McKinsey describes APIs in this manner,
" As the connective tissue linking ecosystems of technologies and organizations, APIs allow businesses to monetize data, forge profitable partnerships, and open new pathways for innovation and growth.”
So whether your business needs to connect to customers, market products, enable integrations, or analyze data, APIs can help you do that. What’s more? In a rapidly evolving market, where businesses have to generate value in an increasingly connected service ecosystem, APIs play a fundamental role in aiding your business strategy and contribute to the revenue.
In fact, 85% businesses consider web APIs and API-based integration fundamental to their business strategy and continued success.
However as businesses scale up their API initiatives, it's critical to create a mature API strategy that aligns with their objectives.
Why do You Need an API Strategy?
50% of Salesforce's revenue is generated through APIs - Harvard Business Review
API initiatives today form a significant chunk of the enterprise technology investments. The need for an API strategy thus stems from the probable growth of these APIs within a company. What happens when they start growing to hundreds or thousands, and too challenging to manage?
The lack of an API strategy or roadmap can prove to be a limiting factor once you start scaling up your APis. As you go up the API maturity scale, you start getting to a place where internal IT infrastructure, existing partner and customer offerings, as well as new buisness models are increasingly reliant on APIs. Once you are at that stage, and without a well-defined API strategy, your company will start losing visibility. Managing and governing APIs, evaluating usage and performance, or even understanding continuing or evolving requirments for certain APIs will become increasingly difficult. And as with any fragmented and siloed business process, your API initiative might become a cost center rather than a growth driver.
Having a strong API strategy on the other hand, enables you to have a complete view of how APIs can drive you business growth, supporting existing value chains and even creating new ones. It allows the creation of integration tools that drive adoption, integrate effectively with partners and scale internal operations. This also helps lower the total cost of ownership (TCO) and maintenance costs.
How to Create a Strong API Strategy in 2020?
Because they realize the tremendous value that APIs bring, several organizations are already productizing APIs, except that a lot of them do it without any careful thought. They have jumped onto the bandwagon, approaching it on a piecemeal basis. And while that might be the right approach at the beginning, profitable framing a strong API strategy requires much more than that.
Infact, the best API strategy is not to start with an API strategy. Start with focussing on your business strategy and customer experience. What are the objectives that you want to achieve? What are the decisions that will enable these objectives? Then drill down to what APIs need to be in place to enable communication between you, your partners and your customers. Move on to identify the design for these APIs and use cases - and you will get an API strategy that very well serves the purpose.
To help you go about creating an effective API strategy for your business in 2020, here’s laying down the 4 pillars to a successful strategy:
- Establish a broad business strategy: Start with identifying your business strategy and outcomes. What are the new customer experiences, objectives that you are looking to achieve? Then go about its execution plan and zero in on the set of APIs that will make them possible.
- Align the organization and culture: Get everyone in the organization to understand and become aware of what APIs are, and why they are important. Ensure that you involve them in the planning of outcomes you want to achieve. Make APIs the center of your organizational change.
- Evaluate, build and deploy the supporting technology: Next up, think about the technology you need? What governance and security initiatives, testing or best practices do you need to enable the ecosystem?
- Engage your ecosystem: Your APIs are in place, and you are forming an ecosystem of users around them. Think how you want to engage the ecosystem. Documentation, hackathons - there will be lots to do. Start with treating your API as a real product, and you will be able to approach it better.
What Entails a Successful API Strategy?
That being said, there are certain must have features for your API strategy in order to be successful. Take a look:
Relevant, up-to-date and easy-to-grasp-documentation
API customers demand comprehensive documentation that helps them derive value from it. Since API documentation may be accessed by developers, as well as the PMs, and CTOs, it becomes important to ensure both its digestibility and relevancy.
As a result, companies need to do more than merely including technical information around what the API does in the documentation. One of the best practices would be to embed real-world API use cases into your API documentation.
Tracking API metrics for success
The other way to ensure the success of your API strategy would be to track its effectiveness, because without a holistic appreciation of how successful your API program is, you'll be unable to optimize it.
Here are three types of metrics you must evaluate:
- Revenue metrics such as direct and indirect revenue, ROI and CLTV (customer lifetime value) per developer
- Operational metrics such as uptime and error
- Developer metrics such as NPS, community engagement, documentation engagement, and churn
Building a strong and engaging developer community
Ensuring a good developer experience is also critical to an effective API strategy. It helps fuel the B2D (business to developer) model, ultimately driving the creation of an engaging developer community.
Ensuring API security, and maintaining strict standards like only exposing interfaces as needed, collecting and sharing essential data, and granting access to key users are some major items to have on your checklist. Having a good user experience will attract the developers enough to pay for it (API monetization), or alternatively not give in to the temptation to go and write some of their own.
From driving your internal digital transformation to building new products and services, APIs are critical to doing business in the digital economy. And no matter where you are on the API maturity scale - building APIs for one-off use cases or creating a federated API platform - Srijan can help.
With strong, vertically focused expertise in API products and platforms, Srijan teams are equipped to help craft your API strategy, and handle API lifecycle management, governance and monetization. As Apigee partners, we’ve aided global enterprises, especially in telecom, retail and BFSI sectors, in executing large-scale API programs.
Looking to move up the API maturity scale or building/migrating your API program to Apigee? Get in touch with our team.