In this post I aim to share my excitement about a topic of major significance: the API economy. In my view, we are at the dawn of a new era which can be as revolutionary for business as that of the Internet itself. Now if you are thinking “API is just for techies, it cannot be so important”, please read on. I am certain I will change your opinion! Adapting from Shakespeare: “To API-fy or fry, that is the question!”.
The dawn of the API era
Back in 1995 at the start of the Web, I had the feeling that something very big was happening. I recall well that some believed having a website was not important. So 20 years on, most readers will agree that a web presence is essential for businesses of any size. Now we are again at a significant milestone where IT technology can transform the business landscape and bring massive benefits to those who are ahead of the curve. API’s are on that same-level of world-changing technology as the Web. Soon, businesses won’t be able to grow, stay modern, innovate and be competitive without an API strategy. API’s are the way to go for business to leverage customer and partner engagement. It is time to act to “API-fy” your business and win competitive advantage stretching over the next 10 years.
What is the API Economy?
The API economy is a new way of doing business and is a very hot topic. It is centred on opening up your business and its assets so that those assets can be accessed as a platform by third parties. The goal is centred on generating additional business value through new opportunities for the business which are accessed through the eco-sphere of the third party.
API in the techie world is an acronym for “Application Programming Interface”. In this classical use, API refers to application interfaces for specific languages such as DLL files for C+ or JAR files for java. However in the API economy, the term API is much more generic. It does include the language API interfaces but also encompasses web services and any kind of software interfaces to business assets.
So the API of the API Economy is a more general term for exposing business assets, whether they are data or software or processes. The concept is not new as shown by Roberto Medrano’s contribution in Forbes entitled “Welcome to the API Economy”.
From day one, Salesforce has offered its solutions as fully API enabled platforms and has had incredible success with this open approach. Medrano gives many examples of large enterprises using opportunities to expose their businesses through web services. Some are: Google, Amazon, eBay, Facebook, Netflix, Paypal, LinkedIn...
Why the API boom now?
So what is new then? Well the newness is that it is really taking off in a quite remarkable way. Recently the number of private and public APIs has been growing exponentially. Already there are 13.444 publically available API’s. The lift-off is fuelled by mobile devices, social networking and social content, clever apps, online services and new software markets such as Google Play, App Store of Apple, Appexchange of Salesforce. I heard recently that 77% of all Mobile Apps would not exist without API connection to backend services of some kind for data or process access. My post on the Internet of Things outlines how everything will become internet connected and this is all dependent on API’s. Together all these factors are a volcanic mix of opportunity to gain new customers and link into new communities.
According to analyst Craig Burton, the number of open APIs is projected to reach 30,000 by 2016. Furthermore, he reports that the commercial sector is quickly catching up, while "dark APIs" (i.e., APIs not publicly exposed) are thought to have a 5X growth rate of open APIs. Burton also projects that in the not-so-distant future "everyone and everything [will be] API enabled."
What are the benefits of being part of the API economy?
A standard business strategy in the past has been to guard internal assets and to try to lock in sales channels. In stark contrast in the API economy, internal assets are exposed via API’s and enabled for access by third party businesses. The aim is to enable these third party businesses to generate new kinds of products or services and added value for the API business owner and the third parties.
Let us suppose, a shoe manufacturer has a large inventory and an established network of distributors around Europe and a couple of e-commerce stores online. API-fying the inventory can allow a small business focussed only on outdoor pursuits to offer online only the outdoor footwear to its own base of customers without actually committing to any physical stock a priori. Imagine this occurs also just for the children’s footwear, the ladies fashion lines etc. A new dynamic community of distributors become a self-organising eco-system which allow the shoe manufacturer to tap into new markets for their footwear and also to access valuable market research. Every new use of the inventory API can be a new channel to market.
Business challenges in the API Economy
A starting point is to get a new conceptual view of your business as a collection of API-able assets. Actually, figuring out how to API-fy your business may need innovative, out of the box thinking. The most rewarding API-able assets may not be immediately obvious. A smart strategy, adopted by ABN AMBRO, is looking at the collective brain power of employees. They launched an internal API challenge with the aim of re-inventing the bank and its products/services.
API Management will be required. The API’s will be new business assets that need to be managed: prototyped, tested, rolled-out and marketed as would be done for a new traditional product or service. In particular marketing needs to be thought through since the third parties, the market for the API’s, may have little overlap with existing partners or channels. A challenge is to make your API’s discoverable and valuable to the third parties, whoever they are.
Key players in the use of API’s are of course the third party developers and associated communities. Making the API well documented and well supported and nurturing developer communities, as in developer portals, is a must-do.
API usage will be frequently in the cloud or another scalable, on-premises environment, requiring proper security and authorisation when the data used or returned by the API is restricted or sensitive.
How ABSI can help you API-fying your business
Systems integration is the core business of ABSI. We can assist you with the whole life-cycle of API creation and management from the start of identifying API-fyable assets through to monitoring their operational usage. We can create the API’s for your assets, test, document and deploy them. We can provide cloud services for hosting API environments and monitoring their usage. We can also provide the appropriate levels of security and authorisation for your requirements and the necessary analytics to support any API revenue model.
Since early 2015, ABSI has been evaluating and learning several API management solutions. I have attended Mulesoft Summit in Amsterdam on may 12th with my colleague sven (@SvenDelporte) and we're both very much impressed by the maturity of the Mulesoft AnyPoint Platform and the ease of use and features of Mulesoft API management Solution. What's more, Mulesoft has been recognised as market leader in the latest Gartner Magic Quadrant on Application Services Governance.
We must wait 10 years to see what will transpire with the API Economy. In any case understanding market trends and trying to see how ABSI can leverage them to better serve both our customers and partners is one of our key success factors. So we are ready to support you adapt, to API-fy and to maybe ride the API rocket!