The API-Driven Enterprise: Why Productivity Trumps Customization

Boosting productivity with API-driven enterprise

Learn how becoming an API-driven enterprise will help your business unlock new revenue streams, boost productivity, and encourage innovation.

Introduction

It’s often said that data is the currency of the 21st century, which is why so many companies stake their business models on acquiring as much of it as possible. When sliced and diced in the right way, raw data can unfold into valuable business insights that allow you to beat your business rivals and better serve your customers.

Unfortunately, too many companies have thus far failed in their efforts to become a “data-driven” organization—even the Fortune 500 firms among us. In a 2019 survey of C-suite executives from some of the biggest multinational corporations, 69 percent of respondents agreed that their organization is not yet data-driven, and a majority report that they do not treat data as a business asset.

In many cases, companies cannot be data-driven without first being API-driven. APIs (application programming interfaces) are protocols that define how two different software applications or platforms, developed by two different creators, are able to communicate and exchange information.

APIs have become an essential part of the digital economy, and when done right, they can massively accelerate your business growth. In this article, we’ll discuss what it means to be an API-driven enterprise and how you can achieve this goal for yourself.

Table of Contents

  • What is the API Economy?
  • What is an API-Driven Enterprise?
  • APIs: Productivity vs. Customization

What is the API Economy?

Ever since Forbes magazine declared 2017 the year of the “API economy,” the term seems to have been on everyone’s lips. But what exactly does this expression mean, and what are the implications for your own business?

The API economy is the web of interconnected channels that different systems and services use to interact and transact with each other. Every time that you use your Facebook account to sign into a third-party website, or view the weather forecast on your smartphone, you’re making use of an API.

By treating the API as an organized method for communicating data, companies can expose the information that they want to make available to their vendors, partners, and end users. At the same time, restricting access to an API allows data providers to control the means by which these entities can download and use this information.

It’s doubtful that Uber would have ever gotten off the ground, for example, if it had to develop its own in-house street maps of hundreds of cities around the world. Rather, Uber pays Google for the use of its Google Maps API that provides street maps and navigation data. This partnership has been quite profitable for Google—Uber reportedly paid $58 million to use the Google Maps API for three years between 2016 and 2018.

The API economy is closely related to the concept of microservices, an increasingly popular software architecture that stands in opposition to the traditional monolithic development approach. With microservices, the software is broken down into smaller, loosely coupled components with individual functionalities that are the “building blocks” of a larger application. APIs facilitate the use of microservices by enabling these disparate components to communicate amongst themselves.

What is an API-Driven Enterprise?

Becoming a data-driven organization is one way that companies seek to achieve another technology buzzword: “digital transformation.” As the objective of being “data-driven” yields to the goal of being “API-driven,” it’s clear that APIs offer the potential to achieve digital transformation on an entirely new level.

APIs can unlock new business models, revenue streams, and ecosystems that were heretofore unthinkable. Companies such as Salesforce, eBay, and Expedia report that they earn 50 percent or more of their revenue through APIs that allow third parties to access and share their information. For example, the Expedia API allows external websites to use its own search engine and booking functionalities—and score a portion of the profits in the process.

Charging for API access is only one part of the puzzle, however. There are three major ways that becoming an API-driven enterprise can benefit your business:

  • More efficient internal processes: Creating robust, well-documented APIs for your internal technology stack makes it easier for all teams and departments to be on the same page. Both people and software can more easily understand the terms of communication, enabling the easier exchange of information as necessary. As discussed above, APIs can also serve as the foundation of new cutting-edge software architectures such as microservices and serverless.
  • Stronger business partnerships: Wrapping up your enterprise data and making it available through an API can be a tantalizing offer for third parties who can stand to benefit from this data. For example, Amazon makes its product information available through an API so that web developers can easily and automatically insert this data on their website (e.g. a camping website linking to GPS devices available on Amazon). This form of arrangement can be beneficial and profitable for both you and the third party.
  • Greater potential for innovation: By linking together separate applications and services, APIs also allow third-party developers to build on top of what you’ve created. By allowing developers to connect to the YouTube API, for example, YouTube has enabled the rise of websites like YouTube Doubler that play two videos simultaneously, extending YouTube’s original functionality while still maintaining the original connection with the YouTube service. APIs can enhance your own products and offerings at no cost to your business beyond the initial expenses of building the API.

The benefits of being an API-driven enterprise are many, including speed, flexibility, and innovation. In order to become a truly API-driven enterprise, however, organizations must possess the following capabilities:

  • An IT culture that promotes openness, creative thought, an aversion to institutional inertia, and the taking of (sensible) risks.
  • API management software for rapidly building enterprise-strength APIs that third-party developers can plug into.

APIs: Productivity vs. Customization

APIs are a classic example of how the business impetus for productivity and efficiency has trumped the desire for customization, ever since the introduction of Henry Ford’s automobile assembly line.

In a perfect world, companies would perhaps be able to exercise more control over their data than the “one size fits all” approach of the API, tailoring their communications depending on each user’s requirements. While it’s of course possible to create separate tiers or access levels for different users, the vast majority of APIs err on the side of caution by catering to the lowest common denominator.

As such, companies have decided that the convenience of having a standardized API available beats the benefits that might be extracted from a more custom-built approach. For the most part, enterprise APIs pass the burden of data processing onto end users, allowing them to pick and choose which pieces of the data set are most relevant for their purposes. The spirit of the API-driven enterprise is to bring one of your greatest business assets—your information—and use it to spur growth both inside and outside your organization, allowing it to be reused and repurposed as users see fit.

Conclusion

Becoming an API-driven enterprise will revolutionize the way that you do business for the better, forever altering the way that people and systems are connected. It’s no surprise that 55 percent of companies now believe that API integration is “critical” to their business strategy, according to a 2019 survey.

However, the technical requirements for API development are too often a roadblock against companies’ best intentions to become an API-driven enterprise. According to the same survey, development teams require an average of 41 days to spin up a new API integration with advanced capabilities.

These 41 days—or worse—are valuable time that you could instead spend building stronger, API-driven bonds with your business partners and customers. What’s more, this time adds up fast when you consider that companies plan to build 18 integrations on average in 2019.

Fortunately, the process of API development and management has been drastically simplified thanks to services such as DreamFactory. We offer an API management platform that provides “APIs as a service” to our enterprise clients, massively speeding up project timelines. Our software streamlines and automates the API creation process from start to finish, instantly creating a secure and well-documented REST API without the need to write a single line of code.

Want to discover how we can help make your business an API-driven enterprise and unlock new valuable possibilities? Get in touch with our team for a free trial of the DreamFactory software.



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