Digital Revolution 2.0: 12 Things About The API Economy You Should Know

By | February 22, 2017
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API economy trends

In a recently conducted study, it was found that close to 78% of all mobile applications would not exist in the absence of backend APIs (i.e., their core functionalities will be affected). The importance of the API economy in the context of software development has been increasing rapidly for some time – with 2017 being dubbed as the ‘Year Of The API Economy’. It can be safely said that we have entered the second major digital revolution (the first, of course, being the arrival of the World Wide Web in 1995), with APIs changing the faces of businesses and driving the growth of IoT applications in particular. In today’s discussion, we will take you through some fascinating facts about the thriving global API economy:

  1. Robust adoption by businesses

    For entrepreneurs who wish to innovate, modernize operations, leverage competitive advantages and in general stay ahead of the game, API strategy implementation is no longer just an option. According to Gartner, by the end of this year, 3 out of every 4 Fortune 1000 companies will have their very own public web APIs. What’s more – these APIs will be the medium for at least half of the total volume of B2B collaborations/communications. Businesses which do not upgrade themselves are bound to lag behind – something that is pretty evident from the fact that, more than 51% of the companies in 2000’s Fortune 500 list have disappeared. It’s an ‘adapt or perish’ scenario.

  2. From code lines to APIs as products

    Modern APIs are, in most cases, reusable, and that gives them additional value. These language-agnostic interfaces emerge from being just lines of code, to tools that can be used across multiple projects. That, in turn, allow IT companies to ditch the traditional ‘project-first’ approach in favour of an environment where ‘managed APIs’ are treated as valuable assets – which are reusable, developer-oriented, and highly reliable. As the precise requirements change from one project to the next, app developers have the opportunity of customizing the API products to implement the desired features. The entire operating model undergoes a change for the better, with accelerated project development times.

Note: Just like the software they are integrated to, APIs too have their own SDLCs (software development lifecycles).

     3. The ‘API Building Blocks’

Working with a viable API strategy can seamlessly transform a business into an interactive platform – which expand and share the overall ecosystem and the resources both within and outside the organization. The transformation takes place with the help of three sets of building blocks. First, there are the ‘Business Model Building Platforms’, which expose data, analytics, resources, algorithms and other proprietary assets, enabling key capabilities in the process. The ‘Digital Business Models’ help in the creation of value from external sources, through the upgradation of business ecosystems (including networks of people and things). Finally, there are the ‘Business Ecosystems’ for delivering innovative, customized solutions by systematically leveraging the overall business model.

      4. Huge spike in data volumes

By 2020, the total volume of big data is expected to gu by nearly 1500%, compared to the 2005 volume. However, it is not the spurt in big data that poses a problem per se (there are plenty of storage resources available on the cloud) – but the actual management, maintenance and security of this data. APIs help in smooth implementation and usage of of these resources in a manner which is actionable for enterprises, and completely safe. With an API strategy in place, delivering data-oriented, ‘useful’ solutions to customers becomes that much easier.

     5. More than cloud computing

Many web and mobile app developers tend to think of APIs as simplistic tools meant to serve one purpose – integration of cloud computing inside applications. While that is obviously true, the justifications behind API-making do not stop at that. A properly optimized API strategy should boost wider asset syndication by enterprises (to users both within and outside businesses). Seamless cloud computing is one of the micro-functions of APIs…on the macro-level, they drive innovation, build new capabilities, and help in expanding business reach.

    6. The need for smarter API management

New things bring with them new challenges – and APIs are no exception to this. A mis-managed API strategy is not likely to yield any favourable results, and can, in fact, be counterproductive (e.g., mounting expenses). The API management issue is further compounded by the fact that – the customers of an API tool might be totally third-party entities (i.e., not a part of the existing partner network of a business). During the development phase, due attention has to be placed on API prototyping, testing and performance assessment. A company also needs to be careful about how it markets a new API solution to prospective clients…in most instances, third-party app developers. Right from ensuring high discoverability and proper scalability, to API authorization standards and lifecycle management – the task of API management encompasses everything.

Note: Detailed documentation of APIs is also essential, as is the gradual creation of developer communities online.

