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90% of Australian companies fear competitive displacement

By Ryan Morris-Reade
Thu 31 Mar 2022

Kong's 2022 API & Microservices Connectivity Report highlights a modern tech stack's vital role in enabling business innovation and world-class digital experiences.

Despite two years of heavy investment in digital transformation to survive the pandemic, the new report from Kong reveals that the pressure to innovate continues to mount for technology leaders. It shows 90% of technology leaders fear competitive displacement if they fail to keep pace with digital innovation. 

Compounding this fear is a lack of skills and talent, cited by 40% of survey respondents as a drag on innovation. Recruiting qualified developers during the Great Resignation is more challenging than ever for organisations across industries.

The annual survey of senior technology leaders across the U.S., Europe and Asia-Pacific benchmarks how APIs, microservices and modern software architectures enable business agility and compares their use at organisations with more than 1,000 employees. The report found that 40% of respondents predict they will go under or be absorbed by a competitor within three years if digital innovation lags. The majority (78%) predict the same outcome within six years and all within ten years. 

"Kong's latest report sheds critical insights into the state of business innovation and technology adoption as we enter this new post-pandemic era," says Kong Inc CTO and co-founder, Marco Palladino.

"We're in a unique business climate today where almost every minute of our customers' lives are digitally connected. They expect nothing less than seamless connections and the best digital experiences possible. Businesses must prioritise customer experiences in 2022, starting by investing in the right tech stack and empowering their developer teams to build the applications of the future."

According to the report, business leaders believe they must innovate quickly to stay competitive, but the speed of innovation cannot come at the expense of security, performance and reliability. When asked about their top business priorities, most technology leaders cited the need to improve application performance and reliability (48%), improve application security (42%), make it easier to adopt new technologies to bridge the transition to the future (38%) and enhance developer efficiency (30%).

As they strive to accomplish their business priorities, technology teams are most commonly challenged by a lack of automation in IT that ties resources up on trivial manual tasks (40%), the complexity of using multiple technologies (38%), and reliance on legacy technologies and monolithic architectures (34%).

Over one in eight (82%) technology leaders say their organisations have either fully transitioned to entirely distributed architectures (microservices, containers, serverless) or are currently using a mix of monolithic architectures and microservices, with 38% fully transitioned to entirely distributed software architectures. As business software architectures become more decoupled, microservices continue to grow in use. Most teams (64%) run 20-99 microservices in production, and over one in five (22%) teams run 100-499 microservices.

"To handle microservices at scale, technology leaders are increasingly turning to service meshes to complement API gateways in providing reliable, secure and observable connectivity between services in distributed, cloud-native environments," says Palladino.

"This year, almost one-third of respondents report already having service meshes in production. Another 44% report having service meshes in deployment, making it a vast majority of technology leaders who already have a service mesh either in production or deployment." 

Kong says providing developers with modern technology tools will be a significant focus for business leaders in 2022. To meet their business priorities and overcome their IT challenges, technology leaders plan to allocate more to their IT and developer budgets:

  • 86% of respondents expect their organisation's IT and developer budgets to increase in 2022, with a vast majority (72%) expecting it to increase by 25%.
  • Another 14% say their IT and developer budget will increase by 25-50%.
  • 64% of respondents believe that their budgets for APIs will increase in 2022, with 32% expecting a large increase of 25% or more.
  • In 2021, 36% of teams increased their API budgets up to 25%, and 20% increased budgets by 24% or more.

Brad Drysdale, APJ field CTO at Kong Inc, says, "As Australian businesses enter the post-pandemic era, the pressure to innovate will continue to mount, and digital transformation will accelerate. The survey suggests that IT departments will be constantly tasked with finding solutions that will enable their organisations to better understand and engage customers, while supporting innovation and reducing the time to market." 

Ultimately, he adds, in today's increasingly digital world where everything is connected, digital experiences are king, and customers expect nothing less than seamless experiences.

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