Presentation at TM Forum Live Nice May 16

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Digital Trust and the
API economy
Rob van den Dam
Global Industry Leader IBM
Institute for Business value

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Content
 Executives’ views on ecosystems (global survey)
 The power of digital platforms
 CSPs as platform companies
 The value of APIs
 The importance of digital trust
 How consumers are trusting companies (global survey)

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Ecosystems seen as inevitable
90%
of executives globally
believe ecosystems
will change their
organization’s
primary activities or
focus areas
Executives across all regions concur that ecosystems will change their organization’s
primary activities or focus areas
Telecom 92%
Global cross-industry executive survey (n = 2,151, telecom executives 197)
> full report available mid 2017

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Changing the way business is conducted
Traditional value
chains are
fragmenting
Disruption reflects a fundamental change in the way business is conducted
55%global
executives
feel traditional value chains
are being replaced
Industries are
converging
51%global
executives
feel the boundaries between
industries are blurring
New ecosystems
are emerging
56%global CEOs
believe
engaging in ecosystems
is the single most effective
way to access new markets
and new geographies

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Ecosystem benefits vs. costs
Net
positive
impact of
ecosystems to the
bottom line
Average impact on
revenue
12.6%
Average impact on
costs 10.9%
1.7pp
more revenue
than costs
Many executives said that costs of embracing ecosystems outweigh the benefits, but
executives from outperforming organizations believe ecosystem benefits outweigh costs
Executives from outperforming organizations

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Expanding organizational revenues
54%
more
69%
Outperformers
45%
Underperformers
46%
Outperformers
14%
Underperformers
Outperformers embrace partneringEcosystems grow revenues
229%
more
of executives from
outperforming
organizations actively
encourage new types of
partnering
arrangements
of executives from
outperforming organizations
believe ecosystems will help
expand organizational
revenues by more than
10%
Executives of outperforming organizations embrace ecosystems faster and more
comprehensively

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Optimistic vs less-optimistic industries
-12,0
-8,0
-4,0
0,0
4,0
8,0
12,0
16,0
ITservices
Banking
Telecom
Transportation
M&E
C&P
Industrialproducts
Automotive
Healthcare
Financialmarkets
Lifesciences
Consumerproducts
E&U
Retail
Insurance
Travel
Consumerelectronics
Total sample Outperformers Overall average
Outperforming organizations vs. overall summary by industry
Profitability by industry (in pp)
Expectedreturnsfrom
ecosystemengagement
Executives of top organizations in banking, healthcare, life sciences, travel among others,
are especially optimistic
Telecom

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Expected and unexpected ecosystem gains
Businesses embrace ecosystems because they
anticipate benefits from participation and
engagement
But the innovation unleashed through
ecosystems can also produce new
opportunities that may not have even been
considered in their absence
Benefits from ecosystems can therefore be
magnified – what we call dynamic (unexpected)
innovation
Ecosystems yield planned and unexpected
gains1
An edge of unexpected gains over expected
gains (revenues)
Production
Possibility Frontier
Output 2
Output1
Source [1]: Production Possibility Frontier http://www.tutor2u.net/economics/reference/production-possibility-frontier
Ecosystems create opportunities unattainable in their absence

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Improve expected outcomes
Pursue new opportunities
• Enablement of new types of business models
• New ways of engaging for both participants and customers
• New ways to monetize products and services creating new value not existing before
Irrespective the role having in ecosystems, businesses can improve expected outcomes
Embrace ecosystems’ strategic potential
• Access to new capabilities that they would otherwise have difficulty obtaining
• Improved access to new markets, new geographies, new segments
• New offerings by combining new and different combinations of assets
Reduce engagement cost
• Improved productivity by up-/reskilling employees through ecosystems
• Increased effectiveness and impact of innovation by embracing open cultures
• Increased agility beyond what many business could achieve alone

