About the API Economy
As the use of APIs becomes more and more common and businesses increasingly share services and data with one another, a sort of ecosystem, or economy, forms.
What is the API economy?
What is the API economy? Simply put, this economy of APIs consists of the secure exchange of data amongst enterprises who, in addition to sharing APIs, integrate their functionality. From the perspective of the business, this economy is a way that APIs may positively impact the organization’s bottom line.
How does the API economy work?
At a basic level, this economy of APIs works through the exchange of data. Understanding the mutual benefits – for them, as well as for other businesses and for society as a whole – businesses have increasingly decided to start opening up their technological intellectual property to one another. By building upon what others have accomplished already, enterprising individuals and companies are able to harness these capabilities to reach new heights that, under other circumstances, they would not have achieved after years of individual effort, if ever.
According to Gartner, the research and advisory company that has conducted much of the leading research on the application of APIs, in this integrated economy, APIs help to connect people and places as well as data and systems. They enable new user experiences by sharing information and authenticating and enabling transactions. They leverage third-party algorithms to create new business models. From businesses and organizations, they create fully integrated platforms.
Who is an API economy for exactly?
In addition to the benefits to consumers to be discussed shortly, app developers have plenty to gain from this emerging economy since they now have the opportunity to monetize parts of their codebase individually, billing these isolated bundles of code as APIs. Without inputting any extra work, a developer can create a source of passive income from which he or she will continue to benefit indefinitely. What’s more, developers may create new products by combining these open-source digital building blocks in new ways and selling their newly created wares.
Why is the API economy important?
An API ecosystem has become an integral part of both big businesses and big tech. Since APIs allow applications to communicate information to one another, the API-based economy is a natural extension of these capabilities. The practical application of this economy of APIs is that consumers are now able to enjoy a level of seamless integration never before seen. In fact, in a matter of years, consumers have come to expect this genre of API-driven experience. From smartphones to wearables to the Internet of Things (IoT), thanks to APIs, consumers are now able to live in a digitally augmented world in which all of their devices communicate their every breath, movement, need, and desire completely unbeknownst to them.
Meanwhile, countless new apps and services have sprung up purely due to the omnipresence of APIs and the technological consumer lifestyle they’ve helped enable.
What you can expect from an API economy?
If its current trajectory is anything to go on, the economy of APIs will only continue to grow and overtake daily life both inside and outside of the business sector. Organizations will continue to find novel ways to harness the power of APIs for value creation. APIs will become more and more mainstream, positioning themselves as integral parts of many a business model. From the consumer perspective, APIs will bring the Internet of Things to new heights, making seamless integration of digital systems the norm in the majority of homes in the developed world.
Use cases and examples
One use case for the integration of multiple APIs for a single purpose is that of ride-sharing apps. In this case, a single ride-sharing app might employ an API for mapping, an API for communication, and an API for billing all in one seamlessly integrated service.
To take a specific real-world example in the same vein, Uber is a well-established, real-life exemplar of the use case successfully implemented. Uber’s business is built on a platform that uses APIs to, among other things, leverage Google Maps in order to match available drivers with passengers in need of a ride. Uber is the perfect example of the potential of API ecosystems because much of the app’s underlying technology did not originate in-house. Instead, they relied on APIs to do the heavy lifting.
Within the Internet of Things, APIs allow users to do things like adjusting their thermostat or their blinds via the app. Even transactions we now view as simple, like verifying credit card information when making online purchases, are powered by APIs. This implies that, in the future, uses of APIs we now see as far-fetched will become commonplace.
What are the benefits of the API economy?
The benefits of this economy of APIs are manifold. Large business owners and small developers alike may benefit from the possibility to add API-powered capabilities to apps. Moreover, this economy will propel value creation within businesses to new heights; the vice president of Gartner, Kristin R. Moyer, has famously been quoted as saying that the platforms created by APIs “multiply value creation because they enable business ecosystems inside and outside of the enterprise to consummate matches among users and facilitate the creation and/or exchange of goods, services and social currency so that all participants are able to capture value.”
How does the API economy compare to competitors?
There hardly exists a sound competitor for this economy of APIs since, as previously stated, without the APIs currently that power the system, such an economy is not possible. APIs are the building blocks that generate emerging technologies and systems like the Internet of Things, which may one day become indispensable parts of daily life for the vast majority of people on the planet.
API ecosystems allow businesses, with the aid of capable developers, to expand their services and leverage digital models to create new solutions and value propositions for exponential growth.