Unlocking value from data may require new strategies and technologies, but the place to start is almost always application programming interfaces
Why should you develop an API and data strategy? What are the success factors and pitfalls? How can we communicate to shareholders and non-tech executives the importance and power of APIs? These are just some of the topics that esteemed guests discussed at the API & Data Strategy workshop sponsored by Apigee, on day two of the Platform Economy Summit, in Frankfurt.
Speakers
Dino Scheidt. VP of Applied Machine Learning, FoundersLane
Marshall Van Alstyne. Professor, MIT IDE
Oliver Ogg. Head of Digital Strategy EMEA, Apigee Google Cloud
Shivaji Dasgupta. CDO AI & Smart Data, Deutsche Bank
One of the most pressing concerns of the digital economy is how businesses can make data accessible so innovators can leverage it to create new value streams? Unlocking value from data may require new strategies and technologies, but the place to start is almost always application programming interfaces or APIs.
Software talks to other software through APIs and this is how developers leverage digital assets, including data, to create new applications. API is nothing new. Every company has APIs in some form or shape. So why aren’t all these APIs helping companies transform their data into new value? It could be because not all APIs are created equal. A company can’t make progress by simply putting rich datasets behind sloppy, undocumented APIs that can’t be easily consumed by developers outside the teams in which they were created.
Oliver Ogg began by introducing the idea of APIs as products, which need to be watered and fed, are simple and valuable, are owned by the business but are delivered by cross-functional teams and, importantly, they maintain quality. But who are the consumers? Often they are developers, businesses, and partners with different payment models for each from freemium or pay per use (developers), subscriptions models (businesses) and revenue share (partners).
Oliver introduced an example of Allstate — a company with deep expertise in usage-based insurance and connected cars — launching Arity, a tech startup. Built on Allstate’s 20 billion miles of driving data and more than a million active telematics connections, Arity technology will increase a company’s understanding of risk and help them to be more nimble, with significant cost-reductions for Arity’s customers.
Targets for Arity are established with existing user ecosystems and APIs help them to address customer needs to integrate into their existing systems. And, they pursue developer onboarding and experience above developers.
Pillars of GTM success
Know your personas. Different users have different needs. This may seem obvious but at some companies, for example, APIs are constructed on an as-needed, ad hoc basis by individual teams. This can result in many bespoke APIs, many APIs needlessly duplicated, and only a few APIs documented well enough and designed consistently enough to be of ongoing use.
Get users using your stuff. You won’t know your APIs are usable until other people use them. Developers are essential participants in the process of turning data into value because they use APIs to build applications that add additional services on the data and that produce new connected experiences for end-users. Most businesses should expect to rely on internal talent for certain developments, but many of the most data-driven companies turn to external developer ecosystems to help broaden their scope of innovation.
Trial or onboarding. Different users need different resources to get going, if they don’t get going, you don’t win. A technology platform is not a project that gets approved and completed — it’s a living and evolving set of technical infrastructure and resources that need to be continually nurtured, improved, and managed. API programs need financial backing to achieve this state of perpetual improvement.
The technology platform on which the program relies will struggle to grow if it is constantly constrained by funding cycles or by churn as contributors, and their knowledge, jump on and off projects. Successful API platform funding models eschew project-based thinking and instead generally focus on annual or multi-year funding cycles to promote longer-term planning.
Where should you start?
Outside in
When we apply “outside-in” to APIs, the objective is to design APIs that make it easy for developers to repeatedly leverage the digital assets, including functionality that helps customers and other API users meet their goals. That is, applying an “outside-in” approach to APIs involves thinking of developers as a type of customer and managing APIs as products for developers.
APIs as products
APIs should not be seen as technological fine-details that IT teams are responsible for, but strategic business products that turn data and valuable intellectual property into a form developers can leverage.
Monetisation
API monetisation isn’t just about how you are going to generate revenue via your API, it is also about how you will keep your API in operation and performing for consumers. Along with the aforementioned pricing models there are also indirect monetisation benefits from brand awareness to SaaS Oftentimes an API will complement the core software and its offering, providing value to SaaS users. API access is often included as part of a core SaaS platform, but also can be delivered as an option for premium SaaS users.
Dino Scheidt, VP of Applied Machine Learning at FoundersLane
Dino smashed the audience into awakeness with an image that commands attention.
The man pictured above stole more than $100 million from tech giants by forging invoices for purchases the companies had never made.
He devised a blatant scheme to fleece US companies out of $100 million.
Evaldas Rimasauskas, from Lithuania, sent fraudulent demands for money to Google and Facebook between 2013 and 2015 totalling $122 million. The companies paid the bills, after not checking if the invoices corresponded with their own records.
With APIs, you can quickly integrate select data providers and create audit trails. This also now essential for fintech operators to make quick decisions on new accounts, which is crucial for a digital-only bank targeting the savvy millennial demographic.
Hackers are not necessarily the bad guys,
they can help you spot your weaknesses.
~Dino Scheidt
Marshall Van Alstyne showed the audience a graph contrasting the rise and fall of Myspace and Facebook, and pinpointed the inflection points when Facebook opened up its platform to developers. Myspace in comparison stayed a closed system, and their slow growing reach reflects the difference.
We tried to create every feature in the world and said, ‘O.K., we can do it, why should we let a third party do it?
~MySpace cofounder DeWolfe.
We should have picked 5 to 10 key features that we totally focused on and let other people innovate on everything else.
API adoption boosts market cap
Studies suggest the use of APIs to facilitate digital transactions increases annual net income by more than $250,000, with potential profit boosts growing as platforms generate and exchange more data, says professor Marshall Van Alstyne, who co-authored ‘The Impact of APIs on Firm Performance.’
APIs are software code that allows developers to write programs that communicate with online services and shared databases to mediate transactions. Companies such as Apple, Airbnb and Uber have leveraged APIs to build disruptive platforms and create network effects.
Such disruption was top of mind for Van Alstyne as he presented at the summit and attempted to quantify the value of APIs, which is no mean feat considering the tangible value of such platforms has been only clear at the intersection between digital platforms and consumers.
One thing is clear, as businesses expand digitally, APIs are essential. Despite what Gartner and others have come to describe as an era defined by digital transformations, Van Alstyne says too few companies put stock in APIs.
Too many folks view this technology as infrastructure and not as strategy and that’s a mistake. It enables you to tap external partnerships in new ways that you simply can’t if you don’t externally open the technology.
~Van Alstyne
