This is the second part of the Building Effective API Programs blog post series. In the first post, we argued that it is paramount that an API contributes to the overarching business strategy of an organization. In this post, we describe the various benefits of APIs in order to understand what this contribution could look like.
Generally, there are four types of benefits for organizations who choose to expose assets (services, content or resources) via APIs.
API Benefits & Examples
An example for the first type of benefit is JustGiving, a global online platform for charitable giving based in London. As a consequence of launching their API program, an additional 25% of annual revenue achieved was driven by their APIs. Today 750,000 fundraising pages were created using JustGiving APIs, which have raised £76m for non-profit organizations. Read more about their story in this case study.
TripAdvisor is a great example of how APIs can help deliver wider reach. Their API has been adopted by 700 partners who created over 50,000 third party apps and services such as website widgets. These adoptions always include the TripAdvisor brand, which resulted in over 300 million monthly uniques and, hence, a growth of brand awareness. According to Dick Brouwer, TripAdvisor Director of Engineering, their API gave reach and brand awareness, which would not have been possible with traditional marketing. (source)
Fitbit’s ecosystem around their API program produced and launched innovative apps and services at no extra development cost for Fitbit. Without an API, this would have required an estimated $1 million (USD) investment in R&D. The apps using the Fitbit API are all generated by the external ecosystem. (source)
4. Increase internal efficiency
Increased efficiency is often regarded as the core, underlying benefit of the previous three types of benefits mentioned. It is, however, justified to mention it as a benefit in its own right. Probably the best example for this one is Amazon. At some point, Amazon decided that every (internal) service had to be wrapped nicely with an API. This increased efficiency (e.g., better re-usability, quicker integration), helped to spot opportunities and get them to market quickly. The creation of a totally new business — Amazon Web Services or AWS — was a consequence of this. (source)
Broadening the Scope of API Exposure
The scope of an API program is another key factor to leverage. This must be specified in line with the overall strategy and what you want to achieve with the API — whether the API is:
- Public: available to everyone
- Partner: only selected partners get access
- Private: only organization-internal use
3scale’s “Winning in the API Economy” ebook goes into greater detail here, discussing how to leverage and benefit from the scope of an API program, based on the degree exposure or openness. In the ebook, we observe an organization’s path to unlocking data value — from having raw data assets, to internal re-use of data, customer re-use, partners and distribution, and then open to anybody — that shows a correlation between API maturity and openness. We recommend reading the ebook for more detail on this topic.
API Benefits from a Developer’s Perspective
One of the core ideas behind the API Economy is the API value chain, which describes the various elements and activities conducted to generate value from the asset holder (the API provider) to the end user. Developers who transform APIs into products usable for end users hold a crucial role in this chain. For an API provider to reap the full benefits of their API, it is key to put oneself into the shoes of a developer who may use the API. Developers typically benefit from integrating with APIs by:
- Enriching functionality: features which are not available on a device or provided by an operating system can be retrieved from Web APIs
- Increasing attractiveness with new combinations: completely new use cases can be created by creating mash-ups of several APIs
- Leveraging brand strength: by teaming up with a well-known brand a third party developer or partner can leverage the awareness of this brand
- Integrating more easily and quickly: modern API technologies make registration and adoption much easier for developers, compared to more outdated approaches (like agreeing to long legal documents such as NDAs vs. simple single-click signups on developer portals)
It is important to understand what value the API can provide for developers, and how this can contribute back to the API provider’s overarching business strategy.
- Study and understand the various types of benefits from APIs
- Learn from best-practices or role models — case studies can be found on various web resources such as APIevangelist.com, APImagazine.info, ProgrammableWeb.com, Nordic APIs or APIUX.
- Study and understand the different options for an API’s scope — public, partner, or private — and related consequences
- Think through what value an API could provide to a developer actually adopting it
- Identify the potential API benefit(s) and scope most suitable for the organization as a basis for the next steps of building the effective API program
In the next part of this series, which we will publish after the holidays, we will cover business strategy and API program alignment.