Why APIs are a business asset, not a technical one

Application Programming interfaces (APIs) are often misunderstood as a technical asset. In reality, they are a business asset, and a way to generate competitive advantage. Here are my thoughts on why enterprises need their product and sales teams to take APIs more seriously.

Introduction

A lot of large enterprise organisations are now designing, developing and releasing Application Programming Interfaces (APIs). Many of them monoliths, they have found themselves having to provide their products as APIs to keep up with changing customer demands. APIs were popularised by Amazon’s somewhat astonshing diversification from an ecommerce site selling books, to a “tech” company. The issue is that many of the companies now trying to get a piece of the API pie have no idea how, or why, APIs create a competitive advantage. They often misunderstand APIs as just another “path to market”, and simply layer an API over their existing product. This fundamentally misses the point of APIs, a business point I might add, not a technical one.

APIs, What They’re Really Made Of

I have provided guidance to teams, both product and technical, on hundreds of API projects, and there are certain themes that occur over and over. One of the major mistakes these teams make is to see the API as just another way to expose the functionlity of their product. The product usually being something like a web based admin or consumer tool. The product team ask their current customers what functionality from the tool they need as an API, the answer is almost always “all of it”, and the development team set about exposing the entire feature set through API endpoints.

Big mistake. Why? Because the current customers only know the tool as it as, not what it can be. You get the most out of an API when it is stripped of all the bloated functionlity that was added to the web based tool. An API should be focused and simple, it should solve a problem and solve it seamlessly. I see teams exposing user management, session management, and other non core functionlity. These are things that are solved by other APIs or managed by the users system itself. Exposing them is just reinventing the wheel, and only hampers customers.

APIs are made of simple stuff, but building something simple isn’t easy. Understand the true value of your API offering, it isn’t the same as that of your product.

APIs, the Business Case

A lot of time is usually dedicated to the technical side of APIs, less so to understanding the business case. This is always going to be to the detriment of the project. As I mentioned, APIs are not just a new way to expose old products. They require a whole new way of thinking, and product/sales teams need to get out of their comfort zones if an organisation is to truly tap into the competitive advantage that a great API strategy can bring.

Having a proper API strategy allows you to invest in attracting customers. APIs should be non prescriptive in nature. By that, I mean your API should be able to work for anyone in any situation, whether your product team thinks of it or not. Often I have seen APIs that are so opionated, customers can only build a replica of the legacy product they came from. This means the only customers you are serving with the API, are the same ones you already serve with the legacy product. An API should instead be focused on solving a problem as simply as possible, so customers can develop unusual and novel solutions with it. This way your potential customer base greatly expands.

Not only will a proper API strategy unlock a bigger install base, it is scalable by default. With a well designed API, it is the customer who will tap into its flexibility, and tailor it for themselves. Your development teams will no longer have to write custom code on a per customer basis, you won’t have to run multiple variants of your web tool because some customers want a blue header rather than a green one, and you won’t have technical leads screaming at you that they don’t have time to tackle technical debt.

More customers, more revenue streams, innovative by nature, customisable by default, scalability built in, APIs are a business asset. Start selling them that way.

APIs, Let me have them!

Another important aspect to a successful API strategy is to open up your APIs. This one seems simple, there isn’t much point in having a well designed API, that offers everything an API should, if you continue to only allow your traditional customers to use it. However, many organisations seem to be fearful of allowing access to their APIs. Some hide behind the excuse that the domain is regulated and only vetted customers should be allowed access them, others are usually incumbants that are conservative by nature. The problem is that if you don’t open your APIs, your competitors will open theirs. You can always streamline a registration process in a regulated market, I mean, you could even use an API to do it! At the end of the day, APIs are about exposing your core competencies in a manner that makes them complimentary to what your customers are trying to achieve. The easier they are to access, integrate with, and use, the more money you will make from them. It is simple economics.