Turning APIs into Products: The Next Stage of Business Growth
Often, businesses initially look to creating APIs as a way to expose some data set or business service to a partner or third party provider so as to test the waters of new business models. This usually occurs after a process of microservices reorientation, where internal systems have been re-architected into API-facing composable services in order to create mobile apps, automate workflows, and enable a more agile feature creation pipeline.
But increasingly, companies are seeing APIs as core products.
Last year at API Strategy and Practice in Austin, Texas, one of the key themes that arose from speakers across multiple streams was the next challenge in this typical rollout. Business leaders charged with the responsibility of (a) encouraging internal APIs to be used by engineering teams creating new products, and (b) facilitating open APIs to be used by partner and external developers found they needed to move beyond a pilot or innovation project mindset and treat their APIs as products.
The consistency with which a variety of speakers raised this API-as-product challenge has led API Strategy and Practice’s 2016 Program Chair, Lorinda Brandon, to create a dedicated session stream to focus on how pioneers are doing this in business.
For those startups and service providers who are moving quickly to a platform model, treating APIs as a product may come more naturally, such as amongst the Twilio, Cronofy, and SendGrids of the world, where their whole business is built on providing a functional API in the market.
But for traditional and existing businesses, APIs start off as an add-on or innovation use case and then need to be situated more strategically in an organization as their value is recognized.
Organizational Structures to Support API as Product
That has been the case for Melissa Jurkoic, a Product Strategist for Services Platforms at Amadeus Hospitality, who will be speaking at API Strategy and Practice in Boston this November.
“We have two full scrum teams working on platforms: one implementing a DevOps process for continual integration and a scrum around API development,” explained Jurkoic. As part of the platforms team, Jurkoic supports internal lines of business across the hospitality company to make use of APIs in their work, whether that be to create business solutions in their services portfolio, or when building customer-based services and exposing APIs to their customers and partners.
Amadeus is also in the process of transitioning one of its core on-premise solutions to a cloud model based on Salesforce.com in order to integrate products and speed up release cycles.
“We do have APIs that we release to our own internal customers, and we have a professional services team that do custom service delivery, looking at how to adapt to needs of large customers that they are trying to roll out. We are providing them with the tools to go to production and create new revenue streams,” Jurkoic said.
Jurkoic said that the company’s previous business model had almost run its course. Requiring an on-premise solution meant the design team had to aggressively price their customization work in order to get a reasonable return on investment. Now by using APIs, they are completely reinventing their business models.
“It is changing the game. We are on the cusp of that, we are testing that theory to its fullest and we try to be as iterative and open as possible,” Jurkoic said.
The API as Product Roadmap
“We leverage the Salesforce.com platform for our external customer,” she explained. “At the moment we have a C#, SQL server backend. We have developed an approach with internal APIs for our sales and catering solution. They push the data out of Salesforce into our platform so we can expose it, so there is a data exchange function that happens. Our customers are not on a multitenant solution. So the multitenant capacity is in our solution, we aggregate all of our Salesforce customers so that our partners only have to integrate into one place and we use Microsoft Azure API platform to give us a place to expose it to the outside world and meter transactions. We get to choose selectively what we get to push up to the developer portal.”
Jurkoic says it has been easy to sell the benefits to people on the tech side, but now needs to start treating APIs as products in order to open up organizational culture to new programmable business model opportunities.
For now, that work includes:
- An approved API list: what all of the internal and open APIs have been approved for, what are the constraints, the performance testing and any boundaries of the functionality
- An API roadmap: With a team of product owners to manage individual APIs
- Work on developer personas: That includes documenting a set of market problems, categorizing the problems for different types of user-developers (system integrators, internal professional services, Amadeus feature developers, and early external adopters), and understanding their entrance criteria (“I couldn’t use this unless it has that”, etc).
The Tech Stack
To make all of this possible, Jurkoic has relied on the Microsoft Azure API platform as the heart of an enabling tech stack.
“We had already delivered an API internally and wanted to expose that. Azure was a great fit; it let us get a solution off the ground quickly. Like the majority of solutions, [Azure] had some sort of developer portal capability, could manage and meter transactions, had governance all the tangible things that I needed,” Jurkoic said.
The company started on the free developer version. “It was a great way to accelerate what we were trying to do and get it out there,” she said.
Now, Jurkoic’s next challenge is on helping sales teams reorient their business models. Based on their on-premise solution, sales teams would receive commissions for the custom projects they secured to carry out integration solutions projects. Now with APIs, that work is much easier and not part of the cost model for customers. Instead, sales need to reorient towards a transaction revenue model, but that work is yet to be done.
Customer Data as the Backbone for Industry
At Dun & Bradstreet, changes across industries towards seeing customer data as the backbone of operations means more need for APIs and integrations. Richard Jones, senior product manager at Dun & Bradstreet, already has many of the organizational business processes in place to treat APIs as products, including documentation on the product line, lifecycle, and features roadmap. Like Jurkoic, he works across the company’s structure to assist business teams in taking advantage of APIs in their work and, like Jurkoic, he will also be presenting his approach in the product management stream at API Strategy and Practice on 2-4 November, in Boston.
“Most of our new business is through integrations,” Jones said. “Traditionally we have had a strong risk management portfolio: we are best known in the U.S for this. But we are seeing an explosion in our sales and marketing line. That area has boomed as most industries are turning to SaaS tools like Marketo, HubSpot, and Salesforce.com. To bring in their customer data and our data, that is all powered by APIs, so a lot of our work is around supporting those types of integrations.”
Jones says a big trend is the augmenting and cleaning of customer data and then using D&B’s data assets to add and fill gaps.
As part of its API-as-product approach, Jones oversees success metrics (including blunt measures like API calls, but also looking at how many new customers migrate from other platforms), tracking of product teams to see what they are creating form the data assets catalogs that D&B maintains, and a major piece of work on assisting business units to develop new sales strategies: helping business units understand how APIs work and how to sell them and bring them to market.
To do that, Jones says, requires a lot of education around the benefits of APIs and the potential of the API economy.
Key Themes at API Strategy and Practice
It is easy to forget at times that APIs are still fairly new in traditional enterprise, and discussions around how to leverage microservices and API technology to create new business models and open up new revenue streams is still very much in its infancy.
Outside tech-heavy players like Netflix and Spotify, for the majority of enterprise in more traditional industries like health, finance, logistics and agriculture, tech reorientation projects are in full swing, which often means the thinking about how to expose APIs in new business programmable models has yet to begin. But because they are a level of abstraction above the architecture, as those projects reorienting to APIs gather steam, business is more easily able to enter conversations about what new models might look like. Treating APIs as products is the mindset change that links technology with business.
Alongside this theme, other major trends will also be discussed at the November conference, including the use of APIs by non-developers, data science, hypermedia, and the latest microservices approaches.
APIStrat 2016 will be held 2-4 November at the Marriott Long Wharf in Boston. The New Stack readers are invited to attend with a discounted 20% off registration.
Feature image: API Strat 2015 audience by Kin Lane.
