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Dion Hinchcliffe's Next-Generation Enterprises

Dion Hinchcliffe

2012 Is Shaping Up As the Year of Open APIs

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It was just over a decade ago that businesses were still wondering why it was necessary to have a Web site. Now it's a foregone conclusion that they are one of the most important touchpoints for any organization to possess. Fast forward to the last few years, and businesses are now -- in the same way they did with Web sites -- beginning to come to terms with the concept of the open API, and how it is turning out to be just as vital to the long-term success of their business.

That at least is the premise of API expert (and my friend and industry colleague) John Musser, who founded and operates the invaluable Programmable Web service that tracks the organizations that have opened up their businesses over the Web using APIs. Those that follow my writings know that I've been bullish on APIs over the years as a way of creating business ecosystems that scale like no other method that's been known previously. Back in 2008, when open APIs first reached the 1,000 mark, I finally dubbed them a new core business model for next-generation enterprises.

Yet, while Internet startups these days almost always include an API for their new Web app so that others can build useful new services on top of them (most of Twitter's traffic for example, comes through its API), they have generally failed to capture the imagination of traditional businesses. Until recently, that is.

Related: Strategically leveraging your data like an Internet startup.

Now it finally seems APIs are reached critical mass, and have started doubling in number so rapidly now, such that as of this writing, over 4,600 APIs are now available. A recent presentation by John shows the significant surge in velocity that the API market has recent achieved, with the rate of doubling of the total number of APIs jumping dramatically in recent months:

Open API Growth is Accelerating

Just as it took a while for the businesses to get the message about interacting with the world via Web pages, it's clearly been a long eight years as APIs have increasingly established a reputation as an powerful way to build an ecosystem of deeply integrated yet easily onboarded business partners. APIs revolutionize the process of integrating the systems of two companies, by designing a well-documented and easily used interoperability point using lightweight services and data formats such as REST and JSON.

For those just now tracking this phenomenon, an API routes around the traditional Web page and allows businesses to directly connect and interact with the live data behind the scenes. It does so in a easily choreographed and controlled manner that protects the company, yet leverages and reuses data assets that are otherwise underutilized. These days it's relatively easy to get started, using services from companies like Mashery and Apigee, to get started and begin cultivating a developer community, business partners, and begin offering a rich array of add-on and third-party services that leverage the investment and innovation of the broader markerplace.

The business proposition is compelling: A company offering APIs will build it just once, and whether 10 or 10,000 companies use it, the level of effort on the API side is roughly the same. This greatly reduces the high costs of traditional custom point-to-point integration between two companies, particularly as API becomes more widely used and successful. On the consumption side, partners like APIs because they're not the first ones using them and support, stability, and shared experience around a standardized connection point is invaluable. In addition, Web pages and people are moved out of the critical path of business activity, enabling systems from each company to talk directly to each other using simple, straightforward Web techniques.

So what's been the hold-up and what are we seeing as the success factors? Several key insights have emerged, some of which John touches on in the presentation referred to above. There are also a few other resulting lessons that I'm seeing as I've worked recently with some large organizations who are starting to open up their supply chains using APIs.

Open APIs as a Business: The Moving Parts and Examples

For 2012, I see the following aspects of APIs playing a central role in driving growth, business value, and ROI for organizations that are climbing the Internet maturity ladder by moving beyond user experiences to the higher operating plane of Web APIs:

Five Key Aspects of Open APIs for 2012

1) The soft aspects of APIs are just as important as the technical factors. I've explored the technical stack required to be successful with open APIs before, but adoption, uptake, and long-term success depends just as much on the entire infrastructure around the API. This includes having a passionate and engaged developer community, who are eager to build on top of your business and also interested in helping each other out. So too are lightweight, off-the-shelf legal and contractual structures that make it profitable for everyone to invest on your APIs. Taking all of the revenue or hoarding all the IP are great ways to make developers look elsewhere for partners to innovate with. Having a community manager that is technical enough to guide the developer audience and make them see the potential is increasingly becoming a key success factor.

2) Simplicity wins. John's presentation makes it clear that complexity is the enemy of APIs. While many of the turnkey services that can put businesses into the API business quickly already provide much of the right technical direction in this regard, it's about the entire end-to-end customer experience (the customer is the developer/partner in this scenario.) Perform a self-audit with these questions: How many steps does it take to get a developer key? If a developer has a question, how long does it usually take to get an answer? Is the developer license easy to understand and investor friendly? Is the API documentation good and is there good example code for the most common scenarios? How good is security and exception handling? Is the latter just OK or is it a core competency?

3) APIs often start small and internal, and then grow outward. While much of the focus with APIs tends to be on Internet startup audience, I am witnessing strong demand for private APIs that are only extended internally to the organization or just to existing business partners. The API model thus works for service-oriented architecture (SOA) both internally and cross-border and many API services provide features for making APIs private or semi-private now.

4) APIs as the product. This is something John is also observing, that increasingly, as Amazon has been doing for years in many of its services, the API is now the only offering that some companies provide. While user experiences will remain important for network interaction with people, they are often just not significant enough or relevant when it comes to connecting two or more businesses together. Xignite, Qwerly, Retailigence, and many others are now exclusively in the API business, hoping to plug into the large ecosystems of other, already-existing businesses.

5) Hard-won lessons from using APIs strategically are maturing into shared industry knowledge. eBay's API lead, Subbu Allamaraju, has been writing about the experiences they've accumulated making APIs scalable and efficient for the e-commerce giant's vast network of 3rd party developers and their products. It's a good example of how the API community shares knowledge. Even better, the invaluable experience is now getting baked into second and third generation toolkits that make it even easier to start doing things the right way. For example, Subbu has recently announced ql.io, a declarative framework for making it easy for HTTP APIs to connect using the latest best practices.

For many businesses, however, they are just now looking to take advantage of the rich yet highly cost effective outcomes of enabling lightweight, agile connection between sites, companies, and their invaluable strategic data sets. APIs are still very much in their early days, but like with social media, we are now starting to see the end of the beginning. For organizations that realize the competitive and growth potential of APIs as a major way of accelerating their revenue, market share, and industry position, it's still early enough to get started and be a leader, at least for a little while yet.

Related Reading:

The future of enterprise data in a radically open and Web-based world | ZDNet

Are We Building Businesses? Or Are We Building Platforms? Yes. | On Web Strategy

Exceeding the Benefits of Complexity? A Fractal Model for the Social Business Era | On Web Strategy

Open API Growth: a Visualization | Programmable Web

Dion Hinchcliffe

Dion Hinchcliffe is an internationally recognized business strategist and enterprise architect View more

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