Why API-First Will Lead Digital Transformation in 2023

Why API-First Will Lead Digital Transformation in 2023

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Netflix was already talking about embracing an API-first approach back in 2012, and they often espouse the advantages it has offered them since. For example, they’ve shared how APIs offer them the flexibility to support more than 1,000 different device types.

Bruce Wang, who leads API systems at Netflix, has also spoken extensively with Apollo about how the company decomposed their monolith in favor of more composable and flexible architecture — a real-world example of APIs leading digital transformation from the past decade.

40% of companies said that digital transformation is driving their need for app integration, found Cloud Elements’ State of API Integration Report. Certainly, more open ecosystems is one consequence of the API-first approach, but how else is it leading digital transformation? In this post, we set out to answer that question.

The Emergence of API-first

When many people hear “API-first,” they think of businesses like Twilio. But companies like eBay, Netflix, and even Amazon can be considered API-first companies too. In the case of these companies, APIs are a means to an end — they make creating a useful product easier, rather than acting as the product itself.

Although the benefits of a microservices architecture are hotly debated, the value they offer in this context is pretty clear. And it’s worth bearing in mind that API-first products used externally might incorporate a user-friendly interface aimed at non-developers, disguising the role of APIs in their design, so there’s no negative impact on accessibility.

API-first often involves constructing microservices and resharing their functionality internally. Behind the scenes, APIs bring reusability for internal components and help organizations decouple front-end and back-end development to simultaneously work on more digital platforms. That makes for shorter and more agile development cycles.

APIs can open up new revenue streams and empower potential partners to engage with organizations through self-service models. In their own ways, both of these benefits of APIs can be used to forge stronger partnerships with other companies and external developers.

Beyond that, APIs bring development standards through OpenAPI and other API specifications. And that’s a good thing too, because it should mean better-defined services, fewer bugs, and more uptime.

API-First Is Already Enabling Rapid Change

There’s perhaps nowhere that APIs are driving more innovation than in the FinTech space. We recently wrote about GGV’s API-First Index, and close to half of the companies it lists are in the FinTech sector. API-first companies like Stripe, Plaid, Rapyd, Checkr are legitimate tech unicorns — valued in excess of $1 billion — and are all truly innovative.

APIs are, however, having an impact on “traditional” financial transactions as well. Take paying a Self Assessment tax bill in the UK, for example. In days gone by, if you wanted to pay by bank transfer, you’d have to make careful note of your reference number, set up the transfer manually, checking (and double-checking) you’d entered everything correctly.

Through Open Banking, it’s now possible to select pay by bank account, connect to your online banking account (using either your laptop or smartphone app), and arrive to all the relevant information filled out. Although most people don’t stop to think about it, they have APIs to thank for that.

Elsewhere, in manufacturing and medicine, for example, APIs are opening up data that would have once been kept locked away in a data lake. This can be used for everything from predicting maintenance needs on machinery to analyzing patient symptoms. Or even, at Buffalo Wild Wings, to track beer consumption using IoT (Internet of Things) flow sensors…

As MuleSoft points out in an article about digital transformation, “as companies develop new application-based services, they are also creating new digital endpoints…Each endpoint gives companies data that they can leverage to meet consumers with greater connections…With the right digital infrastructure in place, companies can ensure this connectivity and maintain greater agility.”

Big data is only getting bigger, and since APIs and automation go hand in hand, it’s inevitable that they’ll continue to play a huge role for organizations that want to keep up.

What’s the Future of API-First Design?

Cyclically enough, one of the areas in which API-first design is driving transformation is in…well, APIs. In an article by Buddy, Ankita Masand talks about how GraphQL was created because “companies like Facebook, Twitter, Github…started facing issues with the REST implementation as the complexity of their application increased.”

API-first design doesn’t just mean putting APIs first — it means pushing for more effective and efficient APIs.

What’s interesting about API-first design is that the more effectively it’s implemented, the more difficult it is to notice. APIs have always been used to push complexity behind the scenes to make it easier for end users, one of the tenets of digital transformation.

In other words? API-first design is making life easier for people in ways they don’t even know. As more businesses embrace an API-first approach, it’s an inevitability that communication between different services will become more straightforward, more streamlined, and more easily automated.

Besides that, API-first design continues to bring all of the benefits that APIs always have:

  • More agile development cycles
  • Different API components are reusable, scalable, and composable
  • Automation and interactivity without the need for complex custom integrations
  • Improved collaboration with, and adoption by, other organizations and developers

In the past year, we’ve seen people talk a lot about how artificial intelligence is going to make life easier (hi, ChatGPT). But programmatic web APIs are capable of doing just as much to streamline the technological interactions that make up daily life.

Maybe, dare we say, even more.