Building innovation through APIs

There can be few organ­i­sa­tions nowa­days that don’t see data as fun­da­men­tal to their busi­ness. But while there’s a nat­ur­al ten­den­cy to think of this data as a pri­vate resource to be care­ful­ly guard­ed, organ­i­sa­tions are increas­ing­ly reap­ing val­ue from open­ing it up to the world.

Busi­ness­es such as Ama­zon allow third-par­ty mer­chants to hook into their site, review sites use Google Maps to dis­play near­by restau­rants and web­sites of all types encour­age users to share pages on Face­book.

Key to all this shar­ing is the appli­ca­tion pro­gram­ming inter­face or API, which sim­pli­fies and stan­dard­is­es the way dif­fer­ent appli­ca­tions hook up. And while these are effec­tive­ly invis­i­ble to the end-user, they are cen­tral to most inter­net busi­ness­es.

An API is a set of pro­gram­ming instruc­tions and stan­dards for access­ing a web-based soft­ware appli­ca­tion or web tool. Using one, a third-par­ty appli­ca­tion can access an organisation’s data with­out the need for soft­ware to be writ­ten from scratch or for devel­op­ers to have to share the whole of their software’s code.

Building blocks of the digital economy

This plug-and-play approach allows enter­pris­es to cre­ate new mar­ket­ing strate­gies, such as tar­get­ing cus­tomers through influ­encers rather than direct­ly, and helps them move into dif­fer­ent mar­kets by cre­at­ing new prod­ucts and ser­vices from their assets, data or process­es.

Hol­i­day com­pa­nies, for exam­ple, can auto­mat­i­cal­ly keep trav­el price com­par­i­son sites updat­ed, boost­ing busi­ness for both. Mean­while, tele­com firms can pro­vide APIs to enable devel­op­ers and part­ners to build mobile and web appli­ca­tions based on their ser­vices.

Using APIs can help organ­i­sa­tions be more respon­sive and inno­vate more quick­ly. In many cas­es, organ­i­sa­tions can charge for access, cre­at­ing new rev­enue streams.

“For any com­pa­ny in any indus­try who wants to stay ahead of their com­pe­ti­tion, APIs should be at the fore­front of their dig­i­tal strat­e­gy. APIs allow busi­ness­es to eas­i­ly and safe­ly share their data and ser­vice through mul­ti­ple apps, and can expose oppor­tu­ni­ties for busi­ness­es to enhance cus­tomer expe­ri­ence and cre­ate new dig­i­tal ser­vices,” says Chet Kapoor, chief exec­u­tive of API man­age­ment com­pa­ny Apigee.

“For exam­ple, APIs can enable loca­tion-based mobile apps to have access to inte­grate infor­ma­tion about enter­tain­ment, shop­ping, hotels and restau­rants, pro­vid­ing cus­tomers with new lev­els of infor­ma­tion and con­ve­nience.”

APIs are at the heart of super­mar­ket Mor­risons’ Match and More loy­al­ty site and mobile app, which pro­vides a price match guar­an­tee against Aldi, Lidl, Tesco, Sainsbury’s and Asda.

The scheme requires the shar­ing of cus­tomer data, loy­al­ty-card infor­ma­tion, and both dig­i­tal and phys­i­cal vouch­ers with the supermarket’s part­ners, along with pro­mo­tions and a live stream of per­son­alised mobile offers when cus­tomers are in-store.

“Apigee has helped us to stream­line dig­i­tal and tech­nol­o­gy process­es with­in Mor­risons to allow the cre­ative teams to con­cen­trate on the expe­ri­ence rather than cre­ate dis­parate front-end sys­tems for each activ­i­ty,” says Tom Fos­ter, the supermarket’s head of plat­form strat­e­gy and archi­tec­ture. “This cre­ates excit­ing new oppor­tu­ni­ties, as well as dri­ving effi­cien­cies, enabling us to swift­ly enter the dig­i­tal age in a well-man­aged way.”

Benefits of APIs

And there are extra­or­di­nary finan­cial ben­e­fits to be gained. Accord­ing to Apigee’s UK Dig­i­tal Busi­ness Sur­vey Snap­shot, com­pa­nies using APIs are eight times more like­ly to report increased rev­enue than those that deliv­er apps alone.

And while the over­all medi­an report­ed increase in rev­enue from suc­cess­ful dig­i­tal ini­tia­tives is £487,000, this rock­ets to £9 mil­lion where APIs are involved.

Mean­while, for Fran­cis Helly­er, chief exec­u­tive of online tick­et­ing busi­ness Lon­don The­atre Direct, the biggest advan­tage of open­ing up the company’s APIs has been a huge reduc­tion in admin­is­tra­tion.

