Ian Goldsmith

Much of the discussion around APIs tends to center on the well-known APIs published by “cool” companies like Facebook, Twitter and Google. Although these high-profile enterprises do show remarkable innovation, the fact is that it’s not just the household names who can use APIs to expand their business capabilities.

Enterprise APIs have become essential tools for creating innovation both within a company and to outside developers. They can not only fuel growth, but also give enterprises a competitive edge over those who don’t have APIs.

Here’s an example:

As this graph shows, Netflix’s publication of an API exposed its core business capability, sending its value soaring while its competitor, Blockbuster, continued on a downward trajectory.

It would have been interesting to see what could have happened if Blockbuster also published an API around the same time. Potentially, there could have been a lot of ball game left to play between the two companies. However, instead, the absence of an API may be one major factor in why there’s such a wide gulf between their valuations.

Netflix went beyond appealing to third-party developers as well. One of the biggest successes for Internet subscription service in the three years since its API launch has been internal developments, fueling growth at an impressive rate. For more on the idea, here’s a great blog post by Kin Lane on ProgrammableWeb.

A business doesn’t have to be a Netflix or a Google to see similar benefits. Enterprise APIs create a range of opportunities, both internally and externally. They can make systems more flexible, drive growth, deliver services in a customized way, and allow for scalability with more ease. They impact how software is developed behind the firewall, and how that software is viewed by customers.

It’s not just social media outlets or business-to-consumer sites that can reap numerous rewards from APIs. In many ways, the API is poised to be a more important channel than the web site for most enterprises (more on that in an upcoming blog post). As Lane notes on his site, API Evangelist, businesses operating a decade ago were still working to understand the importance of having a website. He writes, “Today, businesses need to understand the importance of the API.”

By sparking creativity and innovation both inside and outside the company, APIs create the potential to make any enterprise into one of the “cool kids.”

 

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2 Comments

  1. My personal experience may biased, of course, but I would say the API quality of many enterprise systems is very poor. We (myself included) didn’t care much about developer-friendliness in the past, because we had a captive audience. The programable web changed all that. In my opinion, a big part of the problem is that you cannot simply take existing software interfaces and turn them into public APIs. it is a much bigger investment. Would be very intersted to read your thoughts on this, by the way.

  2. We couldn’t agree more about the investment needed. API documentation, ease of access and use, developer support and the ability to manage your developer community are all essential to the success of an API initiative. As of course is building the right API in the right way. It is very rare that you can take an existing service and call it an API.

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