APIs (Application Programming Interfaces) are at the heart of the most successful digital enterprises, such as Amazon and Facebook. The successful deployment of APIs is not exclusively reserved for Big Tech companies, however. Quite the contrary, according to the article “APIs Aren’t Just for Tech Companies” published by Harvard Business Review. Any company in any field of business can benefit from the possibilities offered by the use of APIs.
According to McKinsey & Company, the adoption of cloud-based solutions and SaaS applications gained momentum during the coronavirus pandemic. If fact, every company, large or small, has now become a software company. Partners, employees, suppliers and customers communicate with each other by means of applications. APIs handle this traffic efficiently. In order to make the most of this new digital reality, companies do not need to undergo a digital transformation – after all, they are constantly using APIs, whether consciously or not – but rather entrepreneurs themselves need to transform their mindset in order to run their digital business well, according to Harvard Business Review.
In this text we will address the importance of APIs, including for smaller companies operating outside the digital sector. In particular, the rise of the so-called API Economy should not be underestimated by entrepreneurs. In addition to the opportunities, we will also discuss the challenges associated with the use of APIs, such as security issues. We will also discuss setting up adequate API Management within an organization.
The model of the API Economy
As described by Mulesoft, the term API Economy refers to a bundle of business models and business practices designed around the use of APIs in today’s digital economy. This bundle includes “exposing” an organization’s digital services and assets through Application Programming Interfaces (APIs). This is done in a controlled manner, as guaranteed by API Management.
APIs guarantee that the data distilled from one software application is efficiently transferred to another application. In this way, APIs make it possible for two applications to communicate and share data with each other seamlessly.
The API Economy makes data and services more accessible and solutions more flexible. Creating a business model around APIs allows companies to respond quicker to market changes. This can be done by using services and data through APIs from third parties or by using APIs to share their own data and services with others.
Use of APIs necessary
The use of APIs is becoming increasingly necessary in many sectors, as the authoritative business magazine Forbes points out. Laws and regulations sometimes require seamless communication and/or integration of applications, such as in the healthcare industry or the financial sector. Companies active in the telecom sector are urged to use APIs for the sake of interoperability, while digitization in retail, media and entertainment, among others, is having such a disruptive effect that the use of APIs is inevitable.
A transformation to business practices well suited to the API Economy is of particular interest to small and medium-sized enterprises that are currently struggling to reach their digitally active audiences. Startups can also successfully apply elements of the API Economy. APIs enable them to easily offer products and services via platforms and to focus on their core business, leaving non-core activities to third parties. APIs provide the seamless communication needed for this. This is more important that ever, as IDC figuresshow: companies worldwide are spending billions to enable digital transformation.
Introduce the API Economy step by step to the company
Simply put, any company that has a website or mobile app already has enough in place to actively participate in the API Economy. The best way to get started with – and benefit from – APIs is to start small with the deployment. Assemble a small, mixed team of business and technical specialists and identify digital opportunities for (and in) the company.
Analyze how customers experience digital communication or collaboration to see if APIs can help provide improvements. Explore how the company, together with external partners and suppliers, can set up a digital ecosystem for exchanging data and accessing each other’s applications through APIs. Learn from these experiences and then take the next step. In this way, the company can slowly expand its successful use of APIs.
APIs vulnerable to hackers
Unlocking corporate assets to the outside world through APIs is not without hazard. Consider the number of hacks and other security issues that appear in the news every day. This means businesses need security measures down to the level of APIs in order to provide the right information to the right clients.
API Security is a matter of implementing security solutions for Application Programming Interfaces (APIs). This includes defining and enforcing API privacy rights and access control to the API. In addition, API Security plays a role in preventing, registering and resolving attacks on APIs.
API Security is vital, as increasing volumes of sensitive information are passing through such APIs. Hackers have preyed on that information and are following advanced methods to work out how to place a hack.
API Management Platform offers security
An API Management platform is used to manage the APIs used by an organization. An API Management platform consists of a set of tools to expose APIs to the outside world in an efficient and secure manner. As previously described, an API is built to communicate, and that creates security vulnerabilities. The key advantage of well-designed API Management is therefore security.
A good API Management platform, such as Boomi API Management, Azure API Management or Mulesoft API Management, also offers business models for companies. For example, it will provide a standardized method for making information and services available to customers and partners. And further, the platform allows you to protect the back-office systems against too many queries in a short time.
APIs make connections easier
Research firm Gartner reported a decade ago that APIs make it easier to integrate and connect people, locations, systems, data and algorithms. This allows for new user experiences, the sharing of data and information, realizing transactions and algorithms, and establishing new product-service models.
In this text, we explained that these positive effects of deploying APIs are not just for large companies. Any company with an app and a website can successfully adopt APIs and create a digital ecosystem together with partners, customers and suppliers. A good API Management platform can largely eliminate security challenges.