Organizations, at least those in advance in relation to digital transformation, rely very much on private, public APIs or partners to develop their business. These interfaces have become economic sales and omnichannel service models. But what strategy should be adopted to enter and succeed in API economies?
For the Gartner group, there is no more doubt. APIs boost sales. Companies like Salesforce have generated 50% of their turnover only through APIs, eBay has generated 60% from it and Expedia 90%. The group of analysts also claim that from now until 2023, 65% of revenues will generate from global infrastructure service suppliers providing services activated by APIs, compared to 15% in 2018.
APIs have become a real business challenge and a new distribution channel. They are also a facelift for your IS. Finding the good formula to foster business still remains. At the heart of the API economy is found the exchange of value between those which provide interfaces and those which consume them. There are multiple applications, from McDonald’s that rely on Uber Eats for home delivery to HSBC which provides a unique financial dashboard for customers or even Expedia which regroups flight information of airline companies in only one view.
Should APIs be used or not?
Everything is possible, thanks to these programming interfaces and in particular, this will be easier and faster. Before, you would depend on the IT team to develop a particular function for your activities to maintain the system. In brief, it was quite boring work. With the availability and convenience of APIs, projects are less complicated because companies can depend on the APIS of the web giants to create or develop their activity. Take the example of Lyft which started by using the Google Map API for navigation.
On paper, this appears simple and tempting. But beware of the anti-climax and disappointments. Should APIs be used or not? It is vital to have a clear vision of the objectives that are assigned to the APIs:
- Increase the value and monetize an internal expertise?
- Develop a new offer?
- Extend the scope of the current company offer?
- Externalize one part of the value chain?
On a more general level, it is important to know in which domains your organization can be improved and what the commercial initiative principles are which you currently focus on.
Another fundamental question is: which business model should be kept? Expert and consultant in new technologies, Olivier Ezratty reminds that there are three models:
- The freemium where the access to functionalities contains publicity or non-solicited elements by the user
- The payment model which consists of invoicing API usage according to the frequency and utilisation service volume
- Affiliation which allows the carrying out of payment transactions between application user and API provider.
The challenge consists of creating a successful API strategy. It rests on different essential points:
1 – Know its public
Without a clear identification of your target for the development of your API, success will be difficult to obtain. How do you envisage the use of your API? If you create an API from zero, don’t start before thinking strategically about the developers that you target, the usage that they could make from it and the use they would make from it.
Some companies have started by forming a team of technological strategy. They have then organized round tables on innovation to test potential integration and to establish best API practices.
Then, they have launched their APIs successfully on the market, allowing external partners and developers to benefit from a unified collection of shared services.
2 – Determine the purpose of API
It is very important to decide if your API is intended for external or internal usage. In the first case, it can bring you closer to your external partners, developers and clients while an internal API can rationalize work flows and improve the global productivity of your company.
3 – Creating a user-friendly API
To create a successful external API, you must provide complete documentation with clear instructions. They will help developers to be integrated in a transparent manner on the interface. The usage facility, reactivity, performance and API service reliability are the four most important characteristics for API consumers. Ensure developing interactive tutorials and providing plug-in functions for current usage cases. And don’t forget to be proactive and to continuously monitor your API to detect possible errors (if not security holes).
4 – Measure efficiency in real-time
It’s a question of defining parameters which will allow the evaluation of the potential and possible success of the API. Then, it’s necessary to continuously scan its efficiency to adjust to the need. In the traditional economy, the time between the decision and the production could be very long. In the digital economy, this time exists no more. The developments are done in real time, continuously, on the fly.
We have entered the API economy, an economy based on the distribution of interconnected web services. But these interfaces are today more than a middleware allowing the connection of different systems and applications. They have a major impact on the data governance of your organization. Your data strategy must be more open. It will be beneficial for your company.
Companies must accept importing data from other systems, integrating it via their APIs instead of producing it themselves and exporting their data to other systems because it has become simple and accessible. APIs allow each actor who knows them to go much faster, based on systems that already exist.
The importance is no longer the website or the application. It’s necessary to do the API first! In several cases, consumers don’t need banks or their sites anymore; but they still need banking services!