In aggregate, the organizations around the world that directly or indirectly monetize their APIs form the basis of what the media often calls the “API Economy.” As a subset of the total global economy, the API economy is responsible for the exchange of trillions of dollars of value annually. According to a recent report, 35% of today’s technology leaders generated over a quarter of their organization’s revenue as a direct result of APIs.
In my recent years as editor-in-chief of ProgrammableWeb, one of the more common requests I get from large organizations is for consultative help on formulating a strategy to join the API economy. They see the Stripes, Twilios, Googles, and Amazons out there monetizing their APIs in some fashion (either directly or indirectly), but lack any sort of prescription for how to emulate that success in their own lines of business and industries.
After spending the last eight weeks bouncing between Boston, San Francisco, Munich, Brussels, Milan, London, and Las Vegas responding to a surge in interest from businesses and organizations of all sizes (and discovering my own personal limits in terms of International air travel!), it was time for a more scalable approach in the form of a downloadable blueprint.
But the more people I presented to, the more I realized that even though APIs come across as being a technology topic (ProgrammableWeb is fundamentally a part of the tech media), one thing that makes APIs unique and special is how the conversation about joining the API economy is hardly a technology conversation. Or, if it is in certain circles, it shouldn’t be. Yes, you need best-of-breed and secure-by-design API technologies and best practices to join the API economy and I can talk about that subject until the cows come home. But, relatively speaking, technology is a pretty small part of the overall conversation.
As it turns out, joining the API economy is mainly a business conversation. And once that conversation starts, it’s one of the few topics that really forces stakeholders from across the entire organization — IT and non-IT people alike — to align around a business idea; not a technology idea. APIs are merely enablers. Small potatoes in the scheme of what we’re talking about.
So, what do I mean when I say joining the API economy? Well, let’s first start off with what an API fundamentally does; it makes an existing or new business capability (take your pick, could be any capability) available from across a network as an on-demand service for usage by other applications and software. This way, the developers of those other applications needn’t build those business capabilities themselves. They just “import" it from the service.
In many cases, an organization’s primary interest in turning business capabilities into a networkable service has to do with legacy modernization. It’s about breaking up existing expensive slow-moving monolithic systems of record into smaller, nimbler, more easily maintained, reusable building blocks of business capability whose exposure is limited to the organizational intranet (as in, “behind the firewall”). Although this is typically done with APIs and the benefits are significant (I won’t enumerate them here), this, in my view, is not an act of joining the API economy. And even though many, if not most, of those benefits accrue to the bottom line in business-friendly ways that the CFO will love, legacy modernization is very much a technology subject.
But the minute a new or existing business capability gets exposed outside of the organizational walls with the express intent of enabling an external entity (partners, customers, developers, etc.) with that capability, you are joining the API economy. And pretty much the only reason to do this is for business purposes (one exception is when government organizations do it as a matter of policy or transparency). It could be the way Netflix exposes its APIs solely to partners like Sony and Nintendo that cover the "last mile" of the Netflix customer experience. Or, the way Google exposes APIs for Google Maps so Uber customers can see how close drivers are to picking them up.