The API economy: future-proof your business
McKinsey analysis estimates that as much as $1 trillion in economic profit globally could be available through the redistribution of revenues across sectors within ecosystems – and APIs are the connection points linking businesses and tech in ecosystems. The rising value of APIs has created what is known as the API economy: the way APIs can positively affect an organisation’s profitability.
Companies are slow to realise the importance in locking down a cohesive and viable API strategy, only seeing their value as extensions of internal service orientated architecture (SOA), rather than their potential as platforms on which to base entire business models. As digital technology specialists, there’s no excuse for not leading in this field. So here’s what you need to know.
What are APIs?
Application Programming Interfaces (APIs) make connections between applications, databases and devices possible. In simple terms: they make it easier to do business, both internally, within your company’s infrastructure, and externally, enabling transactions, authenticating people and purchases, providing information and data, and creating and maintaining business relationships. APIs shield you from all the complicated processes happening behind-the-scenes and eliminate surplus information. A good example is when you use Skyscanner to search for flights:
- You input your desired holiday information using Skyscanner’s menus
- This information is passed onto the APIs of the various airlines Skyscanner is connected to
- The APIs gather the information from their respective servers
- This information is then returned to you in the form of a list of options
That is just one example of an API’s capabilities – there are four main functions they can offer:
- Accessing data so multiple apps or services can work together
- Hiding complexity to allow developers easier navigation
- Extending functionality of existing systems
- As gatekeepers protecting personal data
APIs are mutually beneficial to consumers and owners: users save time, get better deals and gain valuable information; owners extend their reach and, as connectivity grows, future-proof their tech stack. APIs bridge the gaps between applications, databases and devices. As such, they are the most important players in the connectivity revolution.
Creating a future-proof API strategy
APIs can be monetised directly in a minority of cases, but their value is usually measured by how they improve and enhance innovation and development. It’s a case of building digital platforms that expand your company’s capabilities and therefore worth.
Creating a viable portfolio is only possible with a formal API strategy, which must take the following into account:
- Ensure the APIs you’re applying are actually valuable
Data should be analysed on an API’s potential impact on revenue, customer experience and productivity. The focus should be on how they are ‘consumed’ by your company’s ecosystems, rather than on their impact on existing technology infrastructure. In other words, you should take your lead from the customer or client journey (the front-end) and work ‘inside’ (to the back-end) from there. There’s no point applying an API to solve a problem that doesn’t exist or that isn’t a priority when it comes to real-life users. Analysing online behaviour via already-existing metrics is one way to ensure value, or via customer behaviour workshops with users or experts. Once a range of potential (and useful) APIs have been identified, it’s the developer’s job to identify the strategic value and viability of each.
This list of top recommended APIs is worth a look for an idea of the scope and breadth of value they can offer.
Make sure they’re secure
APIs are often used to connect Cloud databases to on-site systems and to enable external data-sharing capabilities. They’re the reason the Internet of Things (IoT) can flourish. However, with increased connectivity comes increased security risks. (We all remember the catastrophic 2019 Apple ‘Facepalm’ bug where a boy could hear his friend’s conversation despite him not answering the FaceTime call.) No one wants to be responsible for trampling over people’s privacy or have their own privacy violated. All of which means security must be a top priority in both the APIs you use and own.
You need to look out for:
- Privacy: ensure personal identifiable information is scrubbed.
- Threat prevention: you may need a gateway API to protect the original API from application-layer threats.
- Identity fraud: identification of all participants (difficult when the application using the API might be a chatbot).
- Rate limiting: control the rate of requests sent or received.
Provide straightforward documentation for your API for developers. Too often APIs are launched without any basic guidance or tutorials on functionality. Detailed documentation can elevate your API over superior products with developers keen to save time and energy by being able to dive right in.
Authentication of any new API should also be straightforward, using tools that developers are familiar with. Mobile and multi-experience application development and easy integration should be prioritised.
You can confirm an API’s effectiveness with a hackathon, providing only the documentation and asking developers to create something in 15 minutes. Hackathons are also great ways of expanding ecosystems, fostering creative partnerships, and discovering where true value lies, leading to new, improved and more valuable APIs.
Install metrics to measure the success of your APIs
APIs should only be built if they further the business interests of the provider, therefore you’ll need to have tools in place to measure who is using it, how they’re using it, why they’re using it (what value is being created?) and how all of this can be improved and worked upon.
Invest now to ensure longevity
Investing resources now in prioritising APIs as part of any business strategy will ensure a company’s longevity in this ever-changing digital landscape. They offer a massive avenue of business growth and revenue for all firms – but particularly digital firms. When utilised effectively they can cut costs, improve efficiency, create and maintain ecosystems, monetise data, enable innovations and spark new partnerships between businesses, developers and customers. Creating and integrating APIs is now essential if you want to lead in this hyper-competitive digital world of ours – and who doesn’t?
More Insights?View all Insights