Transforming SaaS into a Platform Business Model with APIs
The SaaS business model is an on-demand software delivery mechanism allowing the users to access the software via a web browser and pay for it on a recurring basis. The SaaS business model touched the $10B revenue back in 2010 and is expected to grow to $117B by 2021.
The explosive growth of SaaS economy is driven by several factors such as lower operational cost, maintain a consistent feature set, reduced time for setup and training, availability of multitude of cloud infrastructure that are cost-effective as well as support various architectural designs, ability to access the software on a variety of devices and many more. In fact be it a vertical such as healthcare, finance, real-estate etc. or horizontals such as HR tech, sales, CRM, marketing etc. companies today plan to aggressively expand their SaaS offering and move towards the on-demand software delivery mechanism with a subscription pricing model which can present a predictable revenue growth pattern.
The pivot to a platform business model
With the growing demand and hyper-competition to stay ahead of the curve and deliver incremental value to the end-customers, organization’s today are forced to innovate, achieve rapid time-to-market and explore new avenues to generate revenue. There are several mechanisms to build new business models within the product, however, lately with the understanding of the platform economy and popularization of API’s (application programming interface), business have found it much easier to build partnerships, create an eco-system to not only deliver a slice of the overall value but to expand the overall offering to a full-stack nature.
For e.g. a simple lean/kanban process management tool like Trello has now evolved into a SaaS that can integrate with google drive to manage documents, slack to foster improved and effective communication and Jira to ensure tracking of development tasks. This wouldn’t have been possible without the availability and easy integration opportunities with similar other platforms. In turn, from a user standpoint, it offers a single point of entry to a software which now hosts the complete eco-system for managing software development and eliminates the hassle to manage software fees separately for each of the integrated products.
Another great example from my personal experience in the e-commerce industry has been managing an API platform which allowed one of the leading American retailer to expand into reward-redemption, penny auction and incentives type platforms thereby opening up a new revenue channel. The API platform allowed us to share the product catalog, manage ordering experience, provide real-time inventory availability and finally the checkout and delivery information to external partners so that their customers can purchase the product easily without leaving the partner’s website. This pivot from SaaS business model to a platform business model or just opening up a new revenue channel wouldn’t have been easily possible without having API’s that can be accessed by developers and allow easy integration between different parties that deliver a part of the overall value to the end customer but have the potential to collectively delivery a much greater experience.
All things API
Managing an API based platform though comes with its own set of processes which involves designing, developing, testing, publishing, and versioning of the API’s. Until recently, not many tools were available which provided an intuitive interface for developers as well the API teams to manage the overall interaction and ensure successful and guided usage of the published API’s. Additionally, some of the common challenges include API bench-marking/performance testing, ensuring the right API usage pattern, testing of negative scenarios where the client systems are no more conducive towards the API etc.
From a test team perspective, how do they effectively manage API test beds, smoke tests, and regression scenarios? Also, on-boarding and training of a new member in the test team can present significant challenges and quite extensive efforts. All these can be effectively managed using the IBM Connect Test & Monitor tool. This tool is sure to improve the quality of the API since a developer can easily create automated tests that can be integrated with your CI/CD tools (think Jenkins) and hence save the hassle of either reverting the code or breaking something in production unknowingly.
