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Application programming interfaces are a promising source of revenue, so why are so many companies missing out on this business opportunity? And how can they turn API aspirations into assets?
We’ve been using application programming interfaces (APIs) for decades. It’s by no means a new technological development, but in the era of digital transformation, some companies are still underutilizing APIs.
As more businesses across industries introduce mobile, web, and enterprise software into their tech rosters, they will need to increasingly rely on APIs. These interfaces are needed to connect software applications; integrate software-enabled products with vast amounts of data and other software solutions; and tap into other APIs to enhance software.
Digital-native organizations, such as ride-share apps, e-commerce sites, or social media platforms, have invested in API enablement. But “traditional” enterprises that did not originate in the heyday of the tech boom typically lack the innate prowess and experience to “digitize” their business models using APIs.
That’s a major problem. The business of the future will be software-driven and therefore API-enabled.
Enterprises may state API enablement is priority and view APIs as financially viable products, but most have not reached their goals. So how do business and technology leaders course correct and lead their teams to a product API mindset?
Identifying the Issue Areas
First and foremost, it’s essential to identify challenges before implementing any solutions. Companies across the board are saddled with legacy systems — from outdated software to inadequate, siloed data.
There’s also a cultural issue for many enterprises, especially those that did not come on to the scene in the past couple of decades equipped with the expertise to master APIs and the bold, modern approach to design digitally enabled business models. For some companies, this can be traced back to a lack of leadership buy-in. Internal talent shortages and an aversion, or oversight, to working with external partners and vendors has also contributed to lackluster API capabilities.
Tackling Tactics
Fortunately, there are many ways leaders can address these barriers. Although it may cost companies time, money, and effort — the ability to monetize APIs just like products or services will provide enterprises with both financial returns and competitive advantages.
Starting in sequential order, business and tech leaders should implement the below tactics to get their API enablements off the ground:
- Mend the organizational mindset — Enterprises need to view APIs as money-making products. As such, every team should align to APIs to deliver capabilities. This can be done by incorporating change management practices and processes that help business and IT teams ensure capabilities are exposed to APIs and assign certain “API owners.”
- Carefully consider your cases — In their haste to enhance API enablements, organizations cannot forget the business basics — developing thoughtful business and use cases for their API implementations. Leaders must understand the potential value of API initiatives as well as the practical applications. This will not only ensure the company invests their money wisely, but it also helps to educate executives on the vast potential of APIs.
- Establish an API program — Every organization should have a dedicated team of API stakeholders, from developers to business team members, that are responsible for monetizing and delivering the API enablement strategy.
How a Financial Institution Turned API Aspirations into Assets
A multinational financial institution with over 70 million customers around the world saw the writing on the walls. They knew APIs had untapped potential, but they didn’t know where to begin on their enablement journey.
By exposing their APIs to trusted business partners, like fintech start-ups, this company was able to charge a service fee for access to their APIs. In a single year, they monetized a billion API calls, opening up new revenue streams and partnership opportunities. By securely exposing key business capabilities in a business ecosystem, this company made it very easy for their external partners to utilize their APIs. In turn, their partners were able to make products and services which they would normally never have the ability to do so.
Many enterprises across sectors are missing the boat. They need to embrace organizational shifts and think of APIs as products and services — like digital native brands have done for years. By viewing APIs as money-making assets and formulating a comprehensive enablement strategy, organizations can expand their profit margins and hone their competitive edge.
