When Trip Advisor shows you hotels on a street map, or when you order food from Uber Eats or when an airline displays car rental offers at your destination, it is almost certain that APIs (application programming interfaces) are at work behind the scenes.
APIs are essentially a defined set of rules that govern how an application can talk to another. What this does is to create a universal access mechanism to the functionality that one company wants to make available. This functionality may be a train timetable, complex underwriting rules or access to card authorisation.
APIs also allow a company's data and associated business logic to be accessible by external applications. APIs give a relatively simple and standard way to get access to complex business logic. With universal access to functions, innovative developers both within a company and in partner organisations can combine these with others and create new and improved customer experiences. It is no wonder then that APIs has emerged as a key element of technology modernization at many businesses.
Many organisations report stunning results from their API investments. In the UK, 78 per cent reported an improvement in customer experience from using APIs. Many governments and private companies have opened up API portals, which have resulted in innovative digital services that use both public and private information for citizens. While the promise is exciting, many businesses are still struggling to capture the value they originally hoped for.
The first rush into APIs has resulted in duplicate functions, poor maintenance and limited visibility, which has negated many perceived benefits. There are many reasons for these failures, lack of proper business ownership and siloed efforts are key reasons for these failures.
To get the most value from the API investments CIOs need to discuss these five key challenges.
Balanced attention to two perspectives will help address this challenge. The first one is APIs that can enable important customer facing applications and the second is APIs that can build a sound technological foundation. Both, alignment with business strategy and the ability to execute are important when beginning this journey. In short, start with something that will deliver visible benefits and is achievable. Learn from these and expand.
Ideally, API development team should work in an iterative/agile way. API teams need a product owner to make sure focus remains on high value items. Teams also need an IT architect who makes sure technology standards and best practice methods are used and the effort is aligned to the overall architectural vision. As with other agile developments, the APIs should be tested and deployed.
Teams need to be seeded with seasoned API developers/ architects who can help re-architect existing systems and infrastructure. These experts should also be familiar with API DevOps methods.
A key need for people, API evangelists, who can educate the business on the "what" (use cases) and "how" of the APIs (costs, efforts, resources) which is necessary to capture the full value of the effort.
API development needs to demonstrate benefits. The development effort will be measured by the normal agile development metrics. Direct business benefits, adoption of these APIs by other developers (reuse), IT simplification contribution are all useful measures. It is important to distinguish between direct business benefits created (e.g. improvement in customer experience) vs. technology enablement. Too much focus on one without the other can result in failures down the track.
4. What tools are needed?
Right tool sets create an ecosystem for successful API development. Three tool sets or components are essential for API developments. First is the correct application development framework for building APIs. This should be based on business needs and technological feasibility. Such framework should support modular API reference architecture, data formats and business rules.
The second key decision is about the API gateway and developer portal that serves as a front door for the organisation. Thirdly, establishing governance rules around the gateway is important. Cloud-based gateways can enable multiple teams to work on different API sets in parallel.
5. Who owns which APIs?
to customers or partners need to align with the relevant technical, legal, and marketing specs and be easy to use.
Creation of an API council with business representatives to monitor API life cycle, performance and reuse is beneficial. When moving towards API based developments, it is very easy to be overwhelmed by lots of new APIs. API council may play a role in ensuring that APIs remain 'simple' and conform to an overall logical architecture. API council may oversee opportunities for new functions, removal of end of life APIs and promote reuse.
APIs have become essential for digital transformation and for reinventing customer experience. Therefore, they are not just a matter of technology strategy but are increasingly becoming important to business strategy. When CIOs address the five key challenges above they can truly join the API revolution and accelerate their digital transformation.
Based on: The seven make-or-break API challenges CIOs need to address, McKinsey and Company 2018.