API Economy: Enabling programmable businesses

The mission of every enterprise is to create, deliver and capture value. Business models are a "blueprint" for accomplishing this mission. Digitalization brings new threats and opportunities. Which means that the top CIOs must master business models to define their ambitions and map their digital strategies. Forty-nine percent of CIOs reported undergoing a business model change, according to Gartner's 2019 CIO Agenda report that surveyed 3,102 CIOs worldwide. With technology driving transformation, the long-term sustainable value will only be created by unifying business and technology strategies to co-create exponential value for companies.

The business models are changing and that change is driven by consumer behavior in this digital world. Classical business models have to evolve and find out ways to stay relevant. The route to that is to embrace a digital-first strategy through software innovation.

Marc Andreessen penned his famous "Why Software Is Eating the World" essay in The Wall Street Journal eight years ago. Fast forward to today he thinks that Software has eaten the world in this podcast. So what has happened in the last decade and ongoing today?

Rapid pace of API adoption

The ability to innovate at an unprecedented rate is the key to succeeding in today's fast-paced digital world. In recent years, many businesses have realized APIs, that set clearly defined methods of communication among various software components, which are an effective way to enable the digital transformation of their enterprise. APIs today represents the ability of an organization to transact digitally with anybody in a programmatic manner-APIs enable other parties to write software code that accesses data, controls remote resources and drives transactions. The way one can build a castle out of various Lego pieces, you can build a whole service out of a bunch of different micro-services interconnected by APIs, which would be equivalent to the little studs on a Lego piece. APIs can extend the reach of an organization's core assets, allowing them to be shared, reused, or even resold as a new revenue stream.

Source: Forbes

Cut to today's reality of digital disruption and diverse technology footprints. In many industries, creating a thriving platform offering across an ecosystem lies at the heart of a company's business strategy.

How does this become API Economy?

When a single organization unlocks its proprietary systems, processes and/or data by publishing an API, it creates value and potentially a revenue stream, for both itself and its business partners. Multiply this effect by many organizations and it creates an ecosystem known as an API economy whereby value is created from APIs that not only operate independently but also enable new and unique applications to be created from a mashup of several APIs.

Instead of publishing an application that solves a specific use case, in an API economy, a business can package the functionality as an API, and make it available for entirely new use cases that could not have been anticipated by the publisher of the API.

"Software creates a digital platform for the organizations which becomes the building blocks (Legos), the APIs are like the stubs on these Lego pieces that enable different pieces to work together. APIs can be opportunities to create new revenue streams for existing companies."

The current business models based on API Economy

• A handful of successful startups have essentially built their entire ride-hailing business on top of a variety of APIs. in Lyft's case, for instance, the ride-sharing company started by using API of Google Maps for navigation, Twilio for sign-up verification, and Stripe for payment. The same goes for Uber or (Grab/ Gojek / Ola) in Asia. The fundamentals of their business were to make themselves as aggregators and use what is already available in terms of functionality and exposed by an API.
• Digital payment company Square, for example, offers a payment and eCommerce API that small businesses and online vendors can use to easily create customized POS systems to handle both in-store and online payments, thus saving them the trouble of building a cross-channel payment solution from scratch.
• Walgreens launching APIs for 3rd party photo printing and prescription refills that can now drive transactions to over 8,000 Walgreens stores based in the United States.
• Best Buy enabling third parties to use its BBYOpen program to write applications that access the store, product and price information and even create third party transactional shopping experiences
• Shopify is another great example of leveraging the API economy principles and creating a real challenger to Amazon and Alibaba. The company is now valued at 45 Billion with an annual revenue of over 1 Billion in 2018.
• VISA's new developer platform "Visa Next" is offering Open APIs for financial services
• Standard chartered bank in Singapore has started a separate company focussed around becoming an Open banking platform with Open APIs providing a whole set of Digital banking capabilities
• Apple's Siri, Google's Home and Amazon Alexa's are other examples of enabling a thriving ecosystem of products extending the core capabilities of Siri/Home and Alexa and leveraging their APIs

Where do you start?

Deloitte defines the below core principles for companies to consider to enter the API economy.

• What's in a name? APIs should have the clarity of a well-positioned product-a clear intention, a clear definition of the value, and perhaps more importantly, a clearly defined audience.
• Who's on first? Top-down or bottom-up? Or more to the point: What will drive the API charge...business model innovation or technical services?
• Embrace the bare necessities. Organizations should consider what governance model they should establish based on the intended consumers (internal, partners, the public at large) and whether the program is being driven by IT or the business.
• Avoid technology holy wars. There are many decision points, and they can become distracting. REST or SOAP for the service protocol? JSON or XML for the data formatting? Resource or experience-based design philosophy?
• Easy does it. Opportunities leveraging cross-industry cooperation may be tempting right out of the gate. However, businesses should decide if the payoff trumps the extra complexity.
• Build it so they will come. If you are trying to launch external-facing APIs or platforms for the first time, you should ready yourself for a sustained campaign to drive awareness, subscriptions, and support.

In Summary

The real potential of an API-driven economy, however, lies in extending this data-sharing structure to non-software companies, which opens up a whole lot of possibility of how businesses can be built and operated. As more and more industries become disrupted by digital innovations, traditional brands are starting to realize the importance of the flexibility and data access that APIs enable.

APIs are most valuable for creating new business models and streamlining selling strategies across all channels. The greatest revenue potential they provide is removing barriers to growing revenue by integrating platforms and apps so organizations can quickly launch new business models and scale fast.

Please reach out if you want to know more about how Nutanix can accelerate your organization's journey to the API economy. Have a look at the resources for the developer community here

Website: https://www.nutanix.dev/

Twitter: @NutanixDev

Originally published on LinkedIn on August 29, 2019. Read original post.