Why APIs Are Fundamental to Your Business
To explain why APIs must be in your digital strategy’s top 3 priorities, I’m going to start by explaining what an API is. If you are knowledgeable enough, go straight to the section “Why Business Leaders must grasp the decisive nature of APIs?”
What is an API and how does it work?
API stands for “Application Programming Interface.”
I am sure you’ve understood immediately what it means.
I am joking, even for experts, it is still an inaccurate expression. Let me try differently.
An API is simply the component of an application that gives it the ability to “hear” and “talk” with another application.
We refer to the term “Programming Interface” because an Information Technology (IT) developer can interact with the “application” by making use of its API. The “program” is a sequence of interactions written by the developer in the application source code.
Are you still with me? Good.
Here is an example. When an application needs to retrieve data from another application, they exchange information throughout their API. If your Instagram mobile application on your Samsung or iPhone needs to get your profile information, the mobile app will “ask” the Instagram IT system, hosted in a cloud somewhere on the Internet, “Get me the profile of user @YannickHuchard”.
From its API, the Instagram IT System will “hear” the Instagram mobile application request, then identify the request, and finally, respond with some piece of “data” having this kind of structure:
{
“user”: {
“full_name”: “Yannick Huchard”,
“username”: “@YannickHuchard”,
“profile_picture”: “https://igcdn-photos-f-a.akamaihd.net/33645907_a.jpg",
“id”: “1547627005”
}
}
This is simply the language spoken by applications. In IT, we call this data description format JSON. Like human languages such as English or French, JSON is one of many languages. Yes, we humans created the same cultural complexity for applications.
In case you are wondering what would be the equivalent of air vibration, i.e. a voice, in “human-to-human” communication, it is called HTTPS. It is the protocol that runs the Internet (e.g. https://www.google.com). In essence:
Ears and Mouth = API
Voice = HTTPS
Language = JSON
How does the dialog between two applications work exactly?
The difference with humans is that you must be explicit in what you are asking and what you expect to receive. For example, if the Instagram Mobile App asks for the delivery of a Hamburger to the Instagram API, it will respond with an “error”, stating it does not understand the demand. To be clear, it is not a problem of language, it is a problem of understanding. The Instagram API neither knows what the action “deliver” means nor what a “hamburger” concept is.
Instead, if the Instagram mobile app sends the delivery request to Uber Eats API, then expect to receive a hamburger soon!
Of course, the Instagram API will protect your data whenever someone other than you asks for them.
When you log into the Instagram Mobile App, a unique set of digital keys are fabricated by Instagram IT systems so that it identifies you each time you visit someone else’s profile page, change your settings, update your profile, etc. For each action, the Instagram IT system checks if you are authorized to run them. Thus, if you seek to change President Barack Obama’s profile, your attempt will immediately be rejected because your set of keys does not correspond to the identity of the President. And if you insist, the Instagram IT system may consider you a hacker.
Think about it, applications can neither visually nor aurally recognize another application to identify them. The software has no form. Whereas humans identify people by looking at them, memorizing their physical traits, associating other characteristics such as voice, movements, etc. IT systems use other digital mechanisms like unique keys. If you’re interested to know more, check PKI and JWT.
Why Business Leaders must grasp the decisive nature of APIs?
Having your application built with the ability to «hear» and «talk» connects your IT system to the rest of the world. Your differentiating business value and your know-how become reachable. Your company is part of the worldwide Business and Social Ecosystem. It can contribute to the global economy of the ecosystem, or simply provide trustworthy information and actionable insights to providers and consumers.
The key to success is seeing your enterprise enable other companies in building their differentiating ideas, and even innovate. It is thanks to the features you make available through an API.
For instance, consider what happened with Google Maps. Companies like Uber or Postal Services can create new value-added services for people because Google has made geolocation capabilities publically available like « Search location », « Get an address », « Locate my current position ». Then, when you combine Google Maps API with the real-time traffic status API, you create a new API that can provide the capability to calculate travel time from one destination to another.
See how powerful it gets?
Providing a useful API makes you dependable and essential to other businesses
Now look, if you create value for people, and if you enable companies to go faster and create new value for their customers, it means you have provided a relevant product.
What I am going to say is very important.
Your API is a Product as a Service.
If you have to remember one and only one thing from this article, it is this sentence. So I am going to repeat it.
“Your API is a Product as a Service”
If it is a product, then it can be sold. And this is the business strategy companies like Amazon, Google, and Microsoft have adopted. APIs are the foundational building blocks of their platforms. They even have marketplaces (ex: AWS marketplace, Shopify, Etsy). This is the API economy.
API is a means to automate, therefore scale, hence accelerate
The size of your company does not matter. A lot of startups are banking on this type of digital product.
