The API Economy is a phenomenon that has become widely discussed in technology circles and beyond, with many companies now investing in API-powered business strategies. As the term takes hold, it makes sense to step back and reflect on what the API Economy actually is and what effect it has on organizations, individuals, and the Internet/Web as a whole.
In short, the API Economy is an economic model in which organizations expose and consume digital capabilities through Application Programming Interfaces (APIs), turning software functionality into products, services, and revenue streams that can be shared across companies, partners, and customers.
To describe the nature of the API Economy, we outline five axioms we believe are true and a number of conclusions that can be drawn from them. We're sharing these axioms and our conclusions here to make them easier to digest. The thoughts below are somewhat raw, so feedback and debate are welcome.
While producing a set of axioms may seem a rather theoretical exercise, we believe it is a useful endeavor since, when talking about something as complex as the interactions between many types of service providers and consumers, solid foundations are very valuable. The API Economy is clearly different from the human-powered "Web Economy" — transactions happen faster and at greater scale, but they are distributed differently.
The API Economy
As software and technology become ubiquitous in business processes, the means by which organizations, partners, and customers interface with this software and technology is becoming a critical differentiator. The APIs that form these interfaces are the means to fuel internal innovation and collaboration, reach new customers, extend products, and create vibrant partner ecosystems. This shift in the way business works gives rise to significant new opportunities for both individual organizations and global commerce — it is difficult to understate the importance of this change.
Added to this, the computing trifecta of mobile, social, and cloud computing continues to reshape the landscape of computing and business. The combination has a major impact on the nature of data and control flows between servers, resources, devices, products, partners, and customers. Many previous notions of how an organization might set up its internal systems or deliver services and products to its customers have had to change, with APIs becoming what enables an organization to define how data passes between its internal systems, its partners, and its customers.
Lastly, and most importantly from the API Economy perspective, it is clear that the APIs deployed by one company do not just affect its own pre-existing internal teams, customers, and partners. Very often, APIs open the door to large new product, partner, and customer opportunities. Once deployed, these APIs also become part of a wider ecosystem of available building blocks that other organizations can build new services on top of — many of which, in turn, expose their own APIs.
As a result of these shifts, it is critical that organizations understand the emerging API Economy, its implications, and what actions should be taken to embrace its rapid growth. Looking at API economy statistics and adoption trends across industries can help organizations benchmark where they stand and where the opportunities lie.
The Five Axioms of the API Economy
To try to capture the dynamics of this world, here are five axioms we think are true today or are rapidly becoming true. These underpin the notion of the API Economy:
- Everything and everyone will be API enabled
- APIs are core to every cloud, social and mobile computing strategy
- APIs are an economic imperative
- Organizations must provide their core competence through APIs
- Organizations must consume core competences of others through APIs
If you are interested in API technology and wonder how API integration with 70+ shopping platforms can add value to your eCommerce software, don't hesitate to schedule a FREE Call with our expert. We are always ready to answer your questions about the API economy and how it applies to your business.
