Vishal Biyani

24 Mar 2014

API economy

I met a friend at DevOps conference who used to worked for Sabre. He told me about how huge Sabre is and how it drives world’s travel businesses. I went home and researched the company and left it at that. The “Aha” moment happened when I was working on an assignment related to API management. The sheer magnitude of what Sabre was doing and what many others are doing with APIs was huge and I could make sense of it only after looking at it from API perspective. I was fascinated by the economy of APIs and possibilities it offered to businesses. In this post I briefly cover basics of API Economy, show you some cool things organizations are doing and talk a bit about API management platforms.

A discussion about API is incomplete without mentioning about platforms IMHO. While researching the API economy I finished reading [The Age of the Platform by Phil Simon])(http://www.amazon.com/gp/product/B0064FKFH8/ref=as_li_qf_sp_asin_il_tl?ie=UTF8&camp=1789&creative=9325&creativeASIN=B0064FKFH8&linkCode=as2&tag=vishalbiyani-20) and I was already subscribed to platformed newsletter” from Sangeet Paul. Platform thinking is probably one of the most important building blocks of successful API business IMHO.

Real world use cases

Before we understand the drivers of why API economy is significant now and how to go about it, let’s take a look at some cool real world implementations, They will give us insights into what people are doing by opening up APIs!

  • Sabre a GDS company is used by more than 350K travel agents and companies worldwide. When you book tickets through one of the online portals – they are actually hitting one of GDS provider APIs. GDS companies in turn manage the tickets from multiple airlines. So tomorrow if you want to start a travel company – choose one of API providers from GDS companies and get started. Other companies in this space are Amadeus, Galileo

  • Netflix handles roughly 2B API requests daily by audience consuming content from various devices. Managing so many different devices, applications and consumers at this scale would not have been possible without sound APIs in place.

  • Evernote – the editor I used to write this post has it’s API. You must be wondering what business would you generate by exposing API of a editor to others? Co-creation is the name of the game! Developers and companies out there have created apps which have generated additional revenue for Evernote and potential acquisition targets. GTD apps like SmartTM and many others are built on top of Evernote

  • Ordr.in provides API to view restaurants, their menus and order food based on menu items. They give you access to data & a few bundles to get started, building actual customer facing application is done by others. One can build online food ordering apps by using ordr.in apis without having to worry about the data.

  • In words of “Peter Moeykens” from TomTom – you might be sitting on gold mine of data and not know about it. TomTom opened it’s internal assets successfully as API products for consumers/organizations to use and leverage.

APIs for Business

So in above examples what are the organizations doing? They are using API for their business to achieve one of:

  • Sell/expose data/service/function to either internal consumers or external parties
  • Enable and scale the interaction between multiple systems and devices/device types within organization or/and with partners
  • Co-innovate with partners, developers and world at large.
  • Use a product/service in ways not imagined by organization- for example GTD app uses Evernote API

Let’s not be mistaken here: API is not or will NOT create a new business on it’s own – it’s in fact an enabler, multiplier and a channel of delivery to existing business value (data/services). The offered business value might be perceived and used in a completely different way never imagined by organization. Once you have a “value” proposition you will need to bake it into your API, but the value proposition has to be present in first place. So what can be APIzed? At a very broad level:

  • Data: Some form of data which might be valuable is the basic building block of an API business.
  • Service/Function: Some sort of service or function which is offered to internal consumers or partners can be opened to wider audience and might be utilized in ways never imagined within organization

For any business value an enterprise exposes, the level of access plays a pivotal role. Based on how open you want to be there are a few buckets of communities that you want to open API for. The real world use cases might be a mixed combination of following:

  • Internal business units/developers: Internal applications, various business units talking to each other, systems integrating with each other.
  • Partners/Community: Partners/Suppliers/Vendors/ providing you various services or parts of your product, partners co-creating the products with you, communities working with you on your platform
  • Public/External Developers: The world pretty much where developers can sign up your API and build applications on top of it!

The pricing model, how much access to throw in and what to expose as an API is a much more detailed discussion – and some pointers in references might be helpful there.

API Management : Why & How

Identifying the business value you offer and baking it into an API is only first step. APIs are not destination themselves instead are a journey for an enterprise. Once you have an API in place, you would like to potentially

  • Manage access control on APIs, decide what kind of users get what kind of access and how much they can exhaust the system with requests. Have appropriate kill/disabling switches in place for users exhausting APIs.
  • Monitor the usage in terms of which APIs are used most, which are used least, what is the pattern of API usage?
  • What kind of devices and application are using API? Which API is working best for end users and who is making unnecessary requests and might be optimized.
  • If your API is open – then managing the pricing and plans, managing access based on plans, enabling new users to sign up learn and start using your API seamlessly.

Needless to say – not all of these features/functions will be required on your API journey from day one. For example if you are beginning the API journey and the only consumers to begin with are internal developers – you might need access control, well designed API and that’s about it. Once the API usage has started off and you have iterated through couple of improvements may be you will need to add versioning and monitoring. The key is to understand what you need to get started with and what you will need as you scale and build/buy as you go.

How can you build/buy API management solutions? There are quite a few players here like Mashery, Apigee, 3scale. You can find a brief overview of all players in article at ProgrammableWeb. Interestingly as the offerings converge and overlap some of iPaaS players have started offering API management as a logical extension to existing offerings like [MuleSoft]()

API & Platform thinking

Thinking about your business as not only a product or service but as a platform is essential in today’s world. Disruptions are coming from industries least expected. Online travel and retail companies  disrupting their traditional counterparts or music and camera industry being disrupted by smartphones – examples are many. Thinking of your business as a platform enables crowd-sourcing, innovation at scale and out of the box ideas to be evaluated and tested. For you to build a platform – API serve as the backbone.

Thoughts & Conclusion

APIs enable you to do business for the new age, they enable you to build platforms of your business. With more and more connected devices (Marketed as IoT – Internet of things), & complexity of applications API make perfect sense for multiple scenarios. As much APIs are important to your business, much more important is managing growth of APIs and in turn your business – that’s why a sound API Management strategy and execution makes the difference. They are doors to new growth engines and for disruption.

References and further reading

Thanks to my colleague Animesh at work for reviewing the article.