Multichannel to Open Banking to Data Insights: It All Starts with APIs

In virtually every industry, there are one or more “big things” the majority of companies have either recently adopted, are in the process of adopting or are feeling pressure to start adopting.

If your business is retail (or, really, anything that involves interfacing directly with consumers), one of those “big things” is likely omnichannel.

If you work in finance, it’s probably open banking. In healthcare, it might be interoperability for electronic medical records. Regardless of your industry, if you work in a large enterprise, your company is probably investigating ways to turn data into actionable insights and to start leveraging machine learning.

At the surface, where digital experiences meet end users, these “big things” are very distinct, separated by a variety of business tactics, user expectations, legal requirements, and technologies. But on a more fundamental level, all of these “big things” are really one big thing: quickly and securely connecting systems, data, and applications, often while leveraging multiple clouds and generating analytics to inform growth strategies.

That is, these “big things” are all really about APIs.

How APIs Create Strategic Leverage

APIs allow developers to connect applications to one another and to the data and services that power those applications. This lets businesses combine software for new products and digital experiences. APIs are the de facto standard for building modern digital experiences.

To understand how APIs are central to business results, let’s focus on omnichannel for a minute. Modern omnichannel isn’t just about having a physical store, a website, and an app — it’s about providing a consistent, cohesive experience wherever and whenever the customer demands it. That might be in a store, with a mobile device, via a social media platform or even though voice interfaces. It might be across all of them, with customers expecting interactions through one channel to be reflected in their interactions across others.

This ecosystem of customer interactions may require that omnichannel retailers manage transactions among myriad disparate systems: CRM systems, product inventory databases, payment services, third-party platforms and services, and so on. APIs facilitate all of this communication, allowing developers to easily assemble data and services into new digital experiences without being slowed down by the underlying backend system complexity. In this way, an API-first approach can act a catalyst for faster development and execution, and each individual API can act as a point of strategic leverage, ready to be activated and reactivated — combined and recombined — to create new user experiences.

Magazine Luiza — a customer of my employer, Apigee — is a great example. In 2011, Luiza was struggling to compete with larger, more digitally-advanced competition. Company leaders realized that to survive, the organization needed to embrace digital ecosystem and omnichannel tactics, among them an online marketplace that let new participants join via the company’s API platform. Launched in 2016, the marketplace replaced an integrated sales and distribution system that supported only 35,000 SKUs — a number the marketplace increased by nearly 6x in only a few months.

Because this growth was driven by APIs (and thus by infinitely scalable digital assets), Magazine Luiza incurred virtually no marginal cost for each new marketplace participant. Just a few years after feeling pressure from competitors, the company became one of Brazil’s hottest stocks of 2016, and posted breakout earnings in e-commerce revenue.

API Management Best Practices

API-first competency isn’t just about building APIs — it’s about managing those APIs as products that empower developers to build new apps and digital experiences. APIs shouldn’t be seen as the pipes between software or as one-off solutions for specific projects — they should be seen as products that let developers continually leverage core digital assets without being burdened by underlying systems complexity.

Managing APIs as products may involve a number of organizational changes. The APIs themselves should be constantly iterated for improved developer experiences, and the organization should invest in both evangelism and marketing to promote API adoption. If a company makes its APIs available to external developers, it will likely need new licensing, legal, and marketing models. Both the teams building and leveraging APIs should be free to develop products without running into constant bureaucratic roadblocks or endless approval processes, which may require new funding and governance processes built for agile product development.

To develop robust API management competencies, organizations are investing in management tools that support the following strategic and operational emphases:

Visibility and intelligence across multiple clouds

If you have no idea which APIs are driving traffic — or how much or by whom — then you can’t discern potential opportunities, optimize performance, protect against threats, or detect any sudden changes in user and developer behavior. Comprehensive visibility helps a business minimize downtime to business systems and to maintain user experiences by quickly identifying problems. Analytics and machine learning help to protect APIs against malicious behavior, and to develop insights into API consumption and user behavior to inform future decisions.

As businesses continue to invest in multi-cloud architectures that allow them to flexibly choose the best cloud service for a given purpose, APIs are likely to be used as abstraction interface, playing an important role in allowing businesses to leverage multiple clouds without being bogged down in underlying systems complexity. Comprehensive API management should provide visibility and analytics in any deployment scenario, including hybrid and multi-cloud.

Improved user experiences

Well-managed APIs help give customers, employees, and partners the secure, seamless experiences they demand. They enable agile development, rapid iteration, and constantly improved experiences by hiding clunky UIs and backend processes behind a clean facade. Businesses should consider investing in self-service tools to help developers and partners access the tools and APIs they need within minutes.

Operational efficiency

API management lets companies achieve operational savings by automating repetitive tasks and processes, expanding prototyping efforts, and getting ideas to market faster by decoupling back-end systems from front-end systems. An enterprise-grade API management platform should ensure that data flows to the right place at the right time, and enable a business to extend internal IT by easily and securely granting internal teams and partners safe, easy access to digital assets.

[Looking for more insights about digital transformation? Check out Apigee’s resource hub here.]