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Industry Insight

Building the app economy with APIs

APIs are the connectors of the 21st century, linking previously monolithic systems and data siloes while creating new apps.

There is something at work behind the scenes that's powering the new application economy. It is greasing the wheels for the exchange of information that could be described as a modern-day Rosetta Stone, which is said to hold the key to transcribing Egyptian hieroglyphics. It's called the application programming interface (API).

A recent survey of IT and business leaders indicated most companies are leveraging APIs. Moreover, indications are the most successful digital businesses are two to three times more likely to leverage APIs both internally and externally.

Why is this the case?

The simple answer is the main drivers of APIs are business and not technical – it can be seen that bespoke applications have gained importance as competitive differentiators in many different vertical markets.

APIs are transforming all industries, including the automotive, healthcare, retail, sport and fitness, transportation, financial services and even the media. At the New York Times, APIs are used internally and externally to deliver the news to the world. The Times also exposes APIs to outside developers who use them to present news and stories in innovative ways.

One example is the Nested Year Timeline*. The app uses data from the New York Times article search API to display all articles for a topic, grouped into multi-year, multi-month and single-month timelines. Companies such as Netflix, Amazon, Google or Salesforce can be said to owe their success, in part, to the strength of their APIs.

Whole new world

Think about what can be achieved today that could not have happened 15 years ago. Hail a taxi ride or start a car from a smartphone. Find a restaurant from a tablet. Monitor fitness from a wearable device. Record exercise routines for future analysis. Check availability of a product and order it from the nearest store, anytime, anywhere – all the things businesses are doing that they could not in 2000. Expose petabytes of data from legacy systems. Build new applications without reinventing the wheel. Share information instantly with customers, suppliers and partners, develop and monetise in record time.

At the turn of the new millennium, companies began sharing Web-based APIs inside and outside their organisations. Since then, they've become the operating system of the Web, mobile and Internet of things (IOT). APIs are the connectors of the 21st century, linking previously monolithic systems and data siloes while creating new applications. They are changing the world by mashing together data and services from start-ups and established companies alike. They help organisations reinvent the way they do business. They provide a more efficient way of building new services. They create markets and act as the catalysts to enable closer ties with partners and customers.

The adoption and proliferation of APIs could easily create the technological equivalent of the Wild West.

Companies, big and small, are using APIs to level the playing field; they do this by leveraging them to expose powerful data, from legacy systems to new technologies, including smartphones and sensors. Start-ups and established businesses are bringing in data from partners to add services such as health metrics, maps and credit card processes to their apps, without having to write new code. APIs cut the cost of innovation and entry to new markets.

All-powerful APIs

While, behind the scenes, APIs enable many of the apps used every day, they also turbocharge communications between machines. APIs are making it possible for machines to automate processes, predict problems, and generally keep life and businesses humming.

Software is ever more at the heart of seemingly unrelated businesses. In an application economy, companies often invest more in the integration of software products into their larger IT ecosystems than they do in software licences. A published, immutable API protects that investment across versions of the product. For example, high-end car manufacturers are actively trying to differentiate themselves through the on-board software. Soon there will be an iPhone-like trend in cars: downloadable apps that can change the behaviour of the car completely, adding features developed by third-party suppliers.

Globalisation affects software development in many ways. Mergers and acquisitions invariably end up requiring integration of disparate toolsets – this is only possible if they have APIs.

Let's look at software as a service (SaaS). At first glance, the SaaS outsourcing trend may seem contradictory to the application economy trend. After all, SaaS represents more of a one-size-fits-all approach, whereas the application economy moves in the direction of bespoke applications. Companies will choose which way to go on a case-by-case basis.

A company may decide that SaaS makes a lot of sense for e-mail, CRM and ERP applications, but it isn't ideal for the company's call centre and customer service departments. APIs make it possible to integrate the application economy with SaaS, and that will be getting easier in the future. Things like vendor-agnostic API wrappers will ease the transition from one cloud service provider to another.

But, large-scale enterprises continue to accumulate large-scale complexity. The only way to keep complexity under control is through a modular approach – split up the big, complex problem into smaller, less complex pieces. This means the interfaces between those smaller pieces need to be defined – in APIs.

Globalised enterprises will need to find new ways of keeping IT complexity under control, and modularity will be at the heart of those new methods. In the future, APIs may not be invoked by code, but they may just learn about each other and invoke each other just by snapping into place. Software development may turn into assembling re-usable standard components to form new combinations covering new use cases.

However, APIs are not inherently secure – making them potential targets for hackers. They're also proliferating, and that can overwhelm both the providers and consumers of data. Here, API management tools help companies mitigate the risks and realise the benefits of the technology.

The adoption and proliferation of APIs could easily create the technological equivalent of the Wild West. API management tools prevent that. From a single interface, companies can secure and control access. These gateways also track usage and, if desired, billing, opening a new revenue stream for many companies.

Management tools also provide catalogues of available APIs as well as instructions on their use and functionality. This allows companies to encourage more developers to innovate around their APIs, and it cuts the time it takes to create new services.

APIs are important for scale, for re-usable software development, for integration into the ecosystem, and soon, vendors won't be able to sell software that doesn't have them.

* See keynotesavant.com for more information.


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