The Value of APIs for Valuable Data

It was interesting to see the discussion on today’s API panel at the IIS 2012 Summit. The panelists covered a range of areas of value but there was also some confusion as to what impacts openness and distribution would have.

Many companies have amazing data assets and these form the core value of their business for their customers. APIs provide the means to create new distribution channels for this data. Specifically, APIs potentially allow distribution to be turned on its head – rather than pushing data out to customers and their bespoke interfaces, APIs enable customers to pull in the data they need and to integrate it into the interfaces where they need it. The real value behind this includes:

  • Enabling new types of customers to access the data who are unable to use the existing interfaces.
  • Enabling customers to specialize their interfaces to the data – tying them more tightly to the data stream and less likely to switch to other providers.
  • Enable finer grained access to data sources for customers and enable new types of service/data bundling – and potentially enable new business models.
  • Enabling new potential resale channels for the data – which may be aggregators or multi-data source mobile applications.

As the interfaces to data change increasingly quickly on the web and mobile applications, having an API strategy in place provides a stable platform for new products both from within the company and from outside.

There seemed to be concern on the panel about loss of control of the data or loss of brand visibility. These are legitimate concerns, but ultimately unfounded – since there is no reason why a data company should not put significant restrictions on data usage, branding and resale. The company remains in complete control of the data and can set the rules for usage. In many ways, access to data via API rather than the web makes it easier to control who is accessing which data v’s web based access. Many APIs also allow access to only highly trusted parties or specific customers in restricted ways – far from the extreme of completely open APIs. Restrictions on data access can be enforced either by in-house code or via infrastructure solutions such as 3scale or Mashery.

Another concern raised was that the data provision companies such as Bloomberg also often already do an excellent job of providing data terminals and user interfaces to their customers – and that there is no need to outsource. There is no doubt that successful company APIs often also include powerful standard clients/interfaces – and these interfaces are often important differentiators themselves. These interfaces will continue to be critical, however it is rare that companies are in a position to fulfill every integration need their customers may have, every interface need and be able to reach all the audiences they wish to reach.

The API therefore provides the platform for extensions in areas which may not be high enough value yet to tackle but which add value to customers and may one day become larger opportunities. Such extensions also help create a powerful ecosystem around the data on offer and enable customers to put down deeper roots with the data company.

Obviously an API strategy requires thought about business consideration as well as technical –  but as a platform APIs are likely to add very significant value to content and data distribution.

  • http://rafaelsidi.blogspot.com/ Rafael Sidi

    Steve, thanks for the coverage. The concerns that you mentioned was mainly raised by my colleague from Bloomberg. As you state in your post, in our APIs we set the rules for usage.

  • steve

    Hi Rafael, thank you for the comment – yes sure – and I think they were valid points on his part. It’s natural that there are concerns about where the data goes plus loosing control of the interface. As you say – control is key. I just added the post because there seemed to be somewhat of an impression of black and white in that data is either passed by fully proprietary channels or it’s into a model where it’s passed to a third party to distribute.

    In reality a hybrid approach and a “slow opening” seems to be the winner as you point out. This way customers get the benefits and can integrate better but there’s no necessary reliance on a third party.

    Thanks to you all for a thought provoking panel!