The API Economy Is Here. Are You Prepared?

by | Jul 9, 2020

Leading enterprises and technology companies globally are capitalizing on their technology asset, their Application Programming Interfaces (APIs). to offer more value, retain customers, innovate, build partnerships and much more. Is your business prepared for this new opportunity?

APIs are the building blocks of any integration or interaction between technology systems. Initially in the early 2000’s APIs were very haphazard. Each enterprise would have their own format and methods. Different industries standardized around certain formats. For instance financial institutions preferred SOAP based APIs whilst others preferred XML, XML-RPC, ISO etc. The game changer for APIs came with the advent of the REST standard that allowed most organizations to build their solutions around a single format and standard.

Why are APIs Important for your business
APIs allow businesses to open certain aspects of their internal systems for third parties and partners to optimize processes and consume each others services behind the scenes.

The most obvious benefits of this are to create more seamless customer experiences by removing manual processes and increasing automation. An example of this is an e-commerce company such as Amazon notifying the relevant courier company that it has a certain package to be delivered all via an API integration and without human intervention. The customer doesn’t need to know how this happened, they just receive their package faster. Beautiful!

A more emerging benefit of these APIs is that innovation can happen faster as partners and third parties can innovate on top of these APIs. This is particularly relevant for large enterprise incumbents such as banks, telecom operators or government. These organizations control access to a lot of data and transactions but are slower at prototyping and testing new ideas. For instance a bank could let a merchant approve instant loans for small product purchases just based on a customer’s national ID powered by an API integration.

A recent trend that could be a new game changer is that these APIs are now starting to be monetized and become additional revenue streams. This opens up a world of possibilities for new products or reinvigorating existing idle assets. For instance telecom companies could allow micro finance institutions to obtain a standardized credit rating score for any mobile subscriber for a small transaction fee. This trend has introduced concepts and terminology such as ‘Banking as a Service’ or ‘Identity as a Service’ as more businesses seek to monetize their existing services via APIs in the #APIEconomy.

APIs for Traditional Businesses
This trend should not be limited to solely large enterprises. SMEs and traditional brick and mortar businesses such as FMCG companies, manufacturers and distributors all can benefit and be prepared. Any new investments into IT systems or ERP systems that they make, must have a standard REST based API available for future integrations with third parties. This will not only allow for cost savings as processes are streamlined but avoid the need for customization as new software can simply plug into the old one via these APIs.

APIs for Startups
For technology startups and software developers, APIs should not be a new concept. However startups need to build strong foundations for any software that they build by leveraging the API and micro service models. This will not only let their customers consume services via API but also allow future apps and services to be launched without touching the foundation (see previous article on building a strong foundation). At Beem APIs are at the heart of our service offering. We let software developers and others to consume our SMSUSSDAirtimeMobile Payment services and we’re constantly looking to add more APIs.

Potential Risks and Pitfalls
As an API opens up a business’ internal systems to outsiders or as partners begin to rely on these APIs there are some important considerations to keep in mind.

Security, Access Control and Data Protection — IT teams need to plan and evaluate how unauthorized access to these APIs will be prevented. Will API access allow data to be updated and overwritten or will it only allow read access? Is a strong backup and redundancy strategy in place depending on the sensitivity of the data being accessed via these APIs?

Availability & Stability — As more customers and partners rely on one’s APIs it becomes part of the core infrastructure and plumbing. This means that anyone launching an API needs to plan for high availability, scalability and stability of the platform to avoid failed transactions, incorrect transaction data and outages that could nullify the usefulness of the entire project.

Testability, Documentation & Support — An API isn’t really helpful if no one can test and integrate with it quickly. IT teams working on building these APIs need to follow best practices and make sure documentation is thorough with enough examples and support available if needed.

The earliest APIs came about in the early 2000’s so they have already evolved multiple times and have now matured. As the number of APIs and complexity increases, entire businesses such as Zapier have come about helping organizations and software integrate with each other in this new #APIEconomy. These trends will continue as these invisible APIs become central to our way of doing business behind the scenes. What APIs can your business release? Share your comments below.

This post was originally published here.

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