What Is API As A Service? -Microservices & Digital Transformation

Table of contents

diagram showing an API as a service

API as a Service (APIaaS) streamlines the creation and management of APIs in a cloud-based environment. If your enterprise is planning a digital transformation strategy or in the process of migrating to the cloud, you’ve probably heard the terms “microservices” and “APIs.” However, as common as these words are, few people actually understand them unless they’re working as developers. 

To clear the confusion once and for all, we wrote this guide. This guide explains the difference between APIs and microservices and how they can affect digital transformation for businesses.

Here's the key things to know about APIs as a service:

  • API as a Service simplifies the creation and management of APIs in the cloud, offering user-friendly tools for design, scalability, security, monitoring, and integration capabilities.
  • APIaaS accelerates development, reduces costs, ensures scalability, enhances security, and improves developer productivity in modern digital environments.
  • Microservices involve breaking down applications into independent services, offering benefits like scalability, pluggability, language/platform-agnosticism, resilience, security, small development teams, business agility, and faster time-to-market.
  • APIs serve as the connectors between microservices, enabling them to work together seamlessly to build modern applications.
  • Creating REST APIs for microservices can be time-consuming, resource-intensive, and costly.

Table of Contents

What is an API as a Service?

Let’s begin by defining “API.” Techopedia describes an Application Program Interface (API) like this:

A set of protocols, routines, functions and/or commands that programmers use to develop software or facilitate interaction between distinct systems. APIs are available for both desktop and mobile use and are typically useful for programming GUI (graphic user interface) components, as well as allowing a software program to request and accommodate services from another program.

A simpler way to understand an API is to see it as a standardized set of actions or commands available for a specific application or service. These commands are usually available for a web application – like a social media website, a credit card website, a banking website, an accounting web app, or a web-based CRM system. 

An API’s standardized set of actions allows two applications to communicate and share information with each other – even if the applications are programmed in different languages or running on different platforms.

How Does API as a Service Work?

API as a Service (APIaaS) streamlines the creation and management of APIs in a cloud-based environment. It begins with API design and development, offering user-friendly tools to define endpoints and access controls. Once designed, APIs are hosted in the cloud, benefiting from scalability and security. Security measures like authentication and access control safeguard the APIs. Monitoring and analytics tools provide real-time insights into API performance. Scalability is ensured through load balancing and auto-scaling features. Version control and lifecycle management enable smooth updates, while developer portals and documentation facilitate integration. Integration capabilities and ecosystems expand the API's reach. Cost management options and compliance features ensure efficient and secure API management, allowing organizations to focus on innovation and development.

Why is API as a Service Important?

API as a Service (APIaaS) holds significant importance in today's digital landscape for several compelling reasons:

1. Accelerated Development: APIaaS expedites the development process by providing ready-to-use tools and infrastructure for creating, hosting, and managing APIs. This allows organizations to reduce development time and rapidly bring new applications and services to market.

2. Cost-Efficiency: By eliminating the need for organizations to build and maintain their API infrastructure, APIaaS reduces capital expenses associated with hardware and software. Users typically pay based on API usage, offering cost predictability and scalability.

3. Scalability and Reliability: APIaaS platforms leverage the scalability and reliability of cloud infrastructure. This means APIs can effortlessly handle fluctuations in traffic and maintain high availability, ensuring consistent and responsive services.

4. Security and Compliance: APIaaS providers prioritize security and often offer robust authentication, access control, and encryption features. This is especially important in industries with stringent compliance requirements, such as healthcare and finance.

5. Developer Productivity: These platforms offer developer-friendly features, including documentation, testing tools, and developer portals. This empowers developers to understand, integrate, and utilize APIs effectively, enhancing productivity.

Digital Transformation: Example of an API?

Imagine you’re developing an app that interfaces with Twitter’s Direct Message service. Your app needs to connect with the Direct Message service to access, read, and send direct messages through Twitter. Fortunately, Twitter’s Direct Message service has an API that’s available to help your app connect and interact with the service. 

Here’s how Twitter describes its Direct Message API:

These API features enable developers to build better-personalized customer experiences at scale as well as other innovative interactions. To help create more engaging customer service, marketing, and user engagement experiences in Direct Messages we’re providing developers access to endpoints to start conversations with a welcome message, publish messages with quick replies and media, and more.

