E-Handbook: How to smartly manage APIs through their full lifecycle Article 3 of 4

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How the use of APIs helps spur business innovation

Change isn't always cheap. However, by taking an API-first approach, businesses can innovate in a safe, effective and low-cost manner.

APIs enable old and new organizations to change the way they do business. The use of APIs is powering the way forward, helping organizations expand old business applications and create new ones.

When architected properly, APIs give organizations the ability to drastically improve the speed and efficiency of their operations with minimal overhead and investment, which, in turn, opens doors to entirely new ways to run, grow and monetize a business. But what exactly does this process look like? And what does it mean to take an API-first approach to digital transformation initiatives?

Why API-first?

Innovation is an important step in the growth of any business. But what exactly is API-first innovation, and why is it the right path forward?

To take an API-first approach to digital transformation initiatives means to develop an API before tackling innovation. Countless industries use this approach through the use of accelerator programs, incubators, hackathons and developer competitions.

The hackathon tactic in particular is used by everyone from microbreweries to telecom companies and is an excellent way to generate new business cases using capabilities the organization already has at its disposal. Through the creation of APIs that expose functionality and data that is core to their business, these companies can provide a platform for enterprising developers and innovators to build new, inventive applications and services on their behalf, while putting a limit on the risk involved with the development, validation and launch of new features.

But this is not just about growth. Because of their explicitly programmable nature, the use of APIs lends itself to the improvement and replacement of existing business processes. While some may interpret this to mean that parts of the business can be automated more easily, a more accurate interpretation is that organizations can improve the core architecture of a business by making the data that powers it more accessible. APIs empower organizations to gather and analyze metrics that include inventory counts and consumer demand. Through the creation of data-driven APIs, organizations can use this information to build a vast library of analytics. Businesses can use these analytics to understand previously undetected trends.

How to go API-first

Today, it is common for a company to consider itself a "digital" company, regardless of industry. But just because companies are digital-friendly doesn't mean they use APIs properly.

The most obvious way to take an API-first approach to innovation is to create an API on top of technologies or processes that already exist. This is an ideal approach since it puts the organization in total control over its data. Unfortunately, creating an API isn't necessarily in the wheelhouse of nontechnology companies. But through the use of third-party API management platforms, companies can create an API with almost no technical expertise.

While API creation is a great way to open new doors for any organization, I recommend you start with a focus on data. In a nonsoftware company, creating an API that exposes more than just data can be a difficult task that potentially requires the introduction of a new engineering department. Alternatively, creating a simple data API has significantly lower overhead and management costs.

There's another path toward API-first innovation: consuming external APIs. While creating an API to foster innovation and improve transparency is a great way to grow a business with minimal investment, it isn't the only way. APIs are meant to be consumed; their creators intend for other organizations to use and benefit from their API.

The availability of these external APIs can be a powerful tool when organizations explore new ways to foster growth. Take, for example, a photography company that specializes in editing tourists out of vacation photos. While this is a mostly manual process, the introduction of an object-recognition API trained to identify people may speed up the process significantly. This relatively small example is a low-cost way to experiment with new technology without building it yourself.

The use of APIs is a great, cost-effective way to innovate within a business. Real change is often not cheap. But the simplicity of data-driven APIs allows organizations to innovate with minimal overhead. Ultimately, an API-first approach to innovation provides a platform to identify potential business improvements and ensure that the organization evolves in an efficient and sustainable way.

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