Digital Innovation Pressures Rise for IT Leaders, Making APIs and Microservices Competitive Essentials
May 03, 2022

Marco Palladino

Companies have invested significantly in digital transformation in recent years, especially to navigate the pandemic, but are they any closer to outmaneuvering the competition?

According to Kong's 2022 API & Microservices Connectivity Report, our third-annual research report, the answer is a resounding "No."

Failure to digitally innovate and transform poses a serious existential threat. A shocking 75% of technology leaders fear competitive displacement — up from 62% in 2021 and 57% in 2020 — with 40% predicting they will go under or be absorbed within three years if they lag in digital innovation.

So how can tech leaders overcome these innovation challenges and ensure business success for years to come?

It starts with making customer experiences a priority and adopting a modern tech stack to empower developer teams to create world-class digital experiences.

Modern Software Architectures Accelerate Innovation

Nearly 9 in 10 (89%) companies surveyed use a mix of monolithic architectures and microservices, or have already fully transitioned to entirely distributed software architectures (45%), including microservices, containers and serverless. Less than 1% of respondents have no plans to transition away from a monolithic architecture in the next year.

Hybrid architectures are most common for enterprise IT teams, with 54% of respondents noting their "services running on-premises are connected to services running in the cloud." This blend of environments can give teams an optimal mix of features and control over their services, but it also introduces potential connectivity challenges.

APIs and Microservices Are Seen As Key Innovation Enablers

Connecting services across disparate clouds and environments can be made effortless with APIs and microservices.

Nearly every senior technology decision-maker surveyed (99.2%) agrees that APIs and microservices are an essential part of digital transformation initiatives. These technologies help teams overcome the common challenges of IT modernization, including the complexity of using multiple technologies (38%) and a lack of automation in IT that ties teams up on trivial manual tasks (37%).

Teams adopt microservices specifically to increase security (23%), integrate new technologies faster (19%) and increase their speed of development (18%). Of the 99% of respondents with fully distributed or mixed environments, half of them have 50-499 microservices running in production or planned, which is a considerable 44% increase since 2021.

Service Meshes Simplify Microservice Management

Service meshes have emerged as an essential way to manage, monitor, and connect microservices. The No. 1 driver of service meshes is service connectivity/service discovery/traffic reliability (60%), followed by traffic observability (53%). Zero-trust security of services (50%) is the No. 3 driver and a growing area of interest, and necessity, for teams.

Ninety three percent of respondents have a service mesh in production, deployment or ready to be deployed within 12 months. In 2021, just 20% of respondents were leveraging open source service mesh tools.

Innovation Requires IT Budget Increases

To achieve the full potential of the technologies discussed above, teams are increasing their IT/developer team budgets. Nearly 80% expect a budget increase in 2022, with 64% expecting it to increase by as much as 25%. As part of this increase, 67% plan to invest more in APIs.

A key obstacle in the post-pandemic era is a "lack of skills/inability to recruit the right talent" (34%), which could further complicate if the Great Resignation continues.

What Technology Leaders Need to Know

The pressure to innovate is at an all-time high for technology leaders, but APIs, microservices and service mesh technologies can power your transition toward modern software architectures.

Making these technologies work at scale isn't easy, so teams must monitor for complexity, security and performance concerns as they embark on this journey. A modern IT approach paired with DevOps best practices will help teams achieve their full potential and continue to deliver on their customer needs.

Marco Palladino is CTO and Co-Founder of Kong
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