Twitter’s Direct Message API offers a set of “protocols, routines, functions, or commands” that make it easy for you and other app developers to integrate an app with the Direct Message service.

Typical API Functions, Commands, Routines, and Protocols

There are many styles and varieties of APIs, but the most popular type is “REST API.” The RESTful API standard offers app developers a variety of commands to work with. These commands trigger different HTTP requests in the app or service that the REST API was created for.

According to resfulapi.net:

REST APIs enable you to develop any kind of web application having all possible CRUD (create, retrieve, update, delete) operations. REST guidelines suggest using a specific HTTP method on a specific type of call made to the server (though technically it is possible to violate this guideline, yet it is highly discouraged).

In other words, REST APIs offer a standardized set of “protocols, routines, functions, or commands” that two applications can use and rely on for the purpose of integrating with each other. Here are the most common RESTful API commands: 


API developers call these commands “verbs.”

Having a standard set of RESTful commands like this facilitates application development, and thusly digital transformation. It makes connecting and integrating apps very easy. This is especially the case when one application relies on another application or service to operate – like an app that integrates with the Twitter Direct Message service. If Twitter didn’t provide an API for developers, it would be difficult to integrate a third-party app with the service. 

What’s a Microservice?

Now let’s define “microservices.” We love this description of microservices from Martin Fowler and James Lewis:

The microservice architectural style is an approach to developing a single application as a suite of small services, each running in its own process and communicating with lightweight mechanisms, often an HTTP resource API. These services are built around business capabilities and independently deployable by fully automated deployment machinery. There is a bare minimum of centralized management of these services, which may be written in different programming languages and use different data storage technologies.

The easiest way to understand microservices applications is to view them in the context of their opposite: the monolithic application. Enterprises have traditionally relied on a single, monolithic application – or several closely-connected monoliths – to operate their businesses and provide services to their customers. 

What’s a Monolithic Application?

A monolithic application contains all of the programming for its various functions and services in a single piece of source code. The code for these interdependent functions and services can be difficult to untangle – especially after many iterations and updates of the monolith. In fact, source code can become so complicated over time that changing a small part of the application requires developers to refactor the entire monolith from scratch. Furthermore, scaling a monolithic application requires scaling the entire monolith – not just the one service that needs it. 

Here’s an image of a monolithic application architecture:

*Image Source

Solving the Problems of a Monolithic Application

By referring to the definition of microservices from James Lewis and Martin Fowler above, we find an excellent solution to the monolith’s scaling and coding challenges: Break the monolith into microservices! 

Here are the steps of refactoring a monolith into microservices and help pave the way for digital transformation: 

  • Identifying the component functions and services of the monolith.
  • Develop the functions and services as small, independently running apps called “microservices.”
  • Run the microservices on a cloud server like Amazon AWS. 
  • Connect the microservices to form the larger microservices-based application. 
  • Use APIs to loosely connect the microservices.

Here’s an image of a microservices application architecture:

image source

What Is the Difference Between APIs vs. Microservices?

Digital transformation by way of refactoring a monolith into a microservices comes with the following benefits:

  • Scalability: Instead of scaling the entire application, you only need to provide more resources to the services that need it. This allows you to conserve server resources, use your processing more efficiently, and save on cloud-server costs. 
  • Pluggability: The loosely connected, autonomously-running microservices create a modular architecture with a high degree of pluggability. This makes it easier to add, delete, or upgrade the application with a minimum of impact on its operation.  
  • Language/platform-agnostic: Microservices connect to each other with APIs, you can connect microservices written in different programming languages, and microservices running on different platforms.  
  • Resilience: Each microservice runs more-or-less independently from the others, so it’s easier for developers to set rules that prevent failure cascades. The failure of one service is less likely to cause the failure of others. 
  • Security/compliance: Microservices run in a contained environment without any knowledge of the other microservices that comprise the application. The APIs that connect microservices allow developers to control exactly what information available to other users and services. This makes it easier to satisfy industry data compliance and security standards.   
  • Small development teams: Dividing the monolith into microservices means that small, independent development teams can work on each microservice. This makes the entire development process easier to manage. 
  • Business agility: Enterprises can upgrade their applications quickly and easily since they only need to develop the service that needs improvements. This gives businesses greater agility to rapidly upgrade their applications in response to changing business demands. 
  • Faster time to market: Microservices support the CI/CD/CD development cycle. This allows you to quickly develop a minimum viable product (MVP), release it to the market, and continue to develop new microservices for added functionality over time. 

