At the moment the API economy is a hot topic among businesses and application developers – and for good reason too. IBM has estimated the API economy will reach a total worth of 2.2 trillion dollars by the year 2018. APIs are perfect for developing new business models and harnessing the power of the Internet of Things. Several mobile applications that we use in our everyday life utilize APIs without us even noticing them. In addition they offer great benefits for a hybrid cloud: APIs make it possible to connect data from a company server to the public cloud. The API economy is a goldmine and its potential is enormous.
Earlier this year I had the opportunity to sit down with my Danish colleague, Kim Nielsen, and discuss this growing phenomenon. He’s a true spokesperson for the API economy and encourages businesses to seize their opportunities. This is what Nielsen had to say about the topic:
Q: What are APIs all about?
A: API based solutions are among the absolute must-haves of 2016 and for the future. I’m willing to go as far as to say that it is one of the sexiest and most valuable business technologies just waiting to be explored and utilized by companies of all sizes. Simply put, API (Application Programming Interface) is a systems interface enabling a programmer to connect programs and data. However, API goes far beyond its technical definition. It’s the very foundation of new business models, the driver of digital transformation and a prerequisite for surviving the innovations and demands of current and future markets.
Q: What are the possibilities of APIs in today’s world?
A: API technology is already widely used. Whenever we use an application for comparing prices or finding hotels, it is most likely made possible by APIs collecting data from different sources. For example, the wide range of applications most people use when searching for plane tickets are collecting data from businesses that have made these data services available via an API – for free or in exchange for payment. It is possible to create entirely new business models where developers and other businesses can use data in a context that is often outside their traditional core business.
The challenge is to see and understand how vast the opportunities are. Because in effect you’ll be creating an entire eco-system around your business platform – a living eco-system evolving alongside the demands and needs of its users. That way, API is a locomotive in the utilization and creation of a sharing economy between businesses, users and customers. This also means that the traditional product model is dead and replaced by a more organic, flexible business model where data across industries can strengthen and develop the services of a business.
Q: Big data is a huge thing. What is data’s role in the API economy?
A: The data agenda in itself is not a new one, but seeing just how much your own data and that of other businesses can be used when combined, sold or given away continues to be an area that overwhelms most people. As such it is necessary to lay down a long-term strategy. What data do you already have, what data is it prudent to buy and what service can the data impart, internally and externally? For instance, if you sell sportswear there may be vast potential in creating a fitness app that is also using data from food manufacturers and health statistics. Under Armour did just that together with IBM in a solution where cognitive technology and user analytics have created an intelligent application that can even pull information from the socks you’re wearing. The goal is still to sell sportswear but the way to do it is new.
Q: Finally a question we all want to ask: how does this affect businesses?
A: In short, there’s no ignoring API if you want to thrive in today’s business environment. There really are no limits but it is important to have a qualified partner who is able to help clarify and elaborate projects and make new business models transparent. You are sitting on a goldmine. So let’s go mining together.
What does it take for your company to harness the API economy? You can start by answering these 6 quick questions in order to find out where your company stands.