API strategy – getting it right for an enterprise

October 16, 2016Blog, , , Standard
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Few weeks back I spoke to Steve, the divisional CIO of a large enterprise. He was flustered and anxious. The CEO had just given the group CIO broad guidelines and timelines to get in place an API strategy which will help drive sales from their online business. The group CIO was a traditional infrastructure leader who did not understand this stuff well enough. He trusted Steve to come up with the right strategy which will align with business and Steve had all of 3 months to deliver something tangible which he could demonstrate to the CEO.

This was very similar to conversations I have had with similar other IT and business executives, all of which had one common theme, “How do I make this API stuff work to make an impact for my business. Tell me what shall I do so I am not left behind or become redundant”.

As with many new waves, CIOs are under pressure to “ do something very quickly”.

This is not a Technology Company. They actually are a traditional manufacturing company with a certain portion of their sales coming from online.

Enterprises which are in conventional businesses like Retail, Construction, Telecom, Consumer Goods, Banks, Insurance (so practically everybody) and even large governments are scrambling to get an API strategy in place.

Technology companies, ISVs are working on a clear strategy to expose their APIs so they build an ecosystem around their products.

Larger SIs are working with enterprises and technology vendors both to help get the strategy right and then execute it flawlessly.

The folks who are setting the agenda here are mostly startups and smaller companies who are focused on this, and a few large companies from the new age economy like Amazon, Netflix who took early bets on this and are reaping the dividends now in terms of their consumer base, the revenues and the speed with which they can churn out new products and services.

Rest of the universe is frankly playing catch up.

What is interesting here is the way different ingredients have come together to make up the complex API economy which essentially drives to make it easier and easier for retail users to consume more and more of everything – be it products, services or information.

Rise of API Economy – Is it tech or timing or both?

APIs – Application Programming Interfaces – is not a new word per se to people in IT, as these have been around for ages. As the complexity of Applications grew, coupled with increasing demand for higher agility for business, the need to decouple the systems of engagement with systems of records became imperative.

The demand for flexible approaches in APIs essentially came by the timing of multiple trends coming together. The widespread adoption of smart phones meant users needed information and ability to transact anywhere, anytime, at a speed which was never required before.

The rapid growth in Cloud ecosystem meant the enterprises and SMEs now needed to integrate multiple systems and multiple applications and make it all available to users within and outside enterprises in a seamless manner.

Big Data and Analytics capabilities made it possible to deal with unimaginable large volumes of data and help create new services and meaningful insights available to marketers and businesses to create more products and services.

All these technology and business trends meant that the power of APIs could be leveraged to amplify the benefits of technology and harness opportunities which were impossible before.

The evolution of different API architectural styles has given developers flexibility to build APIs for easy consumption.

Technologies for building APIs – JSON, REST, Go, Python have been around for a while, for more than a decade, but these techniques and protocols were efficiently leveraged by business only when all other ingredients – Cloud, Smartphone adoption, cheap bandwidth, and most of all the millennial consumer behavior came together to create the demand and supply both.

Uber might not have been possible 10 years back even though the ability to build and integrate APIs existed then.

In that sense, it is important to grasp that the API economy is more timing than tech.

API Tech strategy – after the Business case

Most enterprises and IT teams make the mistake of focusing too much on the tech part – in terms of the API management layer, about the mechanics involved in developing and exposing the APIs and security considerations therein.

These are absolutely important – no doubt about it.

However what is important to know that the critical success factor in the overall API strategy is to look at how all the pieces fit together. So we need to look at what the end consumer really wants, how do we prioritize the services using 80-20 rule, what are the specific data sources and Applications that needs to be integrated to get these off the ground and use that to slowly build a culture of building services around APIs.

The conversations on engineering and developing APIs and management of APIs has to be in tandem with the conversations around the business, the ecosystem involving usage of the APIs, and the ecosystem partners.

We need to get answers to questions like – who are the ecosystem partners who will benefit by building on top of my APIs, what the new services I can offer if these APIs are made available to external and internal customers, what are the risks I run and how do I balance the risks with the gains.

The conversations around the business case and business benefits and the conversations about the efforts required to build and manage APIs are separate at times but joint at critical places.

So if these conversations are not moderated appropriately by efficient leadership, we can have unwieldy programs which can fail on both sides – we have great articulation of what business wants and great plans but fails on execution because the technology strategy was not aligned to what business wanted.

We also see examples of lot of work done and lot of money spent in acquiring tools and technologies for building and managing APIs and lots of smart folks hired only to find that we have not had enough returns on the business side.

I am aware of at least three examples of enterprises where inadequate detailing of the business case resulted in lot of money thrown at building APIs, only to be junked mid way because the business case did not add up.

Ofcourse, there are successful examples too, where careful alignment of business case by partners developing solutions on top of the principal enterprise APIs have led to unexpected revenue stream.

A rush for development of API tech strategy without adequate homework on business case is like putting the cart before the horse, and in some unfortunate cases also leads to tail wagging the dog when too much focus on API tech strategy limits the business case options available.

As deep throat said in a different context, key would be to “follow the money” and have tech strategy follow the business strategy and not the other way round.

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