Welcome to the API economy! [5 Reading Tips]
The possibility of integrating a third party’s APIs into a system, app or protocol helps companies to orientate their digital business towards a more customer-centric approach or even towards the creation of new business models. Why is the API economy on the rise?
Discovering what value an API gives
According to a Forbes contributor, the term API (Application Programming Interface) stands for: “a set of software modules, tools, and protocols that enable two or more platforms, systems and most commonly, applications to communicate with each other and initiate tasks or processes”.
Google Maps is one of the most popular and simple examples of leveraging value from APIs. Uber was born from the maximum utilisation of the public Google Maps API, which enables its entire business model of putting drivers who have a vehicle in contact with passengers who need a ride.
The same can be transposed to other fields and circumstances so that multiple parties can benefit from the API’s value. For instance, General Motors’ API provides remote access APIs that enable smartphone applications to monitor multiple vehicle functions, making the most of the Internet of Things.
It is estimated that the API economy will become a $2,2 trillion market by 2018.
The rise of the API economy
This new mentality comes from the increasing need among organisations of adapting to the new demands of the digital environment. Since it has been proven that information sharing models between individuals within a company bring advantages at all levels (from disseminating knowledge and skills to driving innovation), companies are starting to see competitive advantages in information sharing models with other companies.
Thus companies and developers communities lay the foundations for a new business paradigm based on the API economy called ‘open business’, which has a greater potential of scalability and spreading – just what companies claimed to create new business models faster and more easily.
Although APIs are not new, their usage has evolved: They are not seen any more as a programmatic interface that enables communication among the apps and systems of an organisation, but as one of the pillars of the digital transformation process of many organisations and, what is more decisive, as an enabler of new business models, in which more parties come into play.
What does the APIfication of a digital strategy bring?
Any company that integrates a clear APIfication policy in its digital strategy will be able to incorporate external capacities into its internal processes with the objective of improving the customer experience, driving revenues or unleashing innovation.
Requirements to be at the forefront of digitalisation!
Despite the multiple business opportunities described above, it is worth mentioning that companies must have a solid digital awareness and the capacity to interconnect diverse platforms, apps and systems securely and in a transparent way before they start planning to enhance their digital strategy through APIs.
If businesses don’t adopt a digital mindset, the race towards the APIfication economy will be driven by false premises since the beginning, what would cause core problems.