API Basics for Business: What They Are And Why They're Important


API Application Programming InterfaceWith all the chatter about digital transformation and digital economy, application programming interfaces (APIs) have moved into the spotlight. As organizations are striving to transform by connecting their disparate systems, adding new capabilities on top of legacy software, and expanding into new channels, geographies, and business models—APIs can help solve integration challenges and enable organizations to focus on growing the business…not on IT issues.

APIs can open up numerous business opportunities and play a critical role in a company’s digital strategy. However, many enterprises aren’t leveraging them effectively to make their data stores and applications more accessible—and are therefore missing out on opportunities to serve internal and external customers better.

Also, this can mean missing out on significant revenue opportunities. The 2017 MuleSoft Connectivity Benchmark Report reports that over 50 percent of companies surveyed already are making money from their APIs or plan to in the near future. Additionally, 80 percent of large companies—those with over 10,000 employees—already make more than $5 million a year from APIs. If your organization doesn’t have an API strategy, it’s time to look at what APIs are and what they can do for you. Let’s explore this.

APIs 101: What They Are (And Aren’t)

There are multiple ways to define and describe APIs. MuleSoft defines APIs as “software intermediaries,” and describes an API as “a messenger that takes requests and tells a system what you want to do, and then returns the response back to you.

The Wikipedia definition of an API is a “set of clearly defined methods of communication between various software components.” Others refer to APIs as a set of rules, routines, commands, code, or form of user interface to facilitate interaction between systems.

Essentially, APIs selectively expose data and connect systems. They connect intended consumers with data and information, such as the real-time availability of product inventory or currency exchange rates. Developers dive deep into enterprise systems to determine what data will be made available and what will be secured from user access, using an API management layer to provide security, governance, and monitoring.

Because APIs have different uses, IBM has classified APIs into four main categories to consider when starting your own API program. They are:

  • Detection APIs, which include capabilities like location detection, sensor monitoring, and predictive analytics. Companies use detection APIs to identify new market opportunities and engage employees, partners, and customers.
  • Enrichment APIs, which use data from CRM systems, account records, and demographic analysis to provide better context for decision making.
  • Perception APIs, which use data shared by users or collected from sensors to offer insight into what users’ interests are, such as if a user has shared upcoming plans to travel to a ski resort.
  • Action APIs, which include push notifications and task management systems and spur users into taking action in real-time.

Each API is built based on the intended user, whether it’s an employee or customer. Depending on the business goals, a combination of these four API types can be used.  Check out the APIs for Dummies limited ebook to learn more about this.

Why APIs Matter

Let’s be honest—undergoing digital transformation is a lofty concept. It means different things to different enterprises. But if you’re serious about embracing what technology can do for your business, APIs must play a role. The integration possibilities can help organizations unlock data that otherwise resides in silos, understand customer behavior, and make data from a wide variety of systems consumable, readable, and actionable. Here are some examples of how APIs are being leveraged.

  • APIs and Cloud Strategies: For example, consider how your organization leverages cloud services. Most likely, data needs to flow from a cloud application into a legacy, on-premise platform, and vice versa. As your organization evolves its IT strategy—either rebuilding and replacing legacy systems on-premise or in the cloud—APIs are the glue that connects them together. If you’re considering a cloud-first strategy, APIs become even more important to connect back to crucial on-premises systems.
  • New Offerings: APIs also offer a way to connect to the outside world and offer new products and services to current and future customers. If your organization collects data or insights that could be valuable to a business partner, with an API, you can selectively expose that data on a subscription basis or to partners.
  • Personalized Customer Experiences: APIs also offer enterprises the opportunity to aggregate data from different sources and pull together comprehensive customer profiles, helping to identify which customers are the most valuable and loyal, understand which are most likely to purchase product and service upgrades, and deliver them more personalized service.
  • Enabling Omnichannel: Omnichannel strategies to create better, more consistent customer experiences will also require APIs. The data unlocked and aggregated through APIs can be used to encourage online shoppers to visit a brick-and-mortar store with a personalized offer, or examine customer preferences to create new consumer products. Financial services in particular can reap the rewards from APIs by using them for mobile banking and payment applications.
  • Internet of Things (IoT): Additionally, as the Internet of Things (IoT) continues to grow, APIs will provide a valuable way of collecting and aggregating data collected from various sensors. It may be monitoring shelf stocking in retail applications, patients in healthcare settings, or factory equipment in manufacturing. APIs can help organizations unlock new ways of operating efficiently and mitigating risk as they forge ahead with their IoT strategies.

As your organization moves forward with its digital strategy, APIs need to be a key component. They’ll serve to unlock data and make that data valuable, as well as connect disparate systems and find new opportunities for your organization.

We’ll explore more about APIs and API Management in future post.  In the meantime, learn more about the basics of APIs in this limited edition ebook from our partner, IBM. 

 APIs for Dummies

Of course, if you would like to learn more about how Lightwell can help you achieve your digital vision with APIs and integration, contact us today.


About the Author

Lori Angalich

Lori Angalich is the VP of Marketing at Lightwell. She loves exploring new technologies and business models, learning how things work, solving problems, and developing new ideas with others. She has a Bachelor of Science in Biology and an MBA in Marketing, and she enjoys applying her knowledge from both each and every day.  Lori has a passion for travel, art, wine, music, wildlife (including her two dogs, who are a bit on the "wild side"), and most of all, creating great memories with her family. 

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