API Strategy

This post is inspired by Daniel Jacobson‘s post over at the Next Web – “Why you probably don’t need an API Strategy“. It’s a great post you should definitely check out and there are a lot of good points made. However, as to the overall premise that an API Strategy might not be needed there is a lot to disagree with. In fact we’d say that increasingly it isn’t just that a company needs an API Strategy it’s that a company’s entire strategy needs to be API Driven.

API Strategy Breakdown

Daniel is also one of the smartest folks in the business (and he’ll be on stage for a fireside chat at the upcoming API Strategy & Practice Conference!), so it’s challenge to disagree with him! Indeed there are a lot of things to agree with in the article. In particular it’s definitely the case that:

An API in many cases should not be a separate product or entity (hence warranting it’s own “strategy”) but something which supports existing strategies. (paraphrased)

and even closer to home:

Companies should be talking about their API as a tactic in support of their broader business strategy and objectives [rather than discussing their “API Strategy,”]

Both of those are certainly on the money and things we encourage people to bear in mind. However, the idea that a company doesn’t need an API Strategy and that APIs are really primarily just a tactical tool misses a much bigger shift which is happening:

For many companies APIs are like to become THE core driver of their Digital Strategy

hence, not just “one tactic among many” but the root of the whole strategy. What’s meant by this is that APIs are likely to have such a transformative impact on many businesses that their use needs to be central to corporate strategy. For example, amongst our customers we’re already seeing:

  • Large retailers funneling content to store locations via API and logging transactions from those locations back to other APIs.
  • Content companies no longer serving most of there users via the browser but through a myriad of apps – each of which draws meta-data and content from an API.
  • E-commerce companies are offering ever more sophisticated catalogue, pricing and transactions services to allow affiliate partners to drive business to them.
  • Large constructions companies have internal teams which write customer applications for their field teams and yet more teams in charge of opening the corresponding APIs to feed these apps with data.

In each of these cases, APIs are the lynchpin of digital strategy.

It’s certainly the case that, as Daniel points out, the days of launching an API as a separate entity to create a new line of business away from the core are generally past us – and so they should be. Any API effort should be closely aligned with the core aims of the business. In this case it is true that companies should not seek “An API Strategy” – that would be a misleading distraction. However, the flip side is – APIs are more critical than ever to overall strategy.

Netflix has become an API company

Interestingly, a nice illustration of this is Netflix itself. Daniel argues that the Netflix team has migrated “from an API team into more of a content delivery team”. This might imply that APIs have become less important (a mere tactic). However, it arguably means the opposite – that APIs have become more important – and rolled up into broader corporate strategy.

  • Netflix is getting on for being an all digital company – excluding the mail/DVD business – Netflix streaming is all digital and represents streams of bits delivered to nearly 1000 different device types.
  • While from a technology point of view, it might appear that the streaming video delivery has nothing to do with APIs, in deep sense it has – Netflix’s servers provide the means to programmatically invoke, manage and control streams of content to any authorized client on an end device.
  • The whole Netflix digital system is really no longer the old style HTML Web – but a programmatic means to access and control content from metadata to the media itself. (Note that HTML5 where used is even closer to an “API” system since often it uses a single HTML page fed by a myriad of API calls.)

As such Netflix’s business really can be seen as one big APIlittle different from Twilio. At the very least, Netflix APIs are key to its success in reaching so many client devices and such a large audience. The fact that much of the infrastructure has diverged from REST Style Web API in many ways tells us more about REST as a technology and it’s envelope of utility as it does about about APIs.

This might seem a bit of landgrab (let’s call everything APIs ;)), however it’s true in a pretty deep sense. The HTML Web gave us a very standardized means to do content delivery to generic browsers. Modern digital businesses have diverged hugely from this model – serving native and hybrid clients specific to their content across a multitude of platforms. The programmatic means to so this really is a set of APIs.

An API Doesn’t Require A Developer Portal

One of the things which is often misunderstood is the perception that having an API equates to running a public developer program to which anybody can register and begin to write applications. While this was often true of early APIs, and in fact exactly this focus often lead to thinking which saw the API as a separate product, it’s certainly not true of most modern API programs. Well over 50% of 3scale’s clients for example, currently use their API to server a small private or semi-private group of partners. This is often where much of the initial or long term value is.

Hence in many ways APIs have already become much more aligned with company overarching goals.

The quest to identify an API separate from a company’s core business is in many ways similar to question that was often prevalent in API discussions in the past which was “What Business Model should I apply to my API?” when really the question which should have been asked is:

What API should I apply to my business model?

API Strategy: No innovation?

The idea that APIs only make sense if they reinforce a current business model or strategy might also imply that they really don’t provide much in terms of innovation and are really just an extension of business as usual. In certain cases this may be true – in others however, the presence of an API is likely to unleash significant new opportunities which didn’t exist before – to drive traffic, recognition, transactions and so forth to the business.

The key is not that an API might not lead to new opportunities – but simply that those opportunities should aligned with the company’s overall direction.

API Strategy: Much more than a tactic

So in summary, APIs are really much more than just a tactic – they will likely have far reaching transformative impacts on businesses in a very wide variety of sectors – and hence should infuse corporate digital strategy at a deep level.

APIs should arguably be the core of most companies’ entire digital strategy. As the number of devices explodes and integrations become paramount to partners and customers, APIs will become the key channel through which transactions are executed and content is distributed. Company strategy really becomes driven by how to channel transactions to an API from a wide variety of sources. This will be the key goal of most digital business strategy going forward – any company that doesn’t plan for this is likely to get bypassed rapidly in the market.

Finally a word on vendors. Having said all this – it is certainly the case that vendors can be overzealous and sell solutions which don’t fit current needs. We try not to be one of them and as such companies should certain evaluate when to embark down such paths and avoid programs which are offshoots that don’t support the overall corporate goal. However, we’d still argue that if you working on corporate digital strategy it needs to become API driven sooner rather than later! If it is not – there very significant risk of being bypassed down the road.

Great though provoking post Daniel! To quote from Sun Tzu / The Art of War to finish:

All men can see these tactics whereby I conquer, but what none can see is the strategy out of which victory is evolved.