10 Steps to the API Economy

Make APIs the basis of your digital strategy.

Application programming interfaces (APIs) make digital society and digital business work by connecting people, businesses and things. They enable new digital products and business models and create new business channels.

“We are building a digital society in which the virtual world and the physical world merge, and in which everyone and everything is connected,” said Paolo Malinverno, research vice president at Gartner. “We already live in an API economy where CIOs must look beyond APIs as technology and instead build their company’s business models, digital strategies and ecosystems on them.”

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CIOs and chief digital officers (CDOs) should focus on 10 key points:

  1. Your (Digital) Strategy Drives Your API Program
    Leading digital firms manage their API portfolios so that business priorities derived from digital initiatives are the key driving factor for the APIs they build, and how those APIs are consumed.
  2. Tailor Your API Experiences for Your API Consumers
    Although APIs are consumed by applications and not by end users, the user experience for APIs is just as important as for end-user applications. It’s important to adapt APIs to the diverse requirements of the consuming applications.
  3. Use Hackathons, but Understand Their Limits
    Hackathons are a great way to jump-start an API program. However, treating hackathons as stand-alone events will have little effect on long-term digital transformation. Properly run, hackathons can generate publicity, change culture and inspire innovation, encourage new partners and ecosystems and attract and retain talent, but preparation is key.
  4. If You Build It, They Might Not Come
    Building the greatest API in the world won’t work if it doesn’t reach the developers who need it. The simple rule for CIOs and CDOs is to only build APIs that have an identified consumer already, otherwise, APIs risk being ineffective, and a waste of resources.
  5. Monetization Is Much More Than Charging for Calls
    Most of the value generated by APIs in the API economy today does not come from charging directly for API calls. Most value is realized through business opportunities enabled by the APIs and the app constructs through which they are consumed.
  6. APIs Enable Bimodal, and Bimodal Requires APIs
    Bimodal is the practice of managing two separate but coherent styles of work: one focused on situations of greater predictability (Mode 1), the other where exploration is required (Mode 2). Exploiting APIs to increase revenue, drawing in new customers and creating value for partners and consumers, forces the enterprise to become bimodal.
  7. APIs Are Doors Into Your Data and Applications: Security Matters
    Because APIs make digital business work, securing them is essential to managing digital risk. The API security strategy must involve all stakeholders from the developers to the operations staff and the security and compliance team.
  8. Don’t Build Your Own API Management
    Differentiation does not come from building your own API management platform. It comes from the APIs you publish to your ecosystems of developers, and how motivated they are to realize application constructs that turn into a business advantage for you. Using established API management platforms saves time and reduces complexity, freeing resources to run an API program that supports business goals.
  9. Modern Application Architecture Relies on APIs
    The first question a developer will ask about a new application, cloud service or Internet of Things (IoT) device is: “What is its API?” APIs are now central to application architecture because they enable loosely coupled integration, as well as being the data conduits behind mobile apps and many IoT devices.
  10. Consuming APIs Will Be More Common Than Exposing APIs
    An average enterprise will consume more APIs than it will provide. In most enterprises APIs are being consumed across many departments often without direct knowledge of senior management or the CIO. The first step to getting a handle on external API usage is creating a catalog of API consumption by the entire enterprise.

Gartner clients can read more in “Top 10 Things CIOs Need to Know About APIs and the API Economy" by  Paolo MalinvernoThis research is part of the Gartner Trend Insight Report The Future of Your Business Ecosystem in the Age of Digital Business.” This special report explains why organizations must design creative business models, and create the underpinning operating model to succeed.

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