Stripe was a startup that solely focused on providing “payments as a service” via an API. Their customers were other companies, other startups, small and medium enterprises. Stripe’s value was low fee payment execution as a service. They grew from this Unique Selling Proposition, to become one of the main players in the Fintech market. We are talking about the direct competition to PayPal, Mastercard, and Visa, which present the same features now, by the way.
FYI, Stripe is currently valued at $35 billion.
What kinds of products can I provide as an API?
Any kind of product, from physical goods to entire systems, as long as they can be commanded by Information Technologies.
The Cloud era started with 2 models:
- Software as a Service: a piece of software is made available from the Internet. Some examples are Salesforce, Office 365, LinkedIn, Dropbox, Twilio, Shopify, etc.
- Infrastructure (or Platform) as a Service: data centers, servers, telephony, and workstations are leased. The players are Amazon, Microsoft, Google, OVH, Heroku, etc.
Nowadays, each of these product lines is commonly available as API.
If you are looking for differentiating and innovative business models, here is the new breed of API products you will be looking for:
- Process as a Service: an industry process is provided to automate a part of your activity. It is getting a lot of traction in RegTech, like Governance.com, because common practices are defined by regulatory obligations. There is a variety of companies that automate Customer Due Diligence or GDPR’s processes. I could say the same about Sales, Retail, or Human Resources.
- Data as a Service: you will likely never start a business from scratch. You will re-use the available data out there. It could be YouTube data, like my BooktubersApp team did for building “Le PLIB”, one of the most technologically advanced Book Prizes using YouTube API. Governments use reference data from a trusted source of truth, like Dun & Bradstreet API for business information validation. To be a trusted source in an industry is very valuable. For example, the DUNS number is trusted by Apple. Have you ever thought about a “data supermarket?” Just visit DataHub.
- Algorithm as a Service: where know-how can be made available. This is the next big thing. A.I. is starting to dominate this spot. But I believe there is a spot for High Computational Complexity Algorithms, like for fleet management systems and quantum computing. It is a nascent market, with huge social and B2B potential.
- Autonomy as a Service: Merging the computing power of A.I. and Cognitive Power of Humans gives a new dimension to your offering. This product line sublimates the “power of the many.” The value proposition resides in the provision of thought pieces of advice, crafted from data, analytics, experiences, and decision cycles. Check out the holistic approach of Nantum OS in the building industry.
If APIs are products, who uses them? Who are API customers?
You’ve probably guessed it already; your customers will be other companies, IT development factories, contractors, and amateurs … Amateurs??? Yes, allow me to explain in a couple of paragraphs.
Companies that have understood the importance of being in the « API Game » know to the core that APIs boost your business significantly. So, they will want to try, then consume, your offering in a standardized, secure, and reliable manner.
The laggers are led by people thinking API is just an IT thing. The same kind of people that missed the decisive nature of having a website when the mobile Internet took off.
Startups and SME opt for the consumption and production of APIs because it is the cheapest, fastest, and most sustainable way to go when you build a “digital native” business. Any Architect will tell you that a sustainable and scalable system, having a good return on investment, is designed and constructed with some APIs in the foundations.
Finally, amateur or independent IT developers are very important yet undervalued customers. These are the ones creating the value of tomorrow. These are your Tech fans that make your organic marketing. These may become tomorrow’s tech leaders, CTOs that will influence other companies’ Leaderships teams. This is why you need to pay attention to them as well. They will want to create “an Instagram for Pokemon» and trend the very next day. Let them innovate for them and you!
How to make good productization of APIs?
This probably deserves another article, but I’ll finish by sharing only a couple points of advice:
- Documentation is the most important thing in the advertisement and the popularity of an API. Description of actions, code examples, and details of the data model characterize the “Adoptability” of an API. Stripe API was extremely well documented, thus dead easy to understand, and hence attractive for businesses. It is your product sheet.
- One must be capable of trying your API immediately. Each developer will check the documentation, read a code sample, code a simple program from it, run the program, and expect a successful result, within 10 minutes. So, if I cannot test your API in 10 minutes, I’ll go find another company. Time is money. I don’t have time to waste. I don’t want to make my life more complicated than it is.
There is much more to consider, but as I said earlier, let’s talk about it in another article.
If you have any questions or comments, I invite you to reach out on LinkedIn or Twitter. Take care of yourself and your loved ones.
Have a great day!
My name is Yannick Huchard. I am a Chief Architect and Entrepreneur, passionate about learning, developing people and businesses.
Feel free to connect:
LinkedIn: Yhuchard | Twitter: @YannickHuchard | My website
My products & services :
- Build your startup and enterprise with AMASE methodology: https://amase.io
- For book lovers: https://www.booktubers-app.com
- Create data maps with LightsSphere: http://www.lightssphere.com/
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