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API stands for application programming interface, and to put it simply, it is the communication network between to web-based applications. APIs allow for the exchange of data without having to have any physical connecting systems. APIs are primarily considered as the key for any new digital transformation strategy.
If you aren’t particularly IT minded, the idea of APIs can be confusing, and so outlined below is the basic information on them and why they could become a pivotal aspect of your business.
Internal vs External APIs
APIs can be either public or private. Private APIs are used internally usually to develop or simplify existing processes. For example, they are often used to integrate systems or create apps used by employees. Those core uses are important but to only use them for that underutilises them as a business tool. Public web-based APIs allow for the companies data to be accessed by third parties securely, which holds a massive potential for businesses. When you make your data available, you are, in effect, extending your reach sometimes globally, which can open up new markets, creating new channels for revenue.
In terms of third party interest, you can usually expect developers to be the ones to want to utilise your API. Developers tend to seek out APIs as they greatly reduce the amount of time they will need to spend writing code, which allows them to take a more collaborative attitude towards a faster and cheaper innovation.
Forward Thinking
APIs have been used to transform businesses, a trend we can only expect to gain traction and become more prevalent in the future. Traditional business strategies relied on large sales forces, mountains of paperwork and generally outdated and expensive means to run day-to-day. These practices are far less sustainable, and so they are becoming more and more scarce time all the time. Companies instead are reducing costs and time wasted by building solutions that APIs access. The influence of APIS is easy to see when you consider the internet and all its uses.
Commercialisation
APIs are one of the only channels that allow for data exploitation that would otherwise go unused. They are often considered digital products in their own right, which means that they can be commercialised, and as such, they do need some legal documentation such as a licence or pricing model. Some creators choose to provide their APIs for free, which is a shrewd move in itself as it brings more brand exposure and allows for commercial opportunities. They can generate revenue beyond the price of their own subscriptions, as they promote visibility and interest, acting as a go-between to bring new business back.
As with any product or service, there are various tiers and pricing models primarily dependent on user need and business strategy. For access to your API, you can charge a subscription or adopt a pay per use approach. When you offer your API up for public consumption, you are simply offering up an information mine; those who buy access can see the number of requests that go through it. There are a few things that you should consider when determining the cost of your API; how expensive will it be for your business to deliver it? How important is the data provided by it? How big is the market for it? Lastly, how competitive is this market?
Digital Marketplaces
APIs can be traded directly between two parties, or you can choose to make them widely available using a digital marketplace. This allows for a more universal experience for potential consumers. These marketplaces deliver a whole host of API tools on one platform. Your business could utilise a digital marketplace beyond providing your API through it as they have a wealth of information from discovery to user content and contract management. For people who require more than one API, it is more cost-effective and simply easier to use a website like that. For example, the information found in re.alto’s Energy Digitalisation API is popular among energy businesses as they offer a host of APIs, allowing them to research and understand the markets they want to operate in better.
Conclusion
APIs generally offer companies a chance to scale, encourage innovation, and allow for a wider reach. Business success is becoming increasingly dependant on how well it connects to third-party apps, devices, and services, and APIs can be instrumental in this. If – as you should be – you are considering developing an API for your business, it can be an arduous process that you may want to consider outsourcing. The amount it will cost to develop an API will be offset by the benefits it will provide in return. APIs are an investment in your businesses future.
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