If your business has anything to do with APIs, whether it creates or consumes them (or both), you will no doubt have heard the term “API economy”. But what does API economy mean, and how can you embrace its full potential? Give us five minutes of your time, and all will become clear.
What is the API economy?
The API economy is the digital economy that stems from application programming interfaces as the basis of new API business models, products and practices. Organisations have progressed rapidly from simply using APIs to enable two services to communicate to spinning up new business ventures based on APIs’ unique and innovative capabilities.
As the use of APIs has grown, so has the range of products supporting their implementation, management, operation and evolution. From a microservices API gateway to tools for monitoring and observability to API software companies providing consultancy services, an entire digital economy has sprung up around using APIs. Fittingly, it has become known as the API economy.
API economy statistics
According to the latest State of APIs report, over 62 percent of developers relied more on APIs during 2022 than in 2021. And 69 percent expect to rely on APIs even more during 2023. The light is most certainly shining brightly for the masses.
That said, those participating in the API economy are at differing levels of maturity when it comes to their use of APIs. According to Tyk’s Secure Your Path to Revenue Growth report, 70 percent of organisations report their API maturity level as intermediate. This shows how much more room for growth remains as the API economy and its participants continue to develop.
Even as the API economy continues to grow and organisations’ familiarity with APIs matures, few people are underestimating APIs’ potential. According to SoftwareAG’s 2022 Annual APIs and Integration Report, 98 percent of IT decision-makers ranked APIs as very or extremely important. Meanwhile, Enterprise Strategy Group found that 42 percent of organisations it surveyed reported that most or all of their internal applications relied on APIs in 2021. That number was expected to rise to 64 percent by 2023. The API economy is very much here to stay.
Why is the API economy important?
Why is it important for your business to get in on the API economic action? Well, a whole host of reasons. Embracing the potential of APIs can enable you to monetise existing business resources, create a whole new API business model, decrease your time to value and time to market, open up new markets, underpin more effective ways of working, increase customer satisfaction and more. What business doesn’t stand to gain from all that?
API economy examples
Tyk itself is part of the API economy. The benefits of Tyk are built around supporting businesses to do more with their APIs through outstanding full lifecycle API management. If it weren’t for API growth and the evolution of the API economy, API businesses like Tyk wouldn’t exist!
Examples of major global businesses with API strategies that make the most of the API economy include Google, Amazon, Stripe, Twilio, Slack and a whole host of other household names. Google’s original Maps feature, for example, has developed into a platform providing Maps, Routes and Places APIs and SDKs that allow businesses to integrate dynamic and static maps with their apps and websites, provide directions, access 360° Street View imagery, use geolocation services and much more. This is a prime example of the value multiplication that Gartner vice president Kristin Moyer mentions when talking about the API economy:
“The API economy is an enabler for turning a business or organisation into a platform. Platforms multiply value creation because they enable business ecosystems inside and outside of the enterprise to consummate matches among users and facilitate the creation and exchange of goods, services and social currency so that all participants are able to capture value.” Kristin Moyer, vice president, Gartner.
How can businesses benefit from the API economy?
When businesses put the right infrastructure, tooling and resources in place, they can benefit from the API economy in myriad ways.
Monetise existing resources
Benefitting from the API economy doesn’t have to mean creating new APIs from scratch. Many companies have an existing product or feature that they could turn into a monetised digital experience by consuming an API. They could also expose their own internal APIs for public consumption, thus creating additional monetisation opportunities.
Maximising value
In addition to monetising, embracing the opportunities of the API economy means that businesses can also ensure their products deliver maximum value. The path to achieving that will differ from business to business. For one, it might mean implementing a new microservice gateway access pattern. For another, it might mean providing an internal developer platform. And for another, it might mean creating a new version of their core API.
There are countless other ways in which participation in it can support businesses to maximise the value of their products. When it comes to API-related opportunities, we’re certainly living in exciting times.
Create a new API business model
Businesses can also benefit from entirely new business models centred around APIs. The concept of APIs as products is still evolving, but with this approach, businesses can create highly focused, customer-centric solutions that allow them to scale rapidly.
Achieve faster time to value
The wealth of API resources that are available also means that businesses can achieve value from their APIs faster and ship their products to market faster. A decent open source API gateway can play a leading role in this, supporting developer teams to ship faster while also shifting security left to reap all the rewards of automation and standardisation.
Open up new routes to market
Taking a business API approach doesn’t only mean getting to market faster, but it can also open up new market routes. Monitoring and observability come into play here. When a business understands in detail how customers are using its API products, it has the potential to respond to customers’ needs in numerous ways.
Businesses that consume APIs rather than creating them can also find new routes to market as they embrace new opportunities and shift their business models accordingly.
