For many businesses, there can be a great reluctance to opening data assets via APIs to external partners or to third-party developers. One way to start assessing the benefits of an API business strategy is to begin using APIs internally. Private APIs can lead to faster time-to-market for new product and service development, open up new market channels, and ensure that any one organizational process does not create bottlenecks in the business’ workflow.

We talked to a number of businesses about the benefits of using private APIs to manage their operations and wanted to share some of these insights with the community.

Business Benefits of Private APIs

1. To commence the API strategic journey

Many businesses face a ‘push-pull’ demand for using APIs, says Mark O’Neill, VP of Innovation at Axway, an API management service provider working with Nordic companies, and one of the Nordic APIs event sponsors. Businesses may be requested by partners and suppliers to connect via API or they see that a competitor has an API and they realise they need it. Mark sees private APIs as a good way for businesses to take the first step.

“A lot of businesses started by deploying SOA [Service Oriented Architecture] inside their organisation and moved on to using APIs beyond the firewall in the so-called omnichannel world”, Mark told us. “Often it goes that the first thing people do is internal integrations, then they might have a partner that wants to integrate which creates the requirements for an API that works across the firewall and all the security that comes with that.”

2. To modernize organizational structure

As companies begin using private APIs to manage internal processes, they often discover the opportunity to restructure and modernize their business to enable the “composable enterprise”. The key concept behind the composable enterprise approach is that by breaking down a business’ functionalities and services into lego-like pieces, it is possible to create new business value chains by composing their services, data and functionalities into new configurations. It also allows businesses and enterprises to access a greater range of resources by enabling many non-core business operational elements to be moved to external providers and cloud-based services.

3. To improve collaboration and internal communication

Internal – or private APIs – can offer substantial benefits in efficiency and productivity. A study by the McKinsey Global Institute estimates that companies can increase their productivity by 20 to 25 percent by improving internal collaboration: a strategy that is only possible with the use of APIs.

It is a benefit that Eva Sjokvist from Absolut shared with our Nordic APIs audience last September. Using an API across the organization means a greater shared awareness of the company’s data models. It can also create greater clarity by enabling consistent data to be used when analyzing the business’ operations. Internal business stakeholders had more “confidence in the data models and structure creating greater leverage for new ideas”, Eva told our Nordic APIs audience.

4. To speed up time-to-market

Internal APIs can significantly speed up time to market of new products and service features. In part, this is an extension of the benefit from improved internal collaboration, as Joakim Skog from the Swedish company Bisnode points out. He told our Nordic APIs audience in November that Bisnode works “with APIs internally when we design new services. Everything we have internally from data sources and services like that are on APIs.”

But there are also other ways that using APIs speeds up time to market. Joakim Rapp, Lead Developer at Nordic online content provider Viaplay, told us that another benefit of using private APIs is that it allows more efficient allocation of internal resources in order to create new features quickly. “When you develop new features in general, APIs make it possible to have a team working on user interface and another on the business logic layer, for example. You don’t have to have all your developer team working on everything and it creates a better flow.”

To help with speeding up time-to-market, Rapp notes that for internal APIs, as long as there is good call logging that logs when API errors occur, there is less need to invest in user documentation and error messaging (as there would be for third-party or partner APIs). Instead, internal stakeholders are encouraged to contact the API developer team if there is a problem in order to maintain time-to-market speed advantage.

5. To more efficiently manage the supply chain

Rapp also talked us through how the composable enterprise approach results in a more efficient business supply chain. One of these benefits becomes apparent when implementing new features. “When delivering new functionality, it is important that it doesn’t impact existing services”, Rapp told us. “We want a robust architecture that makes it easier to develop one component that works well and makes it easier to build and integrate new components as we go.”

This can also be true for managing existing service delivery to customers. He gives an example of how two of Viaplay’s internal APIs are managed. One API is used to check a customer’s current subscription level, to see if their account is active and if they have the right subscription to access specific content. Another API makes it possible to re-commence the subscriber’s content at the last known vieiwing point. If these two aspects were interlocked in the one supply chain, any slight error with knowing what content was last viewed could disable the customer’s whole account until the playback error is resolved.

So while the ability to restart the viewer’s content at the point where they left off enhances the customer experience, it is not an essential feature. Through their use of APIs, Viaplay ensures that if there is a problem, the customer’s account remains active and can access content even if they have to manually re-start it from where they left off. This is much preferred than the customer being unable to access their account because the supply chain falls over due to a single, errant, intertwined process.

6. To allow more precise business intelligence analytics

This flows through to allowing businesses to better identify where there are problems in a business’ operations. Rapp explains: “One other perk of decoupling [business services via APIs] is that it gives a better view of what parts of our system might slow down. It is easier to manage single components. We can monitor response times, uptimes, and the load on the servers and share the analytics that are important for the C-level of the business.”

Getting started with private APIs

Given the benefits, private APIs may well be the best way for some businesses to commence their API strategy. API management providers and specialists can help identify the best integration pathway and assist in designing a strategy that encourages ownership and commitment from across a business’ operations. Learning from the experiences of businesses like Axway, Bisnode, Absolut and Viaplay can help you understand how to best navigate and gain from implementing an API-enablement strategy for your business. We will be exploring more of these case studies and industry best practices for private, partner and public APIs at our series of events in Helsinki, Copenhagen and Oslo in early April.

Mark Boyd

About Mark Boyd

Mark Boyd is a freelance writer specializing in the API economy, with a particular focus on API business models, open data and civic tech.