5 Ways an API is More Than An “API”

Or why in a Business perspective an API is more than Application Programming Interface.

Mehdi Medjaoui
Jul 14, 2014 · 6 min read

When trying to explain a web API, we often start by unpacking the acronym, saying “it stands for Application Programming Interface.” For everyone from business managers to taxi drivers, that often still gets a blank stare.

So then we often say something like “it is a building brick for web and mobile applications”, but it may be too high level so we begin to take concrete examples as : “do you see the Facebook like button? It can be used and activated outside Facebook website anywhere on the web, and how do you think Facebook knows what’s going on? It is thanks to Facebook API that keep the connection active between the external website and Facebook platform. So the Facebook Like button is a small Facebook out of Facebook, because APIs make applications connected together.
You can do the same with mobile and Twitter, saying that “how do you think you can tweet from your phone if Twitter doesn’t allow your mocile app to access to Twitter network? So the mobile app uses Twitter APIs etc…

We try to paint a picture in their minds to show how APIs are the building bricks that can create things.

But if we are trying to speak to that CEO or manager rather than the taxi driver, we could be underselling how transformative an API truly is for anyone thinking about how they can use APIs in business.

An API is not only a building brick, it is also a projection of a product vision, based on internal assets you can open to the world.

From LEGO(c) original ads campaign

APIs define a new digital business-to-business (B2B) sharing economy, where companies expose their core assets through APIs and consume core assets from others through APIs.

We need to explain to business colleagues and management that by exposing internal assets through a web API , they are “productizing” an asset to third parties. We need to encourage them to see it as a business or community journey instead of just a software interface, and be sure they treat their API like products.

Let’s see why on the marketing, financial, technical, business development and legal side, you should describe APIs as, well, more than APIs.

Platform Thinking: On the marketing side, opening an API enables you to transform your company into a platform. In a classic B2B or SaaS market, you compete with your competitors in the market. Building market share is difficult, as you need to wrestle it away from established market players.

By opening an API, you are able to take the market in a perpendicular direction, and build an ecosystem with partners and third-party companies and developers in new, potentially competitor-free unexplored markets (this is often described as a Blue Ocean Strategy).

Monetize existing assets: From a financial perspective, an API is a return-on-investment multiplier for your existing assets. After Amazon built a global retail store, they realized they had cloud data server infrastructure they could also sell as a service; telecommunications companies are moving to a two-sided business model where in addition to selling their own voice, messaging and connectivity services, they also sell access to their network to third party companies or enter new partnerships for innovative product uses; and recently monolithic IT enterprise IBM is beginning to sell access to its Watson big data analytics and infrastructure technology.

Companies have invested a lot of money into building their technological capital assets, and now they want to recoup some of this investment by opening it (for a fee) to third parties.

It’s like someone who has bought a house and wants to rent out a room on AirBnB to reduce their mortgage costs. These companies are exposing their assets through an API to literally share the bill with others, providing customers with access to the dormant, unused part of a company’s resources.

Composability: Form a technical perspective, an API enables a customer to adapt external software to their internal IT instead having to adapt their internal IT to an external software program.

In B2B integration, you can avoid heavy governance on your part. There is no need to plan a succession of business meetings, technical meetings,and technical trainings to talk about integrations. APIs can be established on your portal directly, reducing the time for proof-of-concept from months to days.

By exposing an API, your customers will be able to adapt your software to their internal IT architecture by themselves, and not ask you to ‘make the feature’ for them and oblige you to fix your product.

Of course, you can also sell a service to carry out implementations with major customers (or build a platform/ecosystem with third party integration partners who use your APIs!), but for a long-tail of customers, they will do the job themselves.

Self-service: From a business development perspective, an API a is a self-service portal that enables you to scale your outreach on a global level. Potential customers can discover your services and features 24/7 and use your API for integration, letting you contact them later in the customer on-boarding funnel. You are then able to transform better leads into customers in a more qualified approach.

Increasingly, developers are making snap business decisions on behalf of their companies by reviewing available services online, looking for an API, and testing the integration almost immediately. It has been said that developers will move on to another API service within seven minutes if they are not able to start integrating right away, and I hear countless stories of customers who pass over a business’ services if they cannot get up and running with an API in their time zone, or late at night/over the weekend, or when trying to solve a particular problem unique to their business needs.

It’s the law: From a legal perspective, an API is a contract between you as a supplier and your customers. This is defined in an API Terms of Service and Business Model Agreement.

The API-ization of a business’ data defines a business and legal relationship between the two entities: it is a contract between supplier and consumer.

This is why an API user and customer community is valuable as a customer portfolio in accounting.

So from a legal perspective, an API is a contract, but a relatively simple one that takes ten minutes to read and sign; is available 24/7; and is flexible enough to adapt and change as your ecosystem grows (even if your community does not like abrupt changes to the API Terms of Services).

APIs are changing the way we do business, but crucial to this is fostering a business culture that understands the real value of APIs. We can help our business colleagues to develop the cultural mindset needed to invest and encourage API implementation across a company by describing what an API really is. Get ready for your next conversation when someone asks, “so what does API stand for?

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