  1. Importance of establishing a strong internal API economy

    A company creates and markets APIs, someone involved in mobile app development uses it up, a buzzing ‘external API economy’ is created – and that’s the end of that, right? Well, it’s not quite that straightforward – and companies have to first focus on creating a robust ‘internal API economy’ – that would help them break out of the many limitations imposed by traditional legacy systems. The key purpose of this internal economy is the decentralization of app-creation processes, and ensuring accessibility of data across all tiers of an organization. For this to happen, entrepreneurs have to switch over to an IaaS (IT-as-a-Service) model – and the pool of in-house developers have to increase. These developers will be the ‘internal users’ of APIs, and they will be enabled to innovate more on their own projects. APIs have the potential for a lot of external value-creation – but first, they have to be successful internally.

  2. Highly mature API development cycles

    A piece of software can be as innovative as possible – but it is of little use, if it is not user-friendly. With an eye on that, companies are increasingly focusing on coming up with API platforms that are completely customer-centric (i.e., are designed according to the preferences of target customers). This approach, in turn, is instrumental in making the overall API development cycle – the API SDLC, if you will – to become more and more mature. The ‘Maturity Model’ of cloud APIs can broadly be said to have 4 stages. At the base, there is the ‘Descriptive’ stage, where developers react on the basis of past data. Above it is the ‘Predictive’ stage, where the attention shifts to anticipating future events. Next up is the ‘Prescriptive’ stage, and now the API providers have to specify future actions and how they are to be handled. Right at the apex of the maturity model is the ‘Cognitive’ stage, where things are all about automated learning and auto-adjustment to events.

  3. A new set of business assets

    We have already briefly highlighted how APIs are fast emerging as important tangible assets for businesses. However, with APIs heralding in Digital Revolution 2.0 – enterprises have more new digital assets to consider and manage. The API management software should be mentioned first in this context – since they pave the way for digital platform deployment, data protection, and a host of other key responsibilities. The ‘intelligent business processes’ curate and add scalability to partner-delivered solutions, and they are also important assets (they ensure the ethical handling standards and API compliance considerations as well). The APIs themselves – which share data, algorithms and pre-specified resources – bind the entire infrastructure together.

  4. Main components of API strategy

    A well-formed API strategy is implemented through three main building blocks, as has already been pointed out earlier. Let us now turn our attentions to the components that actually make the strategy. First of all are the business-to-business (B2B) servers that are operated through APIs. The second component would be the existing (and evolving) in-house tech architecture – ranging right from systems and devices, to cloud applications and web-stored databases. The multitude of endpoints (where APIs are executed) are vital too – particularly since the API environments tend to be highly fragmented. Updated enterprise-level data can also be sourced from social media portals, making the latter a cog in the API strategy plans as well.

Note: With the help of APIs, businesses are increasingly reaping the benefits of real-time information-sharing and knowledge-dissemination.

     11. The API culture

One of the biggest upshots of the growth of API economy has been the increasing willingness of companies to expose their data/resources to third-party users (traditionally, enterprises preferred to work in somewhat ‘closed’ environments). For the launch of software ecosystems and refurbished business models, bimodal IT systems are being integrated within existing architectures. The day-to-day operations are witnessing a shift in focus – from projects/products, to deployment of business model platforms. Experts from the domains of web and mobile app development have the additional responsibility of getting familiar with new asset management lifecycles, asset-sharing and intellectual property handling, and new-age risk-management tools. The API culture is upon us…and it is shaking up businesses, from the ground up!

     12. The manifold uses of web APIs

From two-way cloud connectivity, to connecting one on-premise system to another – web APIs are being used by businesses for a multitude of purposes. Advanced ecommerce services require a smart integration of online reliability and superior contextual information transfer to customers – and APIs play an important role in delivering that as well. The most common application of web APIs is, however, their integration in custom mobile apps that offer backend-as-a-service (BaaS).

The API economy has well and truly revolutionized businesses across the world, by shortening (at times, obliterating) delivery gaps, establishing new enterprise models, and providing innovative, personalized solutions. Interestingly, it has also empowered new startups to hold their own against much more established competitors (the fairytale success stories of WhatsApp and Instagram – both acquired by Facebook – bear testimony to this). In fact, the API economy is not only pushing in Digital Revolution 2.0…it is as remarkable as the Industrial Revolution, in the context of software technology!

 

Hussain Fakhruddin
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Hussain Fakhruddin

Hussain Fakhruddin is the founder/CEO of Teknowledge mobile apps company. He heads a large team of app developers, and has overseen the creation of nearly 600 applications. Apart from app development, his interests include reading, traveling and online blogging.
Hussain Fakhruddin
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