Why you need an API‑based digital strategy
Legacy systems block innovation
It can be a real challenge to get through the implementation stage and finalize a digital innovation project. Unexpected issues often arise in this final stage that slow down the project or, worst case, bring it to complete standstill.
Getting your digital innovation projects through the implementation stage is crucial if you want your brand-new, state-of-the-art digital product or service to see the light of day.
Why is it so hard to implement digital innovations?
Problems with the implementation of digital innovations are often caused by the fact that big organizations use rigid and slow digital systems, which are now labeled as legacy. These systems may be deeply rooted in the organization and prevent them from quickly changing the products and services they offer, or the way they work.
More specifically, problems may be of a technical nature, for example when legacy systems are incompatible with digital innovations. This prevents new developments from being used in combination with existing databases or software.
Sound familiar?
Then consider this: You likely cannot be successful in the fast-moving digital market if your digital innovation stagnates. We promise your competition won’t allow it.
Thankfully, there is a digital strategy that is less susceptible to stagnation: a strategy based on application programming interfaces (APIs).
Innovate faster with APIs
By trading in your digital legacy for a more agile, API-based digital strategy, it will be much easier to finalize the implementation of digital innovation projects and reduce time-to-market of new digital products and services.
Why?
APIs allow you to reuse existing software as a ready-made basis for your own innovations.
“You likely cannot be successful in the fast-moving digital market if your digital innovation stagnates.”
An API works as a link between your software and that of a third-party. The third-party software is activated as if it is an integral part of your own product or service.
For example, think of Uber using the Google Maps API to show location information within their app.
With an API, adding a functionality is as easy as adding a line of code in your back-end that ‘calls’ a third-party functionality into action. Et voilà, a map shows up in your application.
No need to build, adjust and vigorously test a new functionality. It has already been trialed and tested by others. You only need to incorporate the API in your business process and test if it works the way you want.
Now, if customer demands or the technical landscape changes in the future, you can remove the API-based functionality as easily as it was added.
So, why keep reinventing the wheel? With APIs, you invest considerably less time and resources in developing the functionalities you and your customers want. It’s a highly effective strategy that is quick and easy to adopt.
APIs mean business
From a commercial perspective, APIs are more interesting than ever. The API economy has really taken off recently.
APIs originally sprouted from the need to make software applications talk to each other. This way, applications could make use of each other’s functionalities, without having to add the functionality in the code base.
The API’s moment of fame did not end there. Nowadays, APIs are also used to consume or sell functionalities as a service component and to share data between software systems, making it possible to buy or sell valuable data.
APIs allow you to offer your product or data in a low-effort, low-cost and accessible way. Creating these new revenue streams and business models is where the real business value of APIs lies.
The Airbnbs and Skyscanners of today definitely know it. In fact, their business strategies and success often rely on APIs.
“By using APIs, you invest considerably less time and resources in developing the functionalities you and your customers want.”
Major compare and booking websites like Skyscanner, Trivago and Airbnb successfully use data APIs to show real-time flight and room pricing and availability information from third party websites. Not only are these APIs of key importance to these websites to create the best customer experience and keep up with the competition, but they also help the airlines and hotels that show up on these websites and the API suppliers to create new revenue streams. APIs keep costs low and increase sales for all parties.
Countless successful companies take advantage of the business value that APIs create – either by offering APIs themselves or by building products around other people’s APIs, rather than flying solo and re-developing digital functionalities that others have developed before. Now, start-ups and scale-ups are starting to catch on too.
Respond to customer demands flexibly
A major advantage of basing your digital strategy on APIs is that it gives you the flexibility to respond to changing customer demands by adding, updating or removing products or services without affecting – or being affected by – other parts of your organization.
It works as follows:
You build up your products and services out of independent APIs that altogether make up a working whole. Every API gives access to a specific digital functionality or a set of digital functionalities. The APIs work independently and can be added, changed or removed without harming your other processes. You can use short sprints and deliver quickly.
“APIs allow you to offer your product or data in a low-effort, low-cost and accessible way.”
If now the next best thing in the market for example becomes to video call your doctor for a health check-up, you don’t need to completely redevelop your healthcare product to keep your customers happy. Shop for the right video calling API and add the link to your existing code base.
If you build your digital strategy on APIs, your business becomes much more agile in responding to fluctuations in the market and can keep offering the best customer experience.
Offer your products as a service
A trendy API-based circular business model at the moment is Anything as a Service, or XaaS.
It basically means you start offering your product in a more flexible way. You allow your customers to take out a pay-per-use or flexible monthly plan on your product, instead of buying ownership of it and having to build, host and maintain it themselves. With XaaS, your product is accessed via cloud-based APIs.
“APIs give you the flexibility to add, update or remove products or services without affecting – or being affected by – other parts of your organization.”
Many companies are already doing it. As we covered in our blog about Communication platform as a Service (CPaaS) on UCToday, it can be especially advantageous for telecommunication providers to implement XaaS. But all kinds of businesses find that XaaS helps their business move forward.
The main advantage of XaaS is that you can put in a relatively low amount of effort and resources before offering your product, in comparison to end-to-end service, while offering your customer a much more better and more flexible user experience.
Other advantages include remaining in closer contact with your customer, therefore getting valuable feedback for improving your product, as customers are likely to have the opportunity to easily test your product, develop a minimal viable product (MVP) and give back findings.
Leverage your partnerships
On top of other advantages, an API-based digital strategy makes it easier to leverage your partnerships, as using APIs actively stimulates cooperation and co-creation.
This is because API-based products and services are built to be compatible with the products, services and IT infrastructures of other businesses. They are made up out of standardized software building blocks, making it easier to share functionalities and knowledge with partners, and to collaborate agilely in an open digital ecosystem.
“The main advantage of XaaS is that, you can create a returning (loyal) paying customer while putting in a low amount of effort and resources.”
You might associate ‘ecosystem’ with the story of the small fish being eaten by the bigger fish, which, in turn, get eaten by an even bigger fish. To be clear, that is not what we are referring to. In this case ‘ecosystem’ means working together and helping each other ahead.
Quite the opposite of annihilating each other, don’t you think?
A digital ecosystem is the current primary model in the field for delivering digital services. As Gartner Research puts it: “A digital ecosystem is an interdependent group of enterprises, people and/or things that share standardized digital platforms for a mutually beneficial purpose, such as commercial gain, innovation or common interest. Digital ecosystems enable you to interact with customers, partners, adjacent industries ‒ and even your competition.”
As you can imagine, such an open ecosystem allows technology and knowledge to be shared around, and fuels the development of innovative new, digital products and services.
It really is grand. Start one!
Conclusion
Adopt a digital strategy based on APIs. This way you increase the speed of development and lower the cost of your digital innovation projects, keep the quality of your user experience high and stay competitive in today’s digital market.
You can either start offering your own APIs or build your products and services around third-party APIs – or both. We recommend you reuse other people’s APIs as much as possible while building your products and services. This can save you a significant amount of time and money. Explore the option of offering your products and services from a cloud-based platform via APIs in a XaaS setup. Also, research if you can offer third-parties access to your own developed functionalities via APIs and create new revenue streams for your company.
And last, but certainly not least: To take full advantage of your API-based digital strategy, we recommend you start an open digital ecosystem with partners and other colleagues to stimulate collaboration and co-creation.
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