Managing Massive Change
Let’s consider where massive change had been managed via the early adoption of APIs. A UK based retailer had been carved out of large group to become a standalone. As a greenfield project every application needed to be replaced, ERP, PLM, POS, E-Commerce platforms. At the time of project initiation the Enterprise Architect stated that we would be following an API-led approach to integration utilising APIs via a middleware and API management platform. The claim was that anything within the estate could be changed at any time, even the ERP! We needed to have the foundational technology in place to enable it. We scoffed at the notion, knee deep in ERP discovery sessions and head down in the throes of an end-to-end digital transformation.
What happened next vindicated the approach. Less than 6 months after go live we were asked to migrate the central DC from one 3PL to another. As we had put a series of robust APIs in place to integrate to our third party supply chain partners we were able to make this change in weeks opposed to months.
The following year and yet another unforseen event, COVID hit and disrupted businesses worldwide. A change in leadership and direction triggered the re-platform of the ERP. Given an API led approach had been initiated in the first iteration of the transformation, all interfaces were migrated in months!
How do we ensure value?
Value isn’t always tangible or even monitorable which makes it’s realisation difficult to measure at times. Yes, we can look towards the obvious, new revenue streams, conversion of sales but it can also be evident when looking towards culture and enablement.
Here are a few points I have picked up that can help;
Utilise monitoring and observability as a precursor to operation excellence
Don’t forget monitoring for internal and external API use where possible. Being able to reference KPIs and key figures is a great way to ensure stakeholders at a high level are engaged.
Create communities of practive and empower business teams
Communities of practice are a great way to evangelise the usage of APIs within the business. By ensuring group understanding of what an API led approach provides to an organisation in the way of agility and forward thinking we find we need to spend less time proving the approach. The business is carried along in the implementation stage to ensure we are designing with business outcomes in mind.
Ensure governance is in place to ensure a solid implementation
API governance needs to be in place to ensure commonality between API implementations especially for split teams where third parties or different product based developers work on a single solution. Ensuring standards are abided by and development is governed by a solution assurance framework accelerates delivery and mitigates the introduction of technical debt and poorly designed APIs.
Reflect on successes and failures
Don’t forget to celebrate the successes but also reflect on failures. As technology teams we are far too quick to hold retrospectives when things go wrong. We need to reflect on what worked well and hopefully create positive patterns of behaviour to embed those into every initiative. Technology leaders in the organsiation need to foster the idea that things won’t always run smoothly. We need to accept it won’t always work. In times of uncertainty often the value is in experimentation so I always prefer a fail fast mentality where POCs can be produced to test assumptions quickly and value can be iterative where early versions are made available to beta users quickly to try before they are refined and productionised.
Keep abreast on the relevant news and industry trends
The industry is constantly changing with the emergence of AI and other technologies, make it a priority of being at the forefront of knowledge. Differentiation and time to market are now critical as retailers need to understand where and when to move quickly.
Executive buy-in is key
Probably the hardest and most important. Ensure you have buy-in from the business leaders. As stated, the value from an API-led approach is not always initially apparent, if they are on the journey with you it buys time.
Some food for thought..
As I chose to end my talk with this I thought I would add it here to pose the same question.
Modern Architecture has changed progressively over the last 40 years, now that we are looking towards a more fluid and pragmatic way of dealing with problems using APIs and other cloud services, what will be next. Will we see a new standalone architectural pattern or a hybrid approach.
At least for the near future I believe the latter, where the move to modern best of breed applications is not always first in the list of priorities. Hopefully enabling API-led connectivity for legacy platforms can be a step in the right direction.
A blog curated by Simon Suarez, currently Director of Enterprise Architecture AbsoluteLabs