January 30, 2017
As a growing number of consumers and businesses incorporate web and mobile apps into their daily routines, businesses are discovering valuable new uses for previously isolated data sources. APIs (application programming interfaces) are the tools that allow businesses to put that data to use — by inspiring innovative developers to create new business opportunities and improve existing products, systems, and operations.
An enterprise should develop an API strategy consisting of both public and private APIs. When an enterprise business releases public APIs that power consumer-facing applications, it enables new ways to engage and connect with its customers through web, mobile, and social apps. And by developing private APIs, businesses can offer their employees and partners new tools that help them streamline operations and serve customers even better. In this dynamic environment — as more and more businesses create and incorporate APIs — it’s increasingly critical for innovative businesses to develop and execute successful API strategies.
To get some context for the widespread use of APIs today, consider the following…
Netflix is able to stream to over 200 different device types thanks to its API.
60% of eBay’s listings are done through their API.
50% of Salesforce transactions are done through their API.
Twitter receives over 13 billion API calls daily.
APIs are not experimental: More than half of all the traffic to major companies like Twitter and eBay come through APIs
#1 An API allows your customers to innovate at their own pace.
No matter how fast you release new features, you’ll never be able to meet the needs of every single customer. Having an API gives your customers (and their development partners) the freedom to customize your software and build the exact solution they need today, not six months from now when you release the next version of your software.
If your product is targeted towards mid and enterprise markets, then having this ability is a must. Your product strategy needs to inform which APIs you need to build first, so you can expose the most critical functionality as soon as possible.
#2 Having an API enables professional services revenue.
If your customer is looking for a feature you don’t have or needs specific customizations, having an API can help you close the deal and bring in additional revenue in the form of professional services. In Enterprise software, it is very common to have an implementation team that focuses on developing one-off features for specific clients. This also helps keep your core development team focused on developing strategic features that will solve problems for your critical mass of users.
#3 With an API, you can build a partner network.
While your Sales team is finite, a partner network can bring scalability and additional revenue to your organization. Once you have an API, partners can either integrate into your product (like the eCommerce example above) or they can build custom tools and functionality on top of your product.
The key advantage here is that partners will help you sell your product because they want to sell their products or services on top of it. By creating a partner network to leverage your API, you have automatically created new sales channels and have scaled your Sales and Marketing teams in a way that otherwise might not be possible.
1. Mobile enablement
As mobile applications have evolved, they now need to be available in multiple versions for multiple operating systems and devices — Android, iOS, Windows Phone, or even next-generation non-mobile devices such as Smart TVs. This places enormous strain on the development and maintenance process in a way that affects not only the various user interface components (the apps themselves), but also how data reaches the applications that are running and how data / transactions are sent back. Securing this “data channel” and keeping it uniform has become one of the most important uses of APIs and companies are increasingly designing APIs first for consistent data experiences and layer application builds on top to provide the specifics for each audience.
2. Customer and partner ecosystem growth (becoming a platform)
A key common challenge for organizations is to serve special needs that vary on a customer-by-customer basis – ideally, these should be delivered in such a way that customers can help themselves in setting up for special needs. In addition, it’s often the case that partner organizations can provide valuable complementary services to enhance an offering. However, in both of these cases, customers need the means to integrate software systems with the company they are doing business with. It is not surprising, then, that one of the most important uses of APIs is to provide the foundation for “becoming a platform” – in other words, they provide exact integration points for customers, suppliers, distributors and integrators. Companies such as Evernote provide the means for many third-party integrations to enhance the user experience, eBay uses APIs as the foundation for a powerful partner ecosystem, and even less obviously technical companies such as Nike are clearly using APIs to enable a third-party ecosystem to emerge.
3. Accelerating reach for transactions and content
A third common use case of APIs is as an accelerator for content distribution and enabling transactions from a wide variety of sources. A special form of partner ecosystem, for media and content APIs, this means providing API access to content that partners, news readers, aggregators and mashup tools can automatically access and propel to new audiences. For eCommerce and, increasingly, brick and mortar retailers, APIs can enable purchase transactions via a much wider set of interfaces than a standard website would. An example aggregator in the media case is Flipboard, which pulls in content via API from a wide variety of sources — having an accessible API is table stakes to being accessible to the Flipboard audience. On the eCommerce side, companies such as Walgreens now have APIs that enable prescription filling and submission of photos for printing – enabling third-party developers to embed such features wherever and whenever it is convenient for the user.
4. Powering new business models
Pure-play API companies such as Twilio and Sendgrid have shown APIs can in fact be products in their own right – becoming the core offering for the company or a large business unit. While this does not apply to all companies, enabling and delivering a valuable service to third-party developers and partners has clear revenue potential. Furthermore, if successful, this strategy has the potential to become an element of core infrastructure for its users and hence create a strong, loyal following of partners, savvy developers experienced in the APIs, and an ecosystem of third-party tools.
5. Driving Internal Innovation
Last but not least, large companies continuously need to innovate – creating new internal and customer-facing systems. APIs offer the key to providing the agility needed to do this – Jeff Bezos famously enforced all software in the company to interact only via APIs from 2004 onwards, and this move is widely credited as key to Amazon’s ability to later enter disparate new businesses such as AWS computing services. APIs are key in providing packaged, accessible interfaces to systems all across an organization and reducing the friction in creating new, cross-organizational systems.
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