APIs and Digital Transformation

Recently, Bill Doerrfeld interviewed me for a piece that appeared on the Adobe CMO blog entitled “The Platform Economy: Why APIs And Integrations Are Crucial”. As usual, I ended up preparing way more than what eneded up on the final piece. An sampling of my expanded responses is below.

In my Net API Notes email newsletter, I talked about the changing API space earlier this year. Hopefully that, as well as the answers below, provide some clarity for executive leadership on how the landscape is evolving.

What the current state of the API economy?

The API economy, however it is defined, is in a state of transition. For the last several years companies have limited, or even shuttered, their “open” developer in favor of explicit partner-to-partner relationships. From, most recently, Lyft, to Venmo, Facebook, and Twitter, companies that aren’t perusing an explicit platform strategy have significantly changed how they think about the strategic potential for APIs.

A number of factors have driven this. On the one hand, I see an end to companies who released public APIs with a “build it, and they will come” philosophy. Without a vision of how corralling 3rd party developers would bolster a company’s strategic execution, these developer portals were cost centers primed for elimination as soon as the platform fervor passed. (For some comprehensive thinking on the role of software platforms, I’ve been enjoying “Platform Ecosystems: Aligning Architecture, Governance, and Strategy” by Amrit Tiwana.)

More recently, I see companies increasingly aware of their expanded risk profile due to public API access. Even with robust security, and the API is behaving as intended, the Cambridge-Analytica scandal awakened many. We now see how the seemingly benign exchange and aggregation of information can have huge ramifications. Simply “putting something out there” not only can be expensive, but it has consequences.

However, that’s a footnote in the larger story. The more significant economic impact of APIs is how companies are using them to achieve greater marketplace agility. It’s the internal decomposition - the reduction coupling and coordination overhead - where the real digital transformation lies. The economic benefit from Netflix’s API approach is not from the developer program (something they ended in 2014). Highly modular architecture allows experiences, powered by APIs, everywhere on everything.

How have APIs historically disrupted digital business? How will platform-platform integrations continue to evolve?

APIs have had, and will continue to have, an out-sized effect on reshaping the cultures of the companies that truly adopt them. Whether it is adoption of the “infrastructure as code” and CI/CD pipelines necessary to efficiently deploy them, or the rearrangement of teams to support bounded context modularity (the “reverse Conway maneuver”), APIs challenge existing organizational and operational structures. (For more information exploring the cultural implecations of APIs, please see the writeup of my conference talk, “A Gardner’s Approach to Growing an API Culture”).

What we’ll see is a continued diversification of useful interactions patterns beyond HTTP’s traditional request/response model. The need for real-time workflows will necessitate investment in, and understanding of things like webhooks (also referred to as callbacks or subscriptions), websockets, and more. The interest in machine learning, along with a greater emphasis on storing and leveraging data, will necessitate more ‘algorithms-as-a-service’ APIs.

How can APIs be used in B2B partner strategies?

More businesses realize the impact data, not only theirs but others, can have on their operations. The responsible exchange of this data is critical. APIs make organizing and managing these partnerships more easily possible due to the wide variety of proven technologies. Everything “speaks” HTTP, securing and monitoring API gateways have vetted playbooks and standards (like OAuth), and there’s a mature talent pool available.

What are the major takeaways for CMOs & CTOs?

Technical leadership is experiencing pressure from all directions. To one side, they are expected to deliver impactful digital transformation to compete in the future marketplace. Simultaneously, they have to meet new (and growing) data governance expectations. APIs, with their standardization of message exchange and centralized points of control, can play an essential role in both objectives.