Com­pa­nies using APIs are eight times more like­ly to report increased rev­enue than those that deliv­er apps alone

The com­pa­ny was found­ed in 1999, but has moved on in recent years from a pure­ly tick­et agency busi­ness mod­el to start offer­ing select­ed part­ners direct access to Lon­don the­atre by devel­op­ing a full API solu­tion with Tib­co Mash­ery, as well as a busi­ness-to-busi­ness book­ing engine and a range of affil­i­ate solu­tions.

Through APIs, it has opened up its book­ing plat­form, span­ning Lon­don musi­cals, plays, bal­let and opera, to numer­ous part­ners and chan­nels, giv­ing a seam­less book­ing expe­ri­ence at any part of the cus­tomer jour­ney.

“Our part­ners have access to pret­ty much every­thing we have as a busi­ness, so it’s very excit­ing to think what oth­er part­ners can do,” says Mr Helly­er. “By allow­ing open access, we hope to get a faster uptake. If some­one comes up with a real­ly good idea for an app or a ser­vice, we can work with them very quick­ly.”

The sys­tem com­bines access to tick­ets from dif­fer­ent ser­vices, and there’s great vari­a­tion between the dif­fer­ent con­tracts and agree­ments. “The way we charge depends on the type of part­ner and there are dif­fer­ent lev­els of com­mis­sion,” he says.

The com­pa­ny has recent­ly added the abil­i­ty to book New York Broad­way shows to its range of ser­vices. And the next step, says Mr Helly­er, is to start includ­ing the abil­i­ty to make trav­el book­ings. “So we’ve added into the mix hotels, flights, enter­tain­ment and trav­el,” he says.

Staying ahead of the game

Organ­i­sa­tions can future-proof their activ­i­ties by using APIs inter­nal­ly too. For­rester Research says sys­tem­at­i­cal­ly imple­ment­ing core busi­ness capa­bil­i­ties and assets as busi­ness APIs can help com­pa­nies become much more respon­sive and enable rapid busi­ness recon­fig­u­ra­tion.

“To stay ahead of the game in iden­ti­fy­ing which busi­ness APIs to build, con­nect API strat­e­gy to busi­ness archi­tec­ture and specif­i­cal­ly to its def­i­n­i­tions of busi­ness capa­bil­i­ties and domains,” accord­ing to Forrester’s vice pres­i­dent and prin­ci­pal ana­lyst Randy Heffn­er. “These form the basis for iden­ti­fy­ing major areas of busi­ness data, trans­ac­tions, process­es and events that are can­di­dates to become busi­ness APIs.”

Organ­i­sa­tions can iden­ti­fy their great­est assets in terms of data or appli­ca­tions and then recruit poten­tial part­ners that can take advan­tage of them to cre­ate new ser­vices for cus­tomers. “Ground your API strat­e­gy in an under­stand­ing that inno­va­tion can come from any­where,” says Mr Heffn­er.

It’s a rapid­ly grow­ing trend, with For­rester pre­dict­ing that this year will see a huge uptake in the use of APIs. US com­pa­nies alone will spend near­ly $3 bil­lion on API man­age­ment over the next five years, it pre­dicts, and annu­al spend will quadru­ple to $660 mil­lion by the end of the decade.

And as they do so, says Nick Knupf­fer, direc­tor of inter­na­tion­al mar­ket­ing for API man­age­ment firm Tib­co Mash­ery, busi­ness process­es are becom­ing far more respon­sive.

“Fuelled by the pro­lif­er­a­tion of mobile appli­ca­tions, by deliv­er­ing data where and when is need­ed,  APIs are slay­ing the usu­al busi­ness and tech­nol­o­gy bound­aries to bet­ter reach and engage with cus­tomers, the work­force, and part­ner and sup­ply chain access,” he says.

“By bring­ing ser­vices and infor­ma­tion togeth­er in one place, and extend­ing the brand poten­tial accord­ing­ly, rev­enue streams are opti­mised cre­at­ing new cus­tomer ser­vices and lever­ag­ing the intel­lec­tu­al prop­er­ty of a wider, inte­grat­ed, flu­id net­work.”

WHAT IS AN API?

APIs, or appli­ca­tion pro­gram­ming inter­faces, are seen as build­ing blocks of the dig­i­tal econ­o­my, enabling inno­va­tion, new prod­ucts and offer­ings through a plug-and-play approach. Sim­ply put, an API is a com­mon inter­face for build­ing soft­ware that allows two or more apps to com­mu­ni­cate with one anoth­er and use each other’s func­tions, with­out the need for soft­ware to be writ­ten from scratch.

Using a basic exam­ple, an API allows com­put­er users to cut infor­ma­tion from one pro­gram and paste it into anoth­er. APIs also allow apps, such as Yelp and Uber, to dis­play their ser­vices on a Google Map or enable Buz­zFeed read­ers to share arti­cles with their Face­book friends with­out even leav­ing the web­site.