More Than Technical, APIs ARE Your Business

Wendell Santos
Oct. 25 2013, 01:33PM EDT

Friday's morning session at the API Strategy and Practice Conference featured keynote talks that hammered home a point that bears repeating. More than ever, APIs are about your business more than a technical proposition. Laura Heritage, Product Line Manager at IBM API Management and Oren Michels, CEO at Mashery both spoke on today's reality that APIs are now more of a business enabler than a technical capability.

Heritage shared real world lessons learned through her work with various clients over the years; all of them looking to leapfrog their competition. These lessons informed the idea that APIs allow businesses to disrupt the value chain.

Lesson 1 - Sometimes it requires unconventional thinking from outside sources

In this case, the VP of a large hotel chain wanted to increase customer participation in their loyalty rewards program as well as increase direct sales to offset the 15% commission being paid to sites such as kayak.com. They realized that if they could use APIs, they could open up new channels for direct sales and would only have to pay partner developers a 3% commission. By being open to the use of APIs, especially through an unexpected source they were able to decrease their reliance on external sales sources.

Lesson 2 - Realize the value of the asset with respect to the value chain, and where that asset puts you within the food chain

Heritage's second example was of an auto repair chain that found themselves stuck at the end of the value behind the customer, insurance companies and auto manufacturers. The repair chain realized that they were sitting on tons of information about their customers cars and that information could put them squarely in the middle of a value chain. This information could be sold to insurers thirsty for statistics. They could sell the information to auto manufacturers who might be interested in building alerting and monitoring devices for connected cars. This was all enabled via the use of APIs which opened up previously unavailable opportunities.

Lesson 3 - APIs provide a way to pivot your business

In this example, the client was a taxi company using an app that allowed users to see what cabs were nearby and negotiate the best price. The company was using an API to power the app but it wasn't until later that they realized that the API was much better suited to a variety of business opportunities such as shipping and service providers. While the company was slow to realize the opportunity, the API allowed them to pivot their business quickly.

The common thread Heritage sees with her enterprise clients is that they are increasingly ready to utilize APIs but may not always anticipate what opportunities will be made available to them. The key is in thoroughly understanding your business opportunities and how APIs can help you reach them or possibly open up unexpected ones.

In the following talk Michels looked at the evolution of APIs and both products and businesses. He started by drawing a parallel between APIs and Coca Cola. With Coca-Cola, the distribution was key. By using railroads, the product (in the form of syrup) could be distributed nationwide thus maximizing the company's reach. Originally a company's product was its backend systems and the API was the distribution channel. Increasingly the API itself can be seen as the product and the API management platform as the distribution tool.

Michels went on to discuss partnering with API management platforms and how they can be used when building an API product. By way of analogy, he explained how the packaging offered to consumers of your API can be thought of in the same way that your cable company will offer different channel packages and different pricing tiers. Similar to how many cable consumers want to pay for channels a la carte, many businesses say they want to pick and choose services from your API. According to Michels, the key to managing this is the relationship formed between the API management platform and the API provider. That personal touch makes sense when the platform has 200 customers, but I'm left wondering if that solution can scale as companies like Mashery move to 2,000 or even 20,000 customers.

Wendell Santos

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