Future of World is in the hands of better APIs and not better Products
The above statement might sound quite ambitious and highly optimistic from API’s point of view, but if you realize the way people are building their products these days, it might not be too far from the truth.
The current state of the APIs
Today, a product without application program interfaces (APIs) that allow software programs to interact with each other is like the internet without the World Wide Web. Just as the World Wide Web opened up the internet’s potential for use by billions, APIs — specifications or protocols for how to exchange information or request online services from an organization — are allowing companies to grow businesses at unprecedented rates by sharing services with external firms.
A product without APIs that allow software programs to interact with each other is like the internet without the World Wide Web
The monolithic infrastructure and applications that have powered businesses over the past few decades are giving way to distributed and modular alternatives. These rely on small, independent, and reusable microservices that can be assembled relatively easily into more complex applications. As a result, developers can focus on their own unique functionality and surround it with fully functional, distributed processes developed by other specialists, which they access through APIs. Products today are straightforward to customize, and they easily integrate pretty much with any other product (thanks to Zapier, IFTTT, etc.).
There is a rising wave of software innovation in the area of APIs that provide critical connective tissue and increasingly important functionality. There has been a proliferation of third-party API companies, which is fundamentally changing the dynamics of how software is created and brought to market. Major credit towards this rise, in my opinion, goes to the fact how developers have grown better in building better APIs by treating them as products. Organizations today have taken this one step further by taking an API first approach towards building applications. An API first approach essentially means that developers are now building their APIs first for products rather than building APIs as side effects to product requirements. They are spending more time designing their API, thinking about business value it will offer, and the developer experience around it.
APIs enable companies to accelerate their digital transformation in a straightforward manner that allows for greater partnership opportunities, both upstream and downstream of their products or services. They enlarge one’s customer base by tapping into companies in adjacent markets and connecting products and services to theirs so that everyone’s customers win. Companies exposing APIs can earn a direct or indirect fee for allowing the use of their assets. Salesforce.com generates 50% of its revenue through APIs, Expedia.com generates 90%, and eBay, 60%.
On the other hand, developers can capitalize on the resources already created by another party, without the need to create them from scratch. This spurs creativity and innovation at their end as they can combine several APIs from different sources and create a new service. Such a strategy of building services proves to be faster, cheaper, and more efficient as compared to the strategy of everything in-house, because of the huge amount of time and financial resources the latter requires. But more importantly, it allows companies to focus on their core capabilities and develop differentiated functionality, their “secret sauce,” at higher velocity.
APIs help companies to focus on their core capabilities and develop differentiated functionality, their “secret sauce,” at higher velocity.
‘Build or buy’ has always been a key strategic consideration while creating new products and businesses. In the API era, this choice will expand to ‘build or buy or API’!
The Big Shift
While the ecosystem for API startups is attractive today, I believe it will only become stronger. By 2023, 65% of global infrastructure service providers’ revenue will be generated through services enabled by APIs, up from 15% in 2018. Over the last decade, there’s been a broadening of interest in enterprise-oriented technologies like SaaS, Big data, microservices, and AI. APIs are the nexus of all four of those areas.
Before buying or subscribing for a product, a lot of businesses today evaluate them not only based on the features it offers but also how well it integrates with their existing products, infrastructure, and workflows. APIs play a major role in achieving that. Hyper-globalization and remote work opportunities in today’s world have greatly impacted our choices of products. People want to be flexible in how they use a product and its offerings, and to facilitate that companies have started investing a lot more in APIs. Jeff Bezos was one of the first people to realize this shift back in around 2002.
The increase in the number of people who are now accessing the internet has also raised concerns over the security of user’s data. Companies are now much more concerned about giving access to their entire data to 3rd party applications. Therefore, they are leveraging APIs to provide this data in a transformed manner and on-need basis. This approach also ensures that they have more control and visibility on the data they are sharing.
APIs are also a key ingredient in building Integrations. Using different types of integrations is turning out to be the fastest-growing and most common way of leveraging a Product. Tools like Slack have amplified their usage by providing a single platform from where people could interact with these integrations and in the most basic way, “Chat messages”. We are now seeing more and more products following similar footsteps by allowing other products to integrate and increase the provided value. Going forward, this trend will ensure that companies will think about integrations as a core part of their business and hence will invest a lot more in APIs to enable these workflows.
Tools like Postman have already made it easy to fiddle with APIs, and if you look at some of their blogs, you will see some interesting use-cases already being solved by just using simple 3rd party APIs (ref 1, 2, 3, 4). Internet of Things (IoT) is another field that has benefitted a lot from this transition towards API-first ideology. The worldwide IoT market is predicted to touch approximately $1.6 trillion by 2024, indicating a strong 21.1% annual growth from $346.1 billion in 2016. APIs being the backbone of IoT means that this growth will also accelerate a lot of innovation and investment for it and be crucial in creating a much brighter future for APIs.
Welcome to the Future
To reason better about what the future holds for APIs, we need to first understand it’s future users. Today, developers are the primary users for the APIs, using it to either communicate between services, build integrations, or provide it for 3rd party consumers. But the future will have fewer developers and more “Builders”. One of the most frictional points, when someone wants to build something, is the ability to code it out. But our future generations will probably not know how to code, and that’s what excites me. They will be intelligent and would be more focused on the outcomes expected from a product rather than the effort it takes to build one. In the future, there will be more applications that will allow you to drag and drop business logic, and spit out the most optimized code with far fewer bugs. It might be hard to believe but look just a few years back, how many designers you knew could build their portfolio websites. Those barriers are now being broken with tools like Webflow.
Over time, our product tooling is going to get a lot better as well. We will see APIs take the shape of LEGO blocks, and builders will mostly have to put together the right blocks to build a product. Products will get intelligent to automatically visualize the API response, which will kill the need to build User Interfaces. At most, what a builder might need to do is to perform some minor configurations to enable those.
We will see a rise in newer API protocols that will associate themselves more closely with products. GraphQL was invented to optimize data fetching on mobile devices, fetching only the information that is required by the product. We will see more such innovations to support wearable devices, IoTs, and future breed of applications. IBM Watson was just the beginning, allowing developers to use NLP and ML capabilities over the API, we will soon be able to leverage Quantum computing as well using APIs, and that will open doors to a completely different dimension of products.
Future generations will be much more critical of the applications that they want on their devices, and they would favor a more integrated end-to-end experience. Which means product integrations are bound to take center stage, and this will mean that people will stop looking for a new product to solve their needs. They will rather search for an add-on on their existing application. I realized this when I gave up on flight aggregators once I discovered Google Flights. Rather than waiting on products to support a necessary feature, people will start feeling more comfortable in taking actions and building those features for themselves.
This is just the beginning…
Several companies like Stripe, Twilio, Segment, etc. are already riding the API-first wave and are the real success stories of this change. And believe it or not, the world will be driven by APIs. If you still haven’t started moving towards the API-first approach, then I would recommend you give it a serious thought.
