May 10, 2016 | Written by: Doug Flora
Categorized: Community | Compute Services
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Application programming interfaces (APIs) are everywhere around us today. Just think – every time you “like” a post or send a friend request on social media, you are talking to an API.
But until recently, it was primarily software engineers who were responsible for understanding APIs. Nowadays, the scenario is changing rapidly. Leading enterprises are taking an API-first approach to building their business strategy. This revolution has given way to the open API economy, driven by connected devices and an ever-growing ocean of useable data.
Organizations can now reuse their assets, resources and core data values through the use of APIs, creating new revenue streams along the way. Thanks to rapid growth, the API economy is projected to be a $2.2 trillion market by 2018. IT Research and Advisory Firm Ovum reports that “during the next two to three years, the number of enterprises having an API program is expected to increase by 150 percent.”
Vinay Patankar, Co-Founder and CEO of Process Street, described this phenomenon to me in a recent interview with “The New Builders” podcast. He explained how his company has adopted an API-first approach to help it get a foothold in the new open API economy, and enable its clients to interact with its back-end services in a hassle-free way. As Patankar describes it, “every single product is pushing an API first approach without making any custom middleware.”
Process Street has packaged its back-end and API servers as a single entity, which enables its customers to interact with its data server through simple API calls, without having to understand the internal complexity of the system. It also saves Process Street time and allows them to focus directly on API development. “We don’t have to build an app and then have to build and maintain an API separately in parallel,” explains Patankar. “We can just focus on building our core API.”
“As a workflow product, one of the key pieces of value that we provide is that we help you move data between products,” Patankar said. “We chose to have an API-first design because … it really makes it extremely simple for us to communicate and move data between different apps.”
Let’s take a look at some of the core concepts behind this new open API revolution:
The Rise of Open APIs: A Little Background
In the not so distant past, applications were primarily concentrated on single functionalities like CRM, HR and finance. In these scenarios, each system had its own completely separate data silo. APIs were private and accessible to a limited set of people on the development team, causing hurdles and delays in the development life cycle.
In today’s reality, technologies are diversified, devices are connected, and the speed and volume of data generation is beyond our imagination. Organizations now understand that their data silos need to be integrated to get better insights and extract more business value. This realization introduced the concept of enterprise application integration through APIs, including incorporating API management into their overall business strategy – which in turn led to the concept of an open API economy, fueled by frictionless interaction between organizational data and services.
APIs have evolved too, from private and only able to be accessed by a limited few, to being publicly available to developers so they can access proprietary software applications.
Why is the API Economy Growing?
Disruption in the digital world is the main catalyst behind the growth of the open API economy. Cloud computing, mobile devices and the Internet of Things (IoT) are all influencing its rise. Open APIs are strategically important in building a successful business. APIs have evolved to now serve as basic customer interfaces for products and services, making them a key channel for revenue growth and brand engagement.
From the organization’s point of view, their main effort is to produce and promote standard public APIs with specific use cases. The APIs they create should be easy to implement, well managed and unique. As the economy grows and more open APIs become available, innovation will be the key differentiator to make APIs stand out to consumers and developers, who will use them to make pioneering services, mobile apps and social platforms.
What Does an API-First Business Model Look Like?
It can be confusing for some to realize that an API ecosystem can actually generate revenue. In simple terms, API monetization is akin to a pay-per-usage model, but organizations are using different business models for direct or indirect revenue growth.
For example, Salesforce.com exposes core features of its platform through the use of APIs for complementary apps. These APIs are known as Salesforce Platform APIs.
In the social media space, Twitter and Facebook are counting on APIs to drive more usage and expand engagement, allowing third parties to leverage their APIs to build new mobile and web apps.
In the entertainment and e-commerce space, Netflix and eBay use APIs to share content and commercial offers through third-party applications, and those transactions generate revenues for the API providers.
The open API economy is still in its nascent state, but trends within the open source community point toward continued growth. Over time, enterprises will realize that the power of their applications can also be leveraged through public APIs. With the disruption in the digital world, open APIs are going to reshape how business is done. The open API economy is a reality for business growth, and those without an API strategy could very well be left behind.
Many signs are pointing in the right direction: Gartner predicts that 75 percent of Fortune 500 enterprises will open their APIs within the next couple of years. The Linux Foundation is also guiding the Open API Initiative as a way forward to standardize and properly document APIs.
According to Patankar, the future of the open API economy is very bright. Third-party and independent developers can easily contribute to an open API ecosystem and the integration possibilities are endless. Because Process Street’s open API is “so-well tested and there are so many endpoints built for it,” says Patankar, “it makes the API very robust and makes it very easy for any other developer to come in and manipulate any of the data that they want from their Process Street account. It makes it very easy if you do have any kind of custom app that you want to integrate with.”
To learn more about how Process Street adopted an API-first strategy, you can listen to our latest episode of the New Builders podcast, “The Back-End Server is the API Server – Building API-First,” with guest Vinay Patankar, Co-Founder and CEO of Process Street.
And for more stories from The New Builders podcast, find us on SoundCloud, IBM developerWorks TV at The New Builders, and on iTunes (coming soon). Please send thoughts, feedback, and guest ideas to me at email@example.com or Jim Young at firstname.lastname@example.org, or reply in the comments.