After working with thousands of enterprise customers around the world, MuleSoft has learned that API-led connectivity brings major benefits to organizations, like increased speed, agility, and scalability. Now, CIOs and chief architects across all industries can measure these benefits objectively. We recently hosted a webinar featuring best practices and frameworks for articulating the value of integration and APIs.
During the webinar, I provided an overview on the quantifiable outcomes of MuleSoft’s API-led connectivity approach and unique methodology. I was joined by guest speaker Corey McNair of Forrester Consulting, who highlighted the financial impact of investing in MuleSoft technology by breaking down the results of the August 2019 commissioned Forrester Consulting Total Economic Impact™ (TEI) study of Anypoint Platform. Below, find a Q&A with Corey on the results of the study.
What is the ROI for an investment in Anypoint Platform, and what are the primary drivers of that ROI?
Corey McNair: The Total Economic Impact study on Anypoint Platform found an ROI of 445% for a composite company, based on MuleSoft customer interviews. Customers cited the solutions’ ability to provide a single-pane view of their organizations’ APIs and integrations among other things, reaping $7.8M in benefits over three years and freeing up 90% of developer time previously spent maintaining APIs and integrations.
These benefits were largely realized by developers reusing pre-existing APIs to complete projects and conducting fewer integrations per project. Anypoint Platform served as the foundation for company initiatives to scale application development and improve developer productivity, quadrupling the number of projects worked on over 3 years.
Q: What were some of the customers’ pain points prior to deploying Anypoint Platform?
Corey McNair: With previous approaches, IT teams lacked a central marketplace for their APIs and often missed opportunities to capitalize on assets that had already been created. They were building and managing their APIs and integrations across multiple platforms: developers would create additional work for themselves by recreating the same APIs for different use cases and building single-use point-to-point integrations.
In an effort to streamline operational efficiencies and build in central governance and visibility, interviewees sought out a unified, single solution for iPaaS and full-lifecycle API management, with hybrid support, both on-premises and in the cloud. This allowed customers to consolidate the number of integration technologies and applications used, leading to $1.6 million in savings from reduced maintenance of APIs, integrations, and retired technologies.
Q: APIs at my organization are typically created with a single purpose for an application. What did the study reveal about how MuleSoft can help with that?
Corey McNair: According to MuleSoft customers, the ease of API reuse through Anypoint Platform encouraged a mindset shift at their organizations. They began building and managing APIs with reuse in mind, identifying opportunities where the same API could be used across multiple projects. MuleSoft encouraged a three-tier approach to API-led connectivity: system APIs unlock data from core systems, process APIs shape that data to conduct a specific business process, and experience APIs reconfigure business processes to deliver a specific end-user experience. Especially when it came to system and process APIs, Anypoint Platform’s single-pane presentation of the organizations’ API marketplaces made it easy for developers to discover and utilize APIs in scenarios where they would have previously needed to build new ones from scratch.
The greatest benefits of API-led connectivity weren’t fully realized until interviewees published a number of productized APIs for reuse in their marketplaces. For our composite organization, the percentage of APIs available for reuse more than doubled between Years 1 and 3, from 33% to 75%. There were still cases in which an API is created for a single project, but on the whole, the API reuse grew for these companies.
Q: We understand that Anypoint Platform enables the reuse of APIs; what does that look in terms of time savings?
Corey McNair: According to interviewees, internal Forrester intelligence, and third-party research, an average API can take 168 hours to create. Depending on the scale of the project, a large number of APIs can translate to thousands of hours of development time.
While some projects required brand new purpose-built APIs, developers reported that they were able to reuse a significant portion of the APIs needed for projects. According to Forrester’s Total Economic Impact benefit model, the percentage for reuse of APIs reached 75% by Year 3. As a result of increased reuse, developers spent 90% less time on maintaining APIs and integrations, allowing time to be reinvested in innovation.
In one case, a VP of architecture and strategy cited that an API project for their company’s security master had been in planning to stand up for two years. Once they adopted Anypoint Platform, the project became more feasible and they were able to stand it up in just three months.
Q: The study covered ROI AND NPV. Can you explain more on how these are calculated? Are these reasonable results for an investment in an API and integration solution?
Corey McNair: NPV is short for net present value. It summarizes a series of cash flow values over time in a single number, reflected in “today’s dollars.” NPV takes into account the “time value” of money. A simple way of understanding time value is that a dollar you earn today is worth more than a dollar you will earn in a year (because you can spend or invest it now); similarly, a dollar you spend today is more costly than a dollar you will spend next year (because you can use or invest that money for an extra year).
The NPV equation requires a time value discount rate, a percentage showing how much more today’s dollar is worth than next year’s. Forrester Consulting TEI projects use a 10% rate. An NPV of more than $0 is a positive investment. It is important that investment decisions based on NPV are still subjective, due to factors such as the size of the project, the size of your business, and other strategic or unquantified benefits.
ROI, or return on investment, is the ratio of net benefits and total costs. For our TEI, the equation is [NPV of Benefits] – [NPV of Costs] / [NPV of Costs]. Any ratio over 0% reflects a positive ROI, and higher ROIs indicate a project that will likely be more successful. There is no exact ROI value that determines whether or not to invest in a project — any investment decision should depend on a variety of factors including the project scope, your industry, and your organization’s appetite for risk. However, any ROI with three digits should be a strong contender.
Q: How does Forrester source its assumptions for the model for the TEI study?
Corey McNair: The TEI study is built upon information collected across four interviews with customers of MuleSoft’s Anypoint Platform. Key pieces of information in these interviews relate to the costs, benefits and risks associated with adopting the platform. The interviews are anonymized and transcripts or recordings of the call are not shared with MuleSoft. Information from these interviews is analyzed alongside internal and third-party resources to provide a complete picture of the total economic impact of purchase decisions.