Swisscom: From Telco to Digital Business

Swisscom is the largest telco in Switzerland, delivering most of the country's mobile and fixed network services. It's also the market leader in enterprise services, providing custom services to large business customers. Swisscom delivers core telco products—bundles of fixed and mobile telephony, internet, and TV for the mass market. The company's enterprise customers buy packaged infrastructure services and custom products, such as hosted telephony, UCC (unified collaborations and communication), and communications services—all hosted in the cloud by Swisscom and delivered as products.

Though Swisscom enjoys about a 70% market share in Switzerland, it still grapples with the competitive challenges that telecommunication companies face globally. The company was looking for new ways to offset declining revenues from its traditional business and set on APIs as a growth opportunity. The goal was to generate new business by providing a set of APIs that Swisscom customers and partners could use to innovate. The company wanted to create new business models, products, and applications using Swisscom programmable internet services—precisely what APIs are all about.

"Our customers, channels, and competitors are all becoming digital, which creates a whole new ecosystem of value. The digital transformation journey is so fundamental that it requires changing our DNA," says John de Keijzer, Head of Development IT, Network & Innovation at Swisscom.

New revenue model

The journey to generate new business through APIs, however, came with a learning curve.

"We couldn't deliver initially on our promise to generate new revenue and we had to take a step back and reevaluate our approach," says Martin Graf, Vice President, Digital Services and Cloud at Swisscom. "Through a series of trials we figured out what APIs are all about and mastered the technology. Now we have many APIs that are delivering value and actively solving customer problems."

Swisscom expects this year to be a breakthrough year, generating millions in new API-based revenue for the company and its customers.

Currently Swisscom has 159 APIs serving 70 distinct consumer applications and generating around 500 million API calls a year. This translates to about 50 million calls a month. With steady growth of 20% annually, the company sees a bright future for its API program.

On-premises with Apigee and Google

The native speed and agility was a deciding factor for Swisscom in the choice of Apigee as its API platform of choice. The team can quickly create APIs based on thousands of existing web services and publish APIs to the platform essentially at the push of a button.

"Everything was smooth and seamless," says Graf. "Looking at the technical infrastructure—the ability to scale, how secure it is—we found Apigee is the enterprise-grade, telco-ready product we were looking for. Instead of weeks or months, Apigee allows us to create APIs in minutes."

Swisscom had been using another API management product, but after going through a product evaluation and proof of concept process, Swisscom made the decision to go with Apigee—partly because the company likes to partner with startups.

"We have more input into helping shape the product roadmap at smaller companies, and that's exactly what Apigee was—a start-up, yet it delivered the product we needed in terms of features, stability, and robustness," says Graf.

During the selection process, the Apigee team made it clear that they would serve as trusted advisors to Swisscom, which Graf credits with tipping the scales in favor of Apigee.

"We felt that we were engaging with a company that would help us through the long transformation ahead, even if times get rough," he says.

When Swisscom first heard about the acquisition of Apigee by Google, the team was concerned that their successful on-premises deployment might not continue to be supported. However, they quickly saw that not only would Google continue to support on-premises deployments, it would offer a much broader menu of digital technologies that could benefit Swisscom.

"Google brings a lot of other technologies and people that can help us in our digital transformation," Graf explains. "Until now it's been more of a technical transformation for us, but our board of directors has now welcomed the idea of a business-level transformation as well.

APIs as products

"With Apigee, we built a proof of concept for APIs as a sustainable business," says Graf. "It can generate at scale, it's limitless, and it has high margins. We're looking at an enterprise-level transformation."

With access to 90% of all Swisscom enterprises, the company is positioned to scale and provide additional value to Swisscom customers, which is in fact the key differentiator of its API program. Beyond revenue, the API model impacts customer retention, adding value to existing products.

Swisscom's board sees the transformative value of what began as a grassroots approach to APIs—it now values the API program as a critical part of a new business model. In other words, it views its APIs as products.

"As I have a product management background, we used this methodology to start thinking about whether the product was a service or the service was a product," says Graf. "Our process is to understand the value of the data and the functionality that we provide our customers, which ultimately solves a specific problem. We don't just create APIs and hope someone wants to use them."

This outside-in approach, first defining, then understanding, and ultimately solving a customer problem by means of an API, defines the new Swisscom business model, which will soon include customer access to Swisscom APIs on the company’s upcoming Digital Marketplace portal.

The ability to manage APIs created over time, combined with features included with the Apigee developer portal (security, onboarding, credentialing, and access control) are valuable to Swisscom. Control and management of APIs for customers and partners is simplified in the Apigee environment.

To stay ahead of potential challenges, the company runs a yearly security audit where it tries to break APIs. Early on it was able to close initial security holes, and now runs "a very, very secure and stable environment," Graf says.

Three-phased journey

Swisscom first began working with APIs in 2012 when it started to solve customer problems by developing individual API solutions. The company is now well into the second phase of its journey: productizing and monetizing APIs for the Swisscom ecosystem. The team is looking forward to the third phase in its transformation, when it expects to see a massive increase in APIs and API-first principles and design: what Graf refers to as the DNA of the future Swisscom stack.

"Apigee is our chosen platform. It's mission critical and a building block of digital and business transformation," Graf says. "Any company that wants to transform itself, and walks voluntarily or involuntarily down this path, has to embrace a mass of APIs."

Learning new technologies, building innovative products and businesses from scratch, and nurturing them to maturity is helping drive Graf, the API team, and Swisscom towards a digital future.