75% of Companies Fear Competitive Displacement in Post-Pandemic Business Climate if Innovation Lags, Up 18% Since 2020

Despite two years of heavy investment in digital transformation to survive the pandemic, the new 2022 API & Microservices Connectivity Report from Kong Inc. reveals that the pressure to innovate continues to mount for technology leaders. A surprising 75% of technology leaders fear competitive displacement if they fail to keep pace with digital innovation, up 13% since 2021 and 18% since 2020. Compounding this fear is a lack of skills and talent, cited by 34% of survey respondents as a drag on innovation, when recruiting qualified developers during the ‘Great Resignation’ is more challenging than ever for organizations across industries. 

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According to the new research, 40% of respondents predict they will go under or be absorbed by a competitor within three years if digital innovation lags, while an overwhelming majority (81%) predict the same outcome within six years and virtually all (98%) within 10 years. The annual survey of 500 senior technology leaders across the U.S., Europe and Asia benchmarks how APIs, microservices and modern software architectures enable business agility and compares how they are used at organizations with more than 1,000 employees.

“Kong’s latest API & Microservices Connectivity Report sheds critical insights into the state of business innovation and technology adoption as we enter this new post-pandemic era,” said Marco Palladino, CTO and co-founder of Kong Inc. “We are in a unique business climate today where almost every minute of our customers’ lives are digitally connected, and they expect nothing less than seamless connections and the best digital experiences possible. Businesses must make customer experiences a priority in 2022 – starting by investing in the right tech stack and empowering their developer teams to build the applications of the future.”

Technology Leaders Make Creating World-Class Digital Experiences a Top Priority

While business leaders believe they must innovate quickly to stay competitive, the speed of innovation cannot come at the expense of security, performance and reliability. When asked about their top business priorities, technology leaders most cited the need to improve application security (44%), improve application performance/reliability (40%), make it easier to adopt new technologies to bridge the transition to the future (40%) and improve developer efficiency (39%). 

As they strive to accomplish their business priorities, technology teams are most commonly challenged by the complexity of using multiple technologies (38%), reliance on legacy technologies/monolithic architectures (37%) and a lack of automation in IT that ties resources up on trivial manual tasks (37%). 

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APIs and Modern Software Architectures Accelerate Innovation

In today’s world where digital experiences are king, a reliable, secure and scalable tech stack is the linchpin of innovation and superb customer experiences. It comes as no surprise that 86% of survey respondents believe that microservices-based applications are the future and the ability to support distributed applications is critical for success. Likewise, 84% said that organizations unable to ensure the reliability and resiliency of the APIs that connect microservices-based apps are more likely to lose market share to competitors who can. 

Nearly nine out of 10 (89%) technology leaders say their organizations have either already fully transitioned to entirely distributed architectures (microservices, containers, serverless, etc.) or are currently using a mix of monolithic architectures and microservices, with 45% fully transitioned to entirely distributed software architectures. As business software architectures become more decoupled, microservices continue to grow in use. The majority of teams (62%) run 20-99 microservices in production, and nearly one in five (19%) teams run 100-499 microservices. 

To handle microservices at scale, technology leaders are increasingly turning to service meshes as a complement to API gateways in providing reliable, secure and observable connectivity between services in distributed, cloud native environments. This year, more than a third (34%) of respondents report already having service meshes in production. Another 46% report having service meshes in deployment, making it a vast majority of technology leaders (80%) who already have a service mesh either in production or deployment.

2022 IT Budgets and Funding Priorities: Tech Leaders Invest in Empowering Developer Teams

Providing developers with the modern technology tools they need will be a major focus for business leaders in 2022. In order to meet their business priorities and overcome their IT challenges, technology leaders plan to allocate more to their IT/developer budgets:

• Nearly four in five (79%) expect their organizations’ IT/developer budgets will increase in 2022, with a vast majority (64%) expecting it to increase by as much as 25%. 

• Another 15% say their IT/developer budget will increase by 25-50%.

• Nearly 7 in 10 (67%) believe that their budgets for APIs will increase in 2022, with 39% expecting a large increase of 25% or more. In 2021, the majority of teams (37%) increased their API budgets up to 25%, and 20% increased budgets by 25% or more.

The increase in API budgets complements most teams’ priority to build or expand access to APIs. Fifty-seven percent of technology leaders say that 60% or more of those current projects focus on building new APIs or expanding access to APIs. For 16% of respondents, APIs are even more crucial, with 80% or more of their current projects focused on building new APIs or expanding access to APIs.

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