What’s a Monolithic Application?

  1. Microservice: A small, independently-running application that focuses on performing a specific service or function for a larger application. 
  2. APIs: A standardized set of “protocols, routines, functions, or commands” made for a specific application or service, so other users or applications can interact and connect with the application or service. 

If you’ve read this far, the difference between APIs and microservices and how they can affect digital transformation should be fairly evident. But let’s clarify the difference by looking at microservices and APIs side-by-side:

If microservices are the bricks that build an application, APIs are the “glue” that connects those bricks together. In this respect, every microservice or web application needs to have an API that it makes available to developers – so it can connect and integrate with third-party applications and microservices. 

Final Thoughts on APIs vs. Microservices in the Age of Digital Transformation

Now that you have a clear understanding of microservices vs. APIs, it’s important that you also understand one of the biggest challenges of building a microservices-based application architecture. The challenge is this: 

Each service in a microservices application needs its own REST API to integrate with the other microservices and form the larger application. However, developing the RESTful APIs that connect your microservices requires a significant amount of time, developer resources, and financial costs. It takes approximately three weeks of developer hours to hand-code a simple REST API for a microservice. 

Fortunately, there’s a solution to this challenge. The most advanced iPaaS (Integration Platform as a Service) platforms – like the DreamFactory iPaaS – can help you reduce your API creation time from weeks down to just a few minutes.

How to Create APIs in Minutes not Months

The DreamFactory iPaaS features an advanced API generation tool that automatically generates REST APIs. In many cases, DreamFactory allows developers to create and publish REST APIs for any microservice in a matter of minutes, with just a few clicks of the mouse. 

DreamFactory’s enterprise-grade API as a service platform is available in the cloud or on-premise. To experience how DreamFactory can dramatically speed up your microservices and API development processes – while potentially saving tens (or hundreds) of thousands of dollars – sign up for a free, hosted trial of DreamFactory now! 

FAQs: APIs as a Service and Microservices in Digital Transformation

What is an API, and why are they important in software development?

An API, or Application Programming Interface, is a set of protocols, routines, functions, or commands that programmers use to develop software or enable interaction between different systems. APIs are crucial because they facilitate communication and data exchange between applications, even if they are developed in different languages or run on different platforms.

Can you provide an example of how an API is used in a real-world scenario?

Certainly. Consider Twitter's Direct Message API. If you're developing an app that needs to access Twitter's Direct Message service to send and receive messages, you can use Twitter's API to connect your app to the service. This API provides standardized commands for interacting with the messaging service, making integration easier.

What are microservices, and how do they differ from traditional monolithic applications?

Microservices are an architectural style where a single application is divided into small, independently deployable services. These services communicate with each other, often through HTTP resource APIs. This approach differs from traditional monolithic applications, where all functions and services are bundled into a single, complex codebase.

What are the key benefits of adopting a microservices architecture?

Microservices offer several advantages, including:

  • Scalability: Resources can be allocated to specific services, optimizing efficiency and cost.
  • Pluggability: Adding, deleting, or upgrading components is easier with a modular architecture.
  • Language/Platform-Agnostic: Different microservices can use various languages and platforms, connected via APIs.
  • Resilience: Isolation reduces the risk of failure cascades.
  • Security/Compliance: APIs enable control over data access, aiding compliance with security standards.
  • Small Development Teams: Independent teams can work on individual microservices, simplifying management.
  • Business Agility: Quick, targeted upgrades respond to changing business needs.
  • Faster Time to Market: Microservices support a continuous development cycle for rapid deployment.

How do APIs and microservices work together in the context of application development?

APIs and microservices are complementary. APIs act as connectors or "glue" between microservices, facilitating communication and integration. Microservices represent the building blocks of an application, while APIs enable them to work together seamlessly.

What challenges may organizations face when implementing a microservices architecture?

One challenge is the development of RESTful APIs for each microservice, which can be time-consuming and resource-intensive. Additionally, managing the orchestration and coordination of multiple microservices can pose complexities that organizations need to address.

Are there any industry standards or best practices for implementing APIs and microservices?

Yes, there are industry best practices and standards for both APIs and microservices. For APIs, adhering to RESTful principles is common. For microservices, best practices include designing services around specific business capabilities, ensuring independent deployability, and using automation for deployment and scaling.