The Programmable Web directory contains over 24,100 APIs as of 2021 and has been experiencing tremendous year-on-year growth since 2010. The driving force behind this sustained growth is the establishment around us of a connected world. In this new paradigm, companies, users, apps, and tools are always open to each other for digital partnerships.
That explains why Salesforce, in 2019, decided to acquire MuleSoft (API management system) for $6.5 billion — a purchase price that was 16X greater than MuleSoft's year-on-year revenue. A year later, Visa too jumped onto the scene, acquiring Plaid for a whopping $5.3 billion.
In some ways, APIs construct the digital identity of a software product. Based on this digital identity, the product’s scalability and utility are judged, opportunities are created, and partnerships are forged. APIs are no longer simple APIs; instead, they are complex solutions that bring management, security, analytics, and transactional gateway functionalities under one umbrella.
Here's what the API economy mean to enterprise CIOs:
Enterprise architectures differ, and so do the business needs they must accommodate. For instance, a Fortune 500 financial services company will have its own set of administrative and operational requirements, which will differ from the likes of Uber. Each enterprise will adopt a set of vertical tools and some horizontal tools. To get the most out of the connected ecosystem, these tools must talk to each other. Hence the focus on APIs and the need to customize them.
A viable approach to go about accommodating customizations is by talking to enterprise technology experts, analysts, and CTOs to understand the demands of the connected architecture. This will include laying emphasis on the data sharing protocols, integration points, shared functionality, workflows and automation, security, and more.
Gartner's analysis reveals that more than 77% of CEOs are skeptical of digital initiatives because of the fear of new risks this may bring. As such, enterprise CIOs need to step up to the plate and make it their agenda to deliver enterprise-grade security within the corporate network.
Digital risk is something the API economy must be cognizant of. Careful plans must be created to address this risk by involving stakeholders and compliance teams early on to come up with a robust API security strategy.
APIs have created a digital singularity for businesses, as they create the opportunity to integrate with other technology services. For that reason, an API strategy cannot exist by itself but rather as part of an overall approach to how systems are being designed, deployed, operated, supported, etc.
As such, the emphasis is not simply on the APIs and their use cases but also on how to make sense of and evaluate APIs and system interactions. This will help enterprises build controls that protect sensitive data as well as deliver quality services through meaningful integration. Think about applying the Information Lifecycle Management (ILM) concepts to integrate APIs into the organizational structure.
As the API economy evolves, so will the way enterprise IT is evaluated (and budgeted for). The trend seems to be moving away from merely looking at the systems that enable technology outcomes (like API calls) to drive monetization through effective app development where APIs could be the enabling layer opening several growth avenues.
Going forward, budgets will need to become tied into the overall digital strategy for business. This means that all forms of digital initiatives would be evaluated based on how they are contributing to the business goal. The focus will be on creating a digital strategy and capabilities to grow the business.
Building an API economy means that enterprises are investing in cloud applications, which are becoming the backbone for digital transformation. From agility to cost-efficiency and automation to easier maintenance, businesses will continue to break away from legacy systems and embrace the cloud. APIs will enable profound and secure integration across multi-cloud and hyper-cloud environments and distributed tools, systems, and applications.
Enterprise CIOs will be called upon to step up. They will look towards technology mentors and strategic consultants to help their IT organization become more technologically skilled and resourceful enough to realize the potential of APIs. It is imperative for them to learn how to automate the delivery of services better, share data, and use tools to facilitate innovation.
With this objective in mind, an enterprise's IT strategy will get centered on getting the most out of APIs. This will be accomplished by using APIs to deploy applications, accelerate business transactions, share data, and expand the use of IT resources.
Gartner defines bimodal passageway by segregating it into two modes:
Mode 1: focused on predictability
Mode 2: focused on exploration
Bimodal passageways involve aligning these two modes with the use of APIs. The idea is to develop a holistic framework capable of enabling enterprises to foster denser and richer digital experiences for customers and employees alike. Through the bimodal passageway, enterprises can develop new ways to establish a value proposition for customers, foster innovation, and improve customer experience. They will help employees become more productive and connected. In essence, these are the facets of greatest value in the API economy.
The API economy is emerging as a significant evolution of the digital space, and enterprise CIOs need to embrace all that it means. In the same vein, it is crucial to ensure that the technology team is aligned with the business goals and objectives.
All in all, to ensure that you're not left in the lurch, you must work with a technology partner who understands your business and is well versed with the nitty-gritty of the API market to help you get ahead.