What is the Right API for the Business Model?
As discussed in the previous post, an API program must be embedded in the overarching business strategy and aligned with business goals. The business model is where the rubber meets the road here – how this API, or these APIs, will interact with existing resources, activities, and partnerships as well the the required cost structure.
Make sure you’re asking the right questions. A common mistake when discussing API business models is to think of the API first. What business model should I adopt for my API? Instead, focus on how an API can be applied to support existing business. What is the right API for my business model? Even in cases where APIs lead to entirely new business opportunities, they generally do so by leveraging existing assets or expertise in new ways.
This is the third part of the Building Effective API Programs series. The introduction can be found here.
To take advantage of the API benefits we discussed in the previous post, an effective API program must be rooted in an organization’s overarching business strategy and contribute to its larger objectives. In order to define an API program in this high level context, there are three important questions to answer:
- Why? – Why do we want to expose APIs via an API program?
- What? – What do we want to achieve with the API program?
Business Strategy to drive the API
Many companies are embarking on initiatives to open their API. However, most API initiatives still do not fully harness the real potential that an API brings. Sometimes this is due to organizational reasons – such as being run as a side project in the engineering team. Often though, it is because of the lack of a rigorous process to ensure that all the creative options are investigated on how to adapt the business model. It is like getting into a car and just following the road ahead; instead of checking a map to see where you want to go and which the best route to take is.
The objective of this article is to define a structured approach to identify which business model will ensure that your API makes the most effective contribution to your business. Before we get to the meat of the business model options, the first step is to decide which your core assets are, and how you wa…