Today’s connected experiences — such as controlling smart home accessories from a mobile app or ordering takeout via a voice assistant — involve a lot of software talking to other software. This means these digital experiences rely in large part on application programming interfaces (APIs).
When someone uses their social media account to log into other websites, an API mediates the interaction. When a person buys a ticket to a show via a smart speaker or voice assistant instead of a ticket booth, an API enables the experience. APIs are how software talks to other software.
But an API isn’t just a connector; it can also be thought of as software that expresses an aspect of a business — the ability to authenticate a user while protecting their password, to engage with a voice platform, to look up a showtime and location, to purchase a ticket, and so on. In other words, an API is like a door to an enterprises’s valuable digital assets.
From recently-deployed microservices to legacy applications coded years ago, these business expressions rely on numerous technologies that weren’t necessarily intended to interact. APIs act as an interface layer that abstracts underlying complexity, allowing the disparate software to interoperate and enabling developers to more easily leverage the software to build new applications. APIs can consequently help businesses in several ways to empower developers to create connected experiences, including:
- Securely sharing digital assets with partners, external developers, and other third parties: This approach can increase the range of developers leveraging a business’s digital assets, broaden its scope of innovation, unlock API monetization opportunities, and insert the business into new contexts or connect it to new user bases.
- Creating new connected experiences internally using APIs: In contrast to legacy development methods, this approach allows developers to more easily and securely reuse, iterate, and combine valuable digital assets and capabilities into new connected experiences.
- Using APIs as a layer on top of legacy technology: This approach both enables developers to leverage a legacy asset without being familiar with the underlying technical details and allows businesses to connect old technologies with new ones.
Looking at this variety of API use cases, it becomes clearer that an API isn’t best thought of as just a connector or even as a digital business asset — but rather as a software product that empowers developers to create connected experiences.
How We Got to Connected Experiences
The term “API” has been around for decades, so what we’re really talking about is web APIs. For most companies, it’s been an evolution from existing systems to the modern RESTful APIs that connect the Internet, to today’s APIs that are treated as products — not just connectors — that enable connected experiences and more.
Six or seven years ago, the dominant API use cases revolved around integration problems, such as connecting a new platform to an old platform, or facilitating easier development of mobile applications. Many businesses were putting an API layer in front of a legacy application so that mobile developers could use technology they understood, such as JSON and HTTP, instead of whatever was used to build the old software.
One big change since then is that a mobile application is barely table stakes for meeting the demands of connected customers. A mobile application is arguably not enough on its own to help a company get an edge, because now we have things like connected devices, smart speakers, connected cars, smart refrigerators, and so on. And we have connected experiences that span devices — an action at a brick-and-mortar business that’s instantly reflected in a mobile app or a streamed video that picks up in the same place when the user switches from her phone to her laptop.
All of these things require some kind of API behind them. When a user tells a smart speaker to get tickets to an upcoming concert, the transaction is only possible because the company selling those tickets has some sort of API for the speaker to connect to.
As a result of these kinds of shifts, businesses face increasing pressure to engage with their customers in different ways that span many touchpoints — not just to be online but to be potentially anywhere customers prefer to be. To meet this mandate, businesses have also begun to shift from building discrete applications to creating cohesive, secure connected experiences.
Beyond Connected Experiences
APIs have helped many businesses meet customers’ increasing expectations for connected experiences, but they’ve also helped some enterprises pursue even bigger, more profound business evolutions — things such as unlocking new revenue streams and product categories, creating online marketplaces, executing platform business models, and many of the other things you’ll find in the loftier (but arguably most accurate) definitions of “digital transformation.”
One example is AccuWeather*, a company many of us know as being the organization that the weatherperson on television gets information from — but that weatherperson is only part of what AccuWeather does.
The company also has APIs that get tens of millions of calls per day day from all sorts of applications and connected devices that people use to keep track of the weather.
But the interesting thing is that APIs enable Accuweather’s business to do much more than helping consumers know whether to grab a coat or an umbrella before heading to work. There are industries such as insurance, financial services, risk management, reinsurance — all kinds of businesses — that weather events have a big impact on.
All of these industries have a compelling need for more specialized forecasting products and easy ways to integrate them into their own efforts — which is to say, all of these industries have a compelling need for APIs such as the kinds AccuWeather offers. Independent developers — that is, the people leveraging and innovating with AccuWeather’s API in unexpected ways to build all kinds of apps — are another emerging constituency. This range of customer types has opened API monetization possibilities for AccuWeather, allowing it to treat APIs as products not only in the sense that they empower developers but also in the sense that access to these APIs can be purchased.
Magalu*, formerly known as Magazine Luiza, is one of the most impressive examples because the company has not only transformed how it operates but also executed on one of the most heralded opportunities of the digital age: a platform business strategy.
The largest retailer in Brazil, Magalu began transforming its business by changing from a traditional brick-and-mortar retailer with secondary e-commerce capabilities into one that has very strong capabilities around the web and around mobile apps. That transformation meant excelling at the things that drive the web and mobile worlds — such as both expressing business capabilities and building applications via APIs.
This has allowed Magalu to launch a platform — a business model that allows their infrastructure to coordinate consumers of goods and services with producers of goods and services. Third-party retailers can sell through Magalu’s online marketplace, for example, and take advantage of its network of stores and distribution capabilities.
Its success has compelled some analysts to call Magalu the “Amazon of Brazil,” and its ambitions only continue to grow; the company is now branching out into the PaaS opportunities, unlocking new ways for customers to integrate with and leverage its technology infrastructure.
Think About the API’s Customers
Connected experiences have thrived partly because successful companies aren’t treating APIs as technology minutiae but rather as products with customers who need to be incentivized to adopt them.
A company such as Magalu, for example, has to consider that if it’s going to offer an API for third-party vendors to sell products and services via network of stores, it needs to understand what technologies those vendors already have and how to make it easy for them to interact with the API. Magalu’s API teams have to think about how to reduce friction for developers, how to measure the impact of APIs, and a host of other things we typically associate more with product management than traditional IT.
Indeed, many of the companies that have been successful with APIs have created API product manager roles and API teams to guide the full lifecycle of APIs, from ideation and development to release and iteration.
The most effective of these API product managers are increasingly data-driven. Whereas a traditional IT organization might track how many APIs are completed, sophisticated API product managers leverage API traffic data and analytics to understand which APIs are most popular; which developers and applications are driving API consumption; which regions are producing API adoption; the availability and performance of APIs, including whether the company is meeting service level agreements with customers; and much more. These product managers tend to strategize not based on internal intuition but rather from the outside-in, using customer data and feedback to direct internal roadmaps and priorities.
In short, delivering secure, API-powered connected experiences is all about responding to the ecosystems customers rely on and the interaction models they expect — and to get there, enterprises cannot think of end users as the only type of customer. Even for B2C enterprises, developers — both inside and outside the enterprise — represent an important constituency. APIs are one of the most universal and impactful tools in this constituency’s repertoire, so the companies that want to create great connected experiences and digital products for end users should start by creating great API products for developers.
*AccuWeather and Magalu are customers of my employers, Google Cloud’s Apigee team.
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