It is generally agreed that a digital strategy can only be successfully implemented if it is based on a well thought-out data strategy. I would go so far as to say that data is the foundation of a digital business. Quite a strong statement - but if you think about it carefully (considering data is important as an asset and not just for analytics) it is obvious. That requires us to give data greater importance then we may already do, to remain competitive, and to offer products and services that are valuable for our customers today and in the next few years.
An enterprise must be able to provide data to its partners, supplies and vendors, to sell that data to potential customers, and to allow other enterprises and start-ups to mash-up the data with other relevant data, and to build new fancy front-ends or products that can end up in new digital businesses.
Modern APIs seem to be the silver bullet to make this reality. APIs are not new at all – they have been around for a long time. But thanks to easy-to-use standards like REST and JSON, they are now even easier to use and can be understood and implemented faster than in the old days. Why should business care about such technical detail and APIs in general? Some time ago, I saw a nice illustration demonstrating the analogy between the need for having a website 10 years ago, and having an API nowadays. Ten years ago, people asked questions about the true value of a website, whether it was truly a useful method for people to learn about a company or product. This is how it feels with APIs today. I am quite sure that in 2-3 years, nobody will be questioning the value and importance of APIs for businesses; it will be just as normal as having a website today and as a requirement for building new business.
How to explain the benefits of an API to business?
An explanation that works quite well for me – and it's an explanation I use a lot when talking about the huge potential of APIs - is the following:
An API allows you and others to quickly provide and consume data to build new businesses on top of it.
I think that explanation makes it obvious; it encourages interest and allows you to dig deeper by using some of the many success stories you can find on the web. Some other explanations and non-technical descriptions I came across of what an API is, and from a business context, that appeal to me include:
My experience has shown, when talking about APIs in an enterprise context, that it is important to differentiate between an enterprise with a long IT history, currently in the process of reinventing itself and jumping on the digital enterprise story, and a start-up that quickly became an enterprise and naturally provides and consumes data through APIs. It is important, because most of the great API success stories you find are from Facebook, Twitter, Netflix and the likes. No doubt, their DNA is data but they haven't been around for 40 years like other manufacturing companies carrying a lot of legacy IT with them. They could use the latest and greatest technology right from the start, maybe even invented it to achieve what's required in this new world, and their whole business model is based on providing and consuming information.
What is the business potential?
If you are one of the enterprises still stuck in the old world and trying to make the shift, it is obvious that an API alone will not solve all your problems, but it can be a great enabler to help you achieve what you plan to achieve faster and with a much broader scale.
By unlocking your legacy data into Internal, Partner or Open APIs, you allow innovation to happen. You allow others to easily enhance and use your products and services. A simple and typical example is an app that can be built by almost anybody and not only by your organization based on your existing business backbone. These apps consume your data and allow your business to benefit from their success. Well-known examples are Ebay and Expedia, which allow other organizations to integrate directly into their marketplace by using their APIs. Today, 80 percent of EAN's (Expedia Affiliate Network) revenue will run through partner sites that use their API. This is a very strong business case and can be adapted to enterprises in almost any industry. By providing more possibilities for potential customers to consume your services and data, this helps you to increase customer acquisition as well as customer retention, which will result in more revenue.
This sounds great to business and therefore the question "how can I charge for this API?" comes up almost every time. The right answer to that requires some thinking around the service offered, as there are many pricing models for how you might charge for APIs. Free- or freemium models, tiered pricing, and unit-based pricing are just a few examples of models organizations can choose. It is important to balance the internal commercial interests and to make it attractive enough for third parties to try out on the one hand, and to invest in integrating your services on the other. When looking at an API pricing as the modern form of the old OEM principle, most of the time this helps in finding the right commercial model.
Conclusion
To compete and remain relevant, enterprises must become digital. Providing data via an API allows enterprises to be the lifeblood of new cutting-edge products, and allows new digital business models a foundation on which they can build. Internally and externally, treat your API like a product that represents your business. This way you will be able to guarantee a high quality API.
