Open API Economy Source: Point.io
At the IBM Digital Experience 2015 Conference, Ajay Kadakia with IBM talked about how the API economy is affecting legacy IT companies versus the newer cloud-based companies. The challenge is how to provide more agile, market reactive content off the legacy systems when competing against seemingly more agile, cloud based systems.
Ajay talked about the digital disruption that is already underway:
- 90% of data has been created in the last 2 years
- 4x increase in cloud investment vs 2013 (just 2 years)
- 100% of LOB apps will be mobile first by 2017
- 75B internet connected devices by 2020
Customer centricity is the only differentiator in today’s world, so experience really matters. But customer choice has exploded in the ways they can experience our brand. Previously a website was the key method for customer self service. Now we have devices such as mobile apps, kiosks, internet TV, connected appliances, connected cars, etc.
The only way to reach out to all these channels is to build robust APIs. To succeed, you must include a strategy for API creation and consumption in your overall business strategy. And this requires support at every level of the organization.
So what is an API in the context of an API economy. An API is like a Lego building block that can be combined with other APIs to build more sophisticated services. APIs are the fast path to new business opportunities. At the end of 2014, over 75% of Fortune 1000 had public APIs. Almost every bank or financial services companies have APIs for their partners.
A successful API initiative requires end-to-end capabilities. APIs need to know who is using the API, you need to figure out how to charge or not charge for use of the API, and of course you need to manage the use of the API, which can require some IT infrastructure.
Entry points into the API Economy include:
- Build – API Design and Implementation
- Manage – API Lifecycle Management
- Secure – Security, Metering and Control
- Monetize – Analytics and Monetization
So how do you get started? First accelerate your agility. If you can’t be agile, you won’t be fast enough to meet customer and market demand. Second you need a strategy to identify business goals, assets and revenue strategies. Finally you need to monetize the API.
What can be API’s? Here are some examples of business assets that could be exposed through APIs:
- Product catalogs
- Customer records
- ATM/Retail Locations
- Payment Services
- Shipping and fulfillment
- Job Openings
- Risk Profiles
- Transaction data
You need to do a thorough asset inventory to identify the potential assets that you have that can become APIs. Some APIs could be monetized, while others may be more useful to create brand loyalty. For each API you need to determine the business goals and success criteria.
There are several monetization models to consider:
- For Free – can drive adoption for typically low valued assets or brand loyalty
- Developer pays – high value assets (like Amazon Web Services) could get paid by developers
- Developer gets paid – provides incentives for developers to use your API for things like Ad Placement, etc
- Indirect – includes other models
For IBM, they were late to the API Economy, but have quickly caught up through various acquisitions over the past few years. IBM Watson and the new IBM/Apple apps are built on the IBM API platforms.