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Roles in ecosystems
Experience provider Asset provider
Process provider Platform provider
 Manage customer relationship
 Develop customer-centric products
and services
 Advance marketing, sales, R&D
 Provision physical assets for
production or supply chain
 Manage physical assets
 Integrate asset usage and planning
 Manage processes around shared
services, functions or activities
 Manage service level agreements
 Optimize process efficiency
 Provide an integrated environment
to support ecosystem operations
 Create market across the network
 Promote and manage alliances
Participants can play any or all of four distinct roles in ecosystems

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Executives want to create own platforms
52%
of global executives want their
organization to create a platform
for customers and/or partners
But uniqueness drives higher value!
Survey responses suggest that most organizations want to be (also) platform providers
57%
of TELECOM executives want their
organization to create a platform
for customers and/or partners

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Top 15 born-on-the-internet (mostly) platform companies
Market value
±15x
±2x
±2x
±2x
70%
unicorn startups
are platform
companies
Rank Company
2017* ($B)
Market Value
2016 ($B)
Revenue Rank Company
2004 ($B)
Market Value
2004 ($B)
Revenue
1 Apple 746 215.6 1 eBay 62 3.3
2 Google 594 90.3 2 Yahoo! 45 3.6
3 Amazon 429 136.0 3 IAC Interactive 37 4.2
4 Facebook 415 27.6 4 Yahoo! Japan 36 1.1
5 Tencent 289 21.9 5 Google 30 3.2
6 Alibaba 281 15.7 6 Apple 17 6.9
7 Priceline 86 10.7 7 Amazon 14 8.3
8 Naspers 82 5.9 8 Rakuten 8 0.4
9 Uber 68 6.5 9 Monster 3 0.8
10 Baidu 62 10.2 10 WebMD 2 0.1
11 Netflix 62 8.8 11 Index 2 0.4
12 Salesforce 59 8.4 12 Shands 2 0.2
13 PayPal 53 10.8 13 NCSoft 2 0.3
14 JD.com 49 37.5 14 NHH 1 0.3
15 Yahoo! 45 5.2 15 For-side.com 1 0.1
TOTAL 3320 611 TOTAL 262 33
Green = Not in Top 15 in 2004 Red = Gone or not in Top 15 in 2017*May 2017

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Serving an extended ecosystem of partners
As platform provider, CSPs open core capabilities to all digital players
Device and component (sensors,
medical devices, etc.) providers
Applications, content, API providers,
platform providers
IoT, ecosystem market makers
(e.g. health companies,
transport organizations, etc.)
IoT, ecosystem integrators
Agility and reduced
costs through micro-
services/APIs

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APIs can unlock new growth opportunities
API’s extend the reach of a company’s core assets , allowing them to be shared, reused or
even resold as a new source of revenue
90% revenue through APIs
60% revenue through APIs
50% revenue through APIs
1.4B APIs calls per Day
13B API calls per Day
>300 API mashups
"Gen D" enterprises are:
1.8xmore likely to use APIs
than their peers
2.8x more likely to report that APIs
given them increased reach
2.0x as likely to find that APIs
increased agility and speed
2.6x as likely to find that APIs deliver
benefits through partners

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Improving business value with APIs
IBM Watson
API ecosystem
Over the last 12 months:
• # developers using Watson
APIs up more than 300%
• # large enterprises engaged
has doubled.
• # people touched by Watson
already ± 1 billion
impact study
• 674% ROI
• Payback < 1 year
• 25-35% faster
TTM for partner/
public developers
consuming APIs
API
connect
Weather data APIs
• A cloud-based service
handling 26B API calls/day
• Cognitive apps combining
Watson and TWC APIs
• Developers can use APIs into
their apps through Bluemix
In addition to increased revenue, the API model results in increased reach, agility, faster
time to market and strengthening integration with partners/developers

