Article

Alexis Ternoy
Alexis Ternoy 9 March 2015

Could APIs Be Your Next Business Strategic Value Generator?

By the time you finish reading the title, you probably already got that the answer to the assertion: "Yes".

By the time you finish reading the title of this blog post, you probably already got that the answer to the assertion: “yes”.



While a lot of entrepreneurs are looking for the next big thing, and firms like Apple designing the next gadget we will all wear, overwhelming the banking sector with Apple pay (mind reading my blog An Introduction to the Use of Virtual Payments and Apple Pay ?). Application Programming Interface (API) for long the preserved of specialised engineers, now appears to be in the centre of everyone strategy to shift from internal to external information exchanges.


Application Programming Interface?

I believe the most business oriented definition of an API I have read in a long time is “APIs, are specifications or protocols for how to exchange information or request online services from an organisation. Through this article I hope I can augment on that and explain why I believe company, small or big, should see them as a strategic value asset rather than a technology gimmick.

 

What does it mean to “shift from internal to external information exchanges”?

One of the paramount mandate of Information Technology (IT) services over the last decade, has been on protecting a walled garden of information transactions. While being part of the mission, I believe the emphasis should now be on the creation of new transactions with the external world.

 

Organisation that leverage such approach are already blooming in the online business realising a few years ago that information is key to their value proposition, there is a huge demand for an ecosystem to provide such offering.


These organisation have come to the realisation that APIs are a strategic value, a strategic value that can be leveraged in a lot more ways and more efficiently allowing companies to grow businesses at unprecedented rates by sharing services with external firms.


A few example. Did you know Salesforce.com generates 50% of its revenue through APIs ? And Expedia.com generates 90%, while eBay 60% !! Some details, Salesforce.com has a marketplace named AppExchange for products created by its partners that use its platform, more than 300 applications are available. In the case of Expedia, it’s APIs allow people using their own websites to use its functionality in order to book flights, cars, and hotels. And APIs allows eBay to list its auctions on third parties websites. No doubt that these APIs give a great exposure to Salesforce.com, eBay and Expedia as well as great financial profits.

 

If your IT strategy is only focused on the internal usage of your data, you are already falling behind the API economy

APIs are growing in popularity ! Yesterday’s members of the ecosystem I describe above were developers, technical team lead and have now grown in their career to be in position of influencing technical approach being in the technology driving seat or one company driving seat.


A different angle to the benefit of APIs reside in the Facebook case

For Facebook and its customer (now we can call them customer), the need of strong API strategy come from the fact that the user demand is really hard to predict but also the variety of device that access the Facebook ecosystem is very wide (Tablet, Desktop, Mobile, SmartTV, via other social media website etc.). Opening up APIs mean Facebook organisations outsource innovation by allowing third-parties to experiment with their information assets and share revenue streams. Furthermore they can control usage when necessary by limiting access to partners they choose. We can appreciate the fantastic growth impact such approach had in this particular instance.

While Athenahealth CEO Jonathan Bush is calling for “More Disruption Please,” the healthcare ecosystem haven’t so far used much the opportunity that APIs represent.

 

Being myself in the Life Science industry for many years, I appreciate the challenges that health records systems like EPIC and GE Healthcare IT protected environments represent. Nevertheless RunKeeper, a tracker for fitness activities, has hadsomewhat greater success in building an ecosystem, but it is more about fitness data than health information. Another recent approach is the Digital Health Companies Rush to Integrate with Apple’s HealthKit.


To conclude, there is no black or white in choosing your company strategy or approach about APIs. There are plenty of public or private, free or revenue sharing driven, information sharing or collecting. Before heading to development I suggest to pace yourself and debate with your colleagues about what your API should do from value and impact, then you need a set of governance mechanisms to enforce it.

 

Still … if your information technology strategy is only focused on the internal usage of your data, you are already falling behind the API economy. You need to start building an ecosystem, and APIs are the way to fuel it.

 

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