There’s a certain breed of developer that has been talking about the benefits APIs can offer for many years now. In fact, if you’re reading this article, it’s likely that you’re one of them!
But it’s only in recent years, in part thanks to the rise of consumer facing services like IFTTT and Zapier, that more and more people have come around to this point of view. APIs aren’t just niche offshoots anymore, but are increasingly being seen as vital for digital success. In some cases, they’re absolutely central to the success of businesses.
There’s a big problem with all of this, though. Namely that, unless an API has been built with monetization or growth in mind, it’s unlikely that most businesses have the appropriate strategy in place to accompany monetizing their API and transitioning to an API platform.
As well as looking at why that’s the case in this article, we’ll also look at a few steps you should be following when you consider monetizing your API. Many businesses may already have a pet API science project in the works — so what are the next steps to transforming it into a profitable venture?
Step 1: Challenge internal perceptions of APIs
Rob Zazueta, previously of Intel and now of TIBCO, talks about the way in which we once thought of “APIs as products…now we’re talking about APIs as being the centre of your IT infrastructure. The core of your digital transformation.”
Rob describes how, in any given company, APIs often come to be in one of two ways:
- Internal efficiency: The IT department creates an API to make their lives easier during a specific project, but often haven’t spoken to other departments (such as biz dev) about its benefits.
- Partnerships: The API is developed as a result of partnerships with other organizations, making it easier to share data.
In the case of the former, there’s a risk that the API is viewed as something that’s useful for the IT department but pretty much irrelevant to everyone else. The latter, meanwhile, is likely to be closely tied to the functions required for the use case at hand.
API developers in the company may make an effort to make it useful for future partnerships, but, as Rob comments, it’s usually viewed as “an ancillary product.” i.e. it’s probably perceived as having not much value of its own. We’d be willing to bet that this was once the case for APIs at, the historically “print first”, USA Today which now has API endpoints for news headlines, US Census data, sports salaries, bestseller lists, and book/music/movie reviews.
Step 2: Audit what you already have
The first step in turning your APIs from a “science project” into a truly useful tool for growth? Taking a good hard look at the systems you currently have in place:
“The first thing you need to do is understand what your API situation is within your organization. You’ve got to understand what APIs you have and how they’re currently being used.”
The best way to do this is to talk to your engineers and IT team, because they’re the ones (in all likelihood) who are responsible for building your APIs and maintaining them. “Think about how your APIs play with your core, and how your IT organization is going to shift its role,” says Rob.
Any time you start talking about evolving roles and changing perspectives, people start to get scared. Fortunately, Rob has an idea of how to get these folks onside: “Give a developer bourbon, and he becomes your best friend for life.”
Step 3: Document everything!
Transparent documentation is key for public facing APIs, but there’s no reason you shouldn’t embrace the same learnability standards for internal facing APIs.
You want to create a developer experience that gets out of their way when creating new applications. You want to be able to get them up and running and onboard them as rapidly as possible, whether they’ve been with you for ten years or they just started last week.”
But there’s much more to turning an API from a curiosity into a truly valuable tool for growth. Rob continues:
“Once that data is free and accessible…you’ve got to start doing things with it! Any new project comes in that you would otherwise connect to the database, use the APIs. Anytime a new partner comes along that needs some set of data, don’t build another script…build a set of services to provide that data and expose it through the service layer.”
In other words? The key to creating a useful API is to…well, use it. As much as possible. This provides opportunities to grow services by figuring out what’s NOT there that should be. It also creates a broader API that’s capable of doing making different things. Rob suggests that a truly effectively API should be “decoupled from specific use cases and instead have the maximum utility for everybody who is consuming those services.”
Step 4: Define your API strategy
One of the most simple steps on the journey toward implementing an effective API is getting management, IT, Business Development, and Operations to unite under the same strategy.
Approach the issue from a high level — what can our APIs actually do? What do we want them to be able to do? What do the companies we work with, or could work with, need them to do? This can be extremely helpful in figuring out the issue of exactly what APIs mean to your business.
One slide in Rob’s presentation outlines the following points as being key to using APIs for growth:
- Manage partners: Maintain quality relationships with companies using the API;
- Manage traffic: Ensure that your API is robust enough to handle the traffic demands;
- Productize APIs: Embed API functions into your products in a meaningful way and/or build new products and services with them at the core;
- Analytics: Monitor your APIs and take action based on that data.
At first glance, these all seem like common sense. That may be true, but it doesn’t mean that they’re things that companies actually do once they’ve created their API(s). Without a proper strategy around what APIs are going to be used for within the organization, it’s unlikely that you’ll ever totally unlock the potential of your API.
Step 5: Determine your pricing model
- Charge directly for an API by call or subscription
- Use API access as a premium upsell opportunity
- Drive revenue generating activities through your API
- Increase distribution through strategic partners
- Use your API to improve efficiency and decrease time to market
That list is far from exhaustive – John Musser suggested over 20 models in a presentation in 2013. Many SaaS companies use freemium plans,which encourage early stage developers to begin their own journey and scale pricing from there.
Selecting the best option for your business is an involved process, and shouldn’t be taken on lightly. In fact, of all the steps in this article, this one is probably the most important one to get right if you want to maximize the success of your API.
Step 6: Evangelize your service
Under-use is a real issue when it comes to the ongoing success of APIs. It may be that people simply aren’t aware of your functional offering, or they may be reluctant to depend on a third party from the vantage point of stability.
Rob proposes a simple solution to this problem: have team members who are API evangelists. It’s these team members who will fight to make sure APIs are actively used to solve real world problems, and identify pain points in order to improve the developer experience.
Effective evangelists engage with partners, ask the right questions, and receive user feedback to discover met or unmet user needs. Doing so will ensure that your offerings are robust enough to handle the demands of services that rely on them, as well as aid the forecasting of future features.
You may need to find ways to make your APIs more valuable, and that often involves building out fully fledged products. More often than not, that will fall under the remit of your IT team. Better stock up on a few more bottles of bourbon…
Conclusion: Strategic APIs Win
It’s probably already very clear to you that, particularly with the wide adoption of RESTful API development and the burgeoning Internet of Things, APIs are incredibly important to the future of web technology. The good news, however, is that this is rapidly becoming clear to business figures as well.
Enterprises that already have a couple of APIs, however rarely they’re being used right now, may have some hidden gems on their hands that could represent a very effective route to business growth. Stay tuned for future articles where we pick apart how to audit and assign value to internal data and functionalities.
For now, the above represents an, admittedly simplified, approach to taking your APIs to the next level. But the real takeaway here is that, without the proper strategy in place to accompany the nurturing of these APIs, there’s a risk that APIs will continue to be seen as a quirky little tool that’s “best left to the techies.”