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CSPs still need to improve deploying APIs
45%
more
63%
Outperformers
40%
Telecom Execs
56%
Outperformers
40%
Telecom Execs
58%
Outperformers
40%
Telecom Execs
58%
more
40%
more
Outperforming companies extensively share APIs with external parties, something CSPs
still need to improve
My organization uses APIs
extensively to share data with
partners
My organization APIs are open to
any parties that fulfill minimal
criteria
My organization APIs are used
exclusively by specific
partners

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Capture a good share of the market at large
As platform provider,
CSPs can capitalize on:
 network effects
 economies of scale
 market trust / brand reach
 capturing innovations
 emerging businesses / startups
 high levels of security and privacy that only CSPs can provide
By moving to a platform API-based business model, CSPs can benefit from the ’Market at
Large’ and enable a new wave of sustainable growth

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A privacy obligation
GSMA chief says mobile
industry has privacy
“obligation”
Mobile World Live, May 10, 2016
Mats Granryd, director general of the
GSMA warned that mobile operators
must keep the protection of
subscriber privacy at the front of
their thinking, with new challenges
already on the horizon.
IoT and big data pose
“monumental” risk for
operators
Mobile World Live, May 10, 2016
Futurist Patrick Dixon warned that “you have
the biggest target for criminal activity that the
world has ever seen”.
Dixon said, “While there is a clear potential for
financial damage through cyber security and
fraud, perhaps the bigger issue is the damage
that can be done to the brand.”
CSPs have a trust established brand, but are also the biggest targets for criminal activity
and through this there is potential for brand damage

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Are we reaching a tolerance threshold for trust?
3%
5%
25% 25%
42%
Not critical
at all
Not so
important
to know
Important
to know
Very
important
to know
Very
critical to
know
People want to know that their personal data is kept private and secure
Global consumer survey: 42 countries n = 20,745
How critical is it for you to know that
your provider keep your personal
data private and secure

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Globally digital trust has decreased in last 3 yrs
In the last years, consumer’s trust in companies has decreased globally, but less for CSPs;
in most emerging countries surveyed trust in CSPs has even grown
CSPs for
each country
-23%
-22%
-21%
-18%
-17%
-15%
-14%
-14%
-13%
-13%
-12%
Change in digital trust in last 3 years
Type of
organization
CSPs
Video streaming players
Device manufacturers
Financial organisations
Online retail stores
Search engine companies
Pay TV providers
Physical retail stores
App developers
Social media companies
Digital unicorns

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CSPs’ trust brand: a tremendous opportunity
-41%
-41%
-39%
-36%
-34%
-34%
-34%
-33%
-33%
-31%
-30%
30%
21%
24%
33%
34%
32%
30%
32%
30%
45%
40%
Somewhat to very Uncomfortable Rather to very Comfortable
CSPs
Financial organisations
Device manufacturers
Pay TV providers
Video streaming players
Physical retail stores
Search engine companies
Online retail stores
App developers
Digital unicorns
Social Media companies
The survey shows that CSPs have a trust advantage over OTT and most other players,
globally they are second only to banks/credit card companies
Because of their trust position
CSPs are well placed to
become a platform curator,
and to add value by providing
service composition along with
assets as connectivity,
knowledge about their
customers, analytics/cognitive
capabilities, reliability, quality
assurance and more
People’s trust in companies with their personal data

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Ready or not? Ask yourself these questions
• How will your organization exercise its distinctive assets to its advantage in
digital ecosystems?
• In what ways can your enterprise plan for growth, given the greater
opportunities that partnering in digital ecosystems makes possible?
• How can you form relationships with newer, nontraditional industry participants
to provide the digital relationship and customer experience that today’s digital
customers demand?
• Are your strategies and initiatives to increase trust in line with the monetization
opportunities in your market?

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Thank you
Rob van den Dam
Global Telecom Industry Leader
IBM Institute for Business Value
rob_vandendam@nl.ibm.com
www.ibm.com/iibv
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