How to build an effective API strategy in five easy steps
Now more than ever, companies are embracing digital ecosystems to keep pace with unprecedented changes in the market, which is why a solid API strategy is pertinent. Imagine an airline refusing to share its flight schedules and pricing data with third-party travel sites – an exchange that is common in the travel industry and that typifies a digital ecosystem. Such an airline wouldn’t survive. When consumers search for flights on popular sites like Travelocity, Expedia, Google, and Kayak, the digitally-estranged airline won’t appear anywhere in the search results. This would cost the airline hundreds of thousands of dollars in missed bookings revenues.
The above example is but one of thousands, if not millions, that shows why aligning your business with a digital ecosystem is becoming a strategic imperative. This holds true for those in industries where digital ecosystems are thriving – like the airline industry – and in sectors where such ecosystems are merely budding. Building a digital ecosystem helps accelerate one’s digital transformation and digital economy.
Indeed, businesses that reject digital ecosystems will end up with a whole lot less of everything:
- Less revenue
- Less competitiveness
- Less agility
- Less adaptability to market shifts
- Less innovation
No APIs? No digital ecosystem
Application programming interfaces (APIs) make modern digital ecosystems possible. APIs are microservices, or building blocks, that lessen the problem of data silos by enabling you to create reusable integration workflows for your applications and data internally. They also help create new products, better customer experiences, and more effective partner relationships by letting you share relevant data externally. What’s more, APIs give developers in and outside your organization a way to come up with new product and service innovations that, by drawing upon your proprietary data, can generate new business for you.
To build or enter a digital ecosystem with APIs, you must first devise a successful API strategy. Your API strategy should at least include the following five broad steps. Consider these steps the secret to your API success.
1. Define the goal
Typically, you’ll want to set a goal that doesn’t explicitly deal with data and then work backward from there. Such goals might include creating a new revenue channel or new products or removing IT bottlenecks. In the airline example, the airline’s goal is to increase booking revenue by including adding partners to its business model and business strategy. To achieve that goal, it must publish public APIs for third-party travel booking sites to consume.
Once you’ve established a clear business goal, the next step is to build out an API program with business use cases and figure out which data you need to share and with whom to achieve that goal. After all, when you design, create, and publish an API, you’re simply choosing specific applications and data to share with specific people. The airline, for example, would want approve
d partner websites to consume APIs granting real-time access to the flight schedules and pricing data from specific backend applications and databases.
It’s wise to start with small attainable goals. After achieving those goals, build on that success in future API initiatives.
2. Understand your IT environment
Your company’s data architecture will dictate how you implement your APIs and share with the developer community. There are a lot of variables to consider in this process. For instance, you need to figure out where the data you’re trying to integrate resides. Is it housed in an enterprise resource planning (ERP) system, a customer relationship management (CRM) application, a human capital management (HCM) solution, a cloud data warehouse, or somewhere else? Will you be pulling data from multiple sources? Is your data hosted on-premises, in the cloud, both? What securities and policies will you need to implement to give various stakeholders access to the data from these applications? Will your organization create more public APIs? These are the kinds of questions you need to answer.
Business and IT teams must work closely together to successfully deploy and maintain the API within your company’s data architecture. IT can help business teams navigate this data architecture to reach their goals with APIs. What’s more, if you adopt a multi-point integration platform as a service (iPaaS) that supports hybrid integrations across cloud and on-premises endpoints, it will make this part of your API strategy decidedly easier.
3. Run a pilot API project first
It’s best to start with a small, low-stakes API project before publishing an API for the whole world to use. Define the use case and create an execution plan so you can measure the success of the API project. API design through experimentation is key in these early stages. As you build your APIs, make sure to create an API documentation so other API developers can get the most out of these APIs. You need to see what is and is not working, uncover potential vulnerabilities in your integrations, and identify ways to drive adoption for your API when it goes live.
In the airline example, before publishing an API that gives partners access to scheduling and pricing data, an airline would publish a beta version of the API to a few developers internally. These developers might test the API by creating business intelligence (BI) dashboards that reveal buying trends month over month. Once the API meets the objectives for which it was constructed and passes all the security tests, the airline can start rolling it out to a broader audience internally with the eventual goal of publishing it for external consumption by turning it into a public API. In using this API, the airline and its partners optimize the user experience for employees and customers alike.
This is where your digital ecosystem can really start taking off.
4. Roll your API out to a broader audience incrementally
Once your API performs well for the few developers in the pilot program, you should then make it available to an entire department. In the airline example, developers might make ready-to-use APIs available to the BI team to track and measure their flight bookings.
And once the API provides measurable value for that department, other departments can start leveraging it to unlock value in their data. As API adoption grows and spans the enterprise, start taking steps to increase your API economy by creating API-led digital experiences for your customers and partners. When you’ve forged all of these reusable integrations that unite internal stakeholders, partners, and customers, then you’ll have built a rich digital ecosystem.
5. Manage your APIs
To sustain your digital ecosystem, you need to manage APIs. Since APIs are intrinsically linked to application and data integration, the best approach to managing them is to leverage an iPaaS with API management capabilities contained in the same platform. Such a solution serves as an API platform that allows you to manage the API lifecycle; to plan, design, implement, test, publish, operate, maintain, version, and, ultimately, retire your APIs with greater success. The ability to do API version control, for example, is important because it prevents service disruptions for developers, partners, and customers due to version incompatibility. API monitoring, another feature of an API management solution, is also critical because it allows you to track API usage trends – information that can inform new revenue-generating API initiatives and API roadmap.
Start building a digital ecosystem
Organizations that embrace a digital ecosystem will expand the reach of their core business, strengthen their connections with partners and customers, encourage and develop innovations that deliver recurring profits, and meet business needs. Creating, integrating, and managing APIs effectively is a critical prerequisite for participating in a digital ecosystem. And to leverage APIs effectively, you must put a clear, realistic API strategy and API program in place. If you start with small wins and then build on them, you’ll be a part of a thriving digital ecosystem in no time.
The SnapLogic Intelligent Integration Platform together with SnapLogic API Management provides a joint API integration and API management solution in one platform. Get a custom demo to see for yourself.