Riding the API wave
Setting the Stage
The global economy is evolving.
From decentralized currencies to the Internet of Things, the rapid rate of technological improvement is promoting interconnectivity at all levels. APIs are a primary enabler of these transformative shifts, acting as pipelines between data sources and allowing for dramatically improved access and aggregation.
Internally, APIs can play a huge role in improved operational efficiency, synergy between business units, and the creation of new revenue streams. In a survey of 800 corporate IT leaders, respondents reported that an average of 31% of all revenue was being generated by APIs or related projects.
Companies are quickly realizing the importance of these new pipelines: according to the research team at Programmable Web, a digital directory of APIs, more than 2000 new entries have been added each year since 2015, and 80% of the surveyed group of IT professionals currently use public or private APIs.
Even in the economic aftermath of COVID-19, firms continue to invest heavily in their data systems, with the API management industry expected to reach $5.1 billion by 2023. But that massive figure still shrinks in comparison to the potential payoff: McKinsey predicts that APIs will enable much as $1 trillion in untapped profit by enabling the development of ecosystems across all sectors.
Unfortunately, corporate philosophy has not yet caught up with the technology – and these investments to build APIs will never reach maximum value until it does.
APIs as IT
For much of their relatively brief history, APIs have been the domain of IT departments. With limited resources and in relative isolation, CIOs and other information professionals have been tasked with developing project-specific data systems. While these one-off efforts can still provide significant benefit, failure to expand the scope of their development places an unnecessary cap on their utility.
Even as the general corporate perspective begins to broaden and the usefulness of APIs extends to other departments, there is continued reliance on siloed efforts. More than 50% of global organizations approach APIs on a project-by-project basis, and 80% identified no effective means of sharing them internally. And among the average of nearly 900 applications used by the average enterprise, only 28% are integrated. Accenture calls this the “innovation-achievement gap”:
This lack of a holistic approach leads to redundancies and, more importantly, lost potential value. By failing to design and build APIs for reuse and integration within the larger corporate ecosystem, companies increase development costs, miss out on potential revenue streams, and stunt possible collaborations both internally and with other firms.