The term API (Application Programming Interface) has become one of those terms being used at all levels of business from the boardroom to developer teams. Many companies are now hiring for API strategy roles while others are leveraging internal champions to drive their API strategy.
This is new area for many companies and as such it’s not clear to many how an API strategy should be formulated. Depending on the orientation of the person or team defining your API strategy, it is pretty easy to have blind spots around the business model, go to market strategy, implementation or operationalization of your API. The fact is your API is a new product that represents and significant business opportunity. As such, it needs to be planned in the same detail as any new business venture.
No Strategy is a bad API Strategy
Many will be familiar with Twitter, the social sharing site that started as a way for people to share updates with their friends. As the service grew in popularity it attracted a lot of funding without anyone really knowing what the business model was going to be for the service.
Twitter’s API became one of the most successful APIs in history thanks to thousands of developers creating an application ecosystem around the service. As pressure from investors mounted for Twitter to figure out how it was going to monetize, they repeatedly changed their usage policies to the detriment of their ecosystem. These changes included disallowing others to create applications that enabled users to publish and subscribe to feeds so that Twitter could own the eyeballs and hopefully grow advertising revenue.
They also started locking down access to the “fire-hose” – the public feed of everything – used by companies to monitored trends and provide sentiment analysis for everything from political campaigns, brands, celebrities and TV shows. Now the early adopters that gravitated to Twitter are also the ones looking for something new in part because of how the policy changes have negatively affected the ecosystem. If Twitter had a strategy for their API up front, they might be in better shape right now.
To avoid the pitfalls that Twitter has stumbled over, plan your API strategy by considering the following 5 aspects.
1. Pick a Business Model
The press have been calling Open APIs the new Open Source. Having 15 years of open source experience, I can see the parallels on the freedom and leverage aspect – both Open Source and APIs allow you to choose and leverage capabilities of other applications, platforms and utilities – but the strategy is very different.
APIs are an opportunity to drive new channels of business. As such, you need to understand what you will offer, who your audience is and how important your offering is to that audience. Some companies such as Google and eBay have offered free APIs for a while, but increasingly companies are realizing that certain types of data and functionality is worth paying for. There are already lots of business models in use such as Free, Developer Pays, Developer Gets Paid, Indirect. The tree below highlights the number of business models today and growing.
2. Understand your audience
As with any product you need to understand whom you customer base will be and how you will reach them. It is not enough to say you want developers, in reality you API usage will be driven by companies that can leverage your API to their advantage. So the question is which segments and/or companies have the most to gain from your API.
Ideally, you’ll be able identify an audience that experience pain by not having your API; you want to be selling painkillers not vitamins. SaaS applications, such as Salesforce and NetSuite typically have APIs that serve System Integrators and end users that create an ecosystem around the data stored in the SaaS application. Infrastructure APIs often align with a platform or with consumers that currently buy the equivalent on premise infrastructure. You will need to define a go to market strategy that communicates the value of your API in a way that will grab the attention of your audience.
3. Plan and resource your marketing and community strategy
Many people considering an API strategy will not have created a product before. The challenge with APIs is that there are potentially two audiences that you need to reach: the business owner that has the need and the developer who will work with the API. These strategies can be split into Marketing and Community. Both are important.
Depending on what your API offers you’ll need to “solution sell” your API, to help your customer understand the value and relation to their problem. Many organizations are just starting their journey into an API-centric world; you’ll need to cut through the marketing hype to engage your audience. Your community strategy is focused on engaging the developers that will use your API. Those that have a loyal and vibrant community succeed others die on the vine. Depending on your business model, you don’t need hundreds of thousands of developers, but you will need to be engaged and helpful in supporting your developers.
4. Be a good citizen
It’s really hard to get an API right first time around and it’s not easy to change an API if you have traction. Plus you are fighting against everyone else to the right expertise to deliver an API in this emerging market.
You will want to appeal to developers and developers like APIs that are ‘good citizens.’ This means that the API has good documentation, the sign up process and security is standard and transparent, the API is discoverable through a console, there is a way of running tests against it and it has a well-defined versioning and change control policy. This is a lot to get right.
Luckily, there are vendors that ease some of these concerns, but you need to make them a focus of the implementation. As I recommend with integration projects, its better to start small but think big; start with a simple API and graduate to offering a wider set of services that to try and do it all at once.
5. Have an operational plan
Most organizations have little experience of running a public service other than keeping their web site up. The operational side of publishing an API is often overlooked by the implementation team but is critical to the success. IT operations will typically take charging in owning the API infrastructure and will need to ensure its secure, reliable and available, smaller companies may choose a partner to host with.
As the APIs market places fill up the Service Level Agreement (SLA) of an API and the vendors ability to meet that SLA is becoming increasingly important. APIs are typically integrated into other offerings, downtime of the API can mean down time for your customers applications.
Starting your API Strategy
The golden rule of creating a great product is to think from the vantage point of your users. The table below offers a set of questions to help identify your strengths, weaknesses, opportunity and threats (SWOT).
Table: SWOT Analysis Questions
Do you have data that others don’t have access to?
Can you glean useful insights or trends from the data specific to you?
Do you functionality that you have invested significant IP that is hard to copy?
Have you already invested in building APIs? Do you have the right culture and skills?
Do you have a captive audience or will you need to build from scratch?
Can you identify new markets for your data or functionality?
Can you team up with other suppliers to offer more value or reach a new audience?
How much of your existing skills can you leverage to gain advantage?
How easy it to mimic your API?
How well do you understand your audience and the business models they will bear?
Are you building your API as a product?
This is an exciting time as we move rapidly into an API-centric era. New products, business models and channels will be defined that open up more possibilities than we can imagine. Those that treat their API strategy as important will stay in the game to gain competitive advantage, many that don’t will risk falling by the way side. Your API may be your most successful product. Treat it as such.
About the Author
Ross Mason is founder and CTO of MuleSoft, provider of the most widely used integration platform for connecting SaaS and enterprise applications in the cloud and on-premise. Ross founded the open source Mule project in 2003. Frustrated by integration “donkey work,” he set out to create a new platform that emphasized ease of development, flexibility and re-use of components. He created Mule to bring a modern approach – one of assembly, rather than repetitive coding – to developers worldwide.
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