API Connect

 View Only

What is an API? and What is the API Economy?

By Alan Glickenhouse posted Thu January 04, 2018 07:05 PM

Businesses start to consider APIs and the API Economy at various times.  Many are long down their API journeys, while others are still considering whether to start.  With the beginning of the new year I thought it was an appropriate time to step back and take a look at some of the basics that companies considering APIs might want to know.

What is an API?

API stands for Application Programming Interface.  But, you already knew that.  API is not a new term.  It has been around for many decades.  One program calls another program through its API.  So, is there something new here?  The new interest in APIs is not from this traditional definition.  In fact, the correct term we should be defining when talking about this increased interest is “Business API” or “Web API”.


Traditional APIs were often very technical complex interfaces to applications.  They represented the complete functionality of the application being called and provided an input/output mechanism to obtain the results the program could provide.


“Business APIs”, by contrast, are simple to understand interfaces focused on business recognizable assets – for example, a product, an order, a customer, etc.  Business APIs are focused on providing a simple easy to consume interface targeted toward the consumer of the API, not the provider application(s).  The target consumer for the business API is still a programmer.  This programmer could be your own company employee, a partner company or anyone out in the public.  It is your choice who you allow to consume your API.  But, whoever this is, one of the goals is that they should be able to do this very easily through a self-service mechanism (called a developer portal).


The term “web API” is also often used because many of these “business APIs” use web protocols.  However, when thinking about “business APIs” in this new context it is better to think about this without reference to the underlying technical implementations.  This gives much more flexibility as you move forward, because we all know that technology is always evolving.


Most people reference this new definition simply as “API” leaving off the “business” or “web” modifier.  Of course, this could lead to confusion as to whether you are referring to a traditional complex API or a Business API, so context may be required to sort this out.


What is the API Economy?

“API Economy” is a general term related to the use of “business APIs” to positively affect the company.  Frequently this is related to monetary benefits.  In my blog series “API Economy – 4 Business Drivers and 7 Use Case Categories – Series Overview” I outlined several of the areas that are commonly targeted for API initiatives.  The four business drivers: Speed to market, reaching new markets/customers, innovation (at low cost/risk), and improved sharing of assets across the enterprise (domains) are all very valuable scenarios for the use of APIs.  Some of these may target internal programmers as API consumers to deliver offerings, projects, or capabilities to market quicker and with lower risk.  Other scenarios may deal with easing the interaction between businesses to drive increased value for all the participants.  Often this latter case is what is referenced as the “API Economy”, but I believe both internal and external scenarios are the correct definition.


API Economy is also frequently related to API monetization.  This is also an often misunderstood concept, and I refer you to my recent blog on this topic – “API Monetization – What Does It Really Mean?”.


Is this a fad?

We are starting to hear less about “APIs” and “API Economy” as these terms have now been around for several years.  Is this a fad?  Has the time for APIs come and gone?  The simple answer is – Absolutely NO.


New focus areas – Digital Transformation, Cloud computing (especially hybrid cloud), Cognitive computing (AI), Blockchain, IoT, Microservice architecture and many other new focus areas all use Business APIs.  Business APIs have become the de facto interface for these new initiatives that are moving forward as use case examples where APIs provide the consumption and security context around the assets being exposed.


Business APIs and API Economy are now passed the hype stage.  Real projects are being implemented, industry ecosystems are being formed, and in some cases regulatory requirements and industry standards are being developed around Business APIs.  If you are newly considering an API initiative, the time is now to get started.  You are late.  Not having Business APIs as we move forward will be like not having a web site in the late 1990s.


To understand more about IBM’s thoughts on the API Economy visit the IBM API Economy website.  IBM API Connect is IBM’s complete foundation to Create, Run, Manage, and Secure APIs.  You can find more information about IBM API Connect at the API Connect website.  And you can also experience a trial version of API Connect.


If you have questions, please let me know.  Connect with me through comments here or via twitter @Arglick to continue the discussion.