The ubiquity of the Internet, mobile, and cloud computing has made APIs (Application Programming Interface) the de-facto foundational technology to exchange data and information across systems, devices, applications and geographies.
APIs have been around for decades, but the past few years have seen an explosive growth. As many as 40 APIs are being added per week to the ProgrammableWeb directory, and the total number of APIs stands at around 17,000 in early 2017. The key thing to consider here is that these numbers are based on publicly available APIs and do not reflect the API growth, internal to an organisation at all, which easily outnumber the public APIs.
With over 10 billion connected devices, the burgeoning Internet of Things (IoT) will feed even larger growth. Therefore, what we are looking at is just the tip of the iceberg as far as APIs are concerned. APIs are not only driving the exchange of data but also influencing enterprise architecture in a fundamental way. Hence, enterprises need to evaluate their IT organisations and processes for API readiness and beyond.
Why APIs Matter
APIs are the backbone of the digital economy. Many enterprises and startups have begun leveraging APIs to generate new revenue opportunities. For instance, a HBR study estimates that Salesforce generates 50 percent of its revenues through APIs, eBay nearly 60 percent and Expedia a whopping 90 percent. According to another report by McKinsey, an estimated $3 trillion in annual economic potential could be unlocked via open data and APIs across seven domains. The ability of APIs to generate revenue by monetising digital assets has led to people using the phrase “API Economy”.
Meanwhile, the proliferation of SaaS applications gives a new dimension to application development, where the developer has to focus on coding the business logic alone. APIs also take care of hiding the complexity of underlying implementation, bring in modularity and separation of concerns, which lets independent decoupled services to be implemented and tested. Thus, APIs can increase agility by de-coupling and exposing business processes.
Also, the monolithic infrastructure and applications that have powered businesses over the past few decades are giving way to distributed and modular alternatives. These rely on small, independent and reusable microservices that can be assembled relatively easily into more complex applications. Microservices are small, single-purpose applications that collaborate using APIs to deliver services. In many organisations, developers are already employing microservices architecture whether management knows it or not. Microservices, with the help of APIs, are poised to take scalability and continuous delivery to the next level in the years to come.
Is Enterprise IT Ready For APIs?
IT in a large complex organisation is typically dispersed with multiple silos and sub-groups which typically have their own processes and technologies. This makes integration across organisation and centralisation of IT a big challenge contributing so Shadow-IT related issues. However, APIs require communication and a common understanding across the silos in the form of programmable interfaces and contracts. This problem is exacerbated due to the complexities mergers and acquisitions.
Enterprises also have varying levels of IT project priorities and re-prioritising project workload is a standard IT practice that is here to stay. Prioritising projects to ever-changing business demands define an enterprise and the decisions taken by its IT leaders. Maintaining strategic initiatives with maintenance activities can be hard.
Moreover, application development in enterprises are still largely controlled and managed by engineering/technology teams relying on traditional ways of doing development, which is focused on technology rather than business imperatives. The business stakeholders like product managers and business analysts are part of the development process only during logical units and the technical modules are developed in silos and then a big-bang integration cycle happens, gobbling up enormous amounts of time and energy, which results in going back and forth in the application building process.
Today, IT is supposed to cater to business demands in a fast, responsive, low-maintenance, low-cost, scalable, secure, and consistent manner. Thus, it is not unfair to say that enterprise IT is not built to survive the challenges posed by the API-first, new normal. This calls for IT leaders to simplify the infrastructure, systems and processes across the enterprise.
Realigning IT To Thrive In The World Of APIs
In order to survive and thrive in the world of APIs, IT needs to be realigned in each of the following six dimensions:
- Leadership: Before charting on a new course, identify stakeholders, champions and potential opposition. It is critical to engage your executive team early to get their input and support. The force of the C-suite office is required not just for budgetary reasons, but to also gain strategic organisational alignment and influential advocacy.
- Culture: Also, very often, organisations apply technology to solve complex challenges only to find that the technology multiplies the impact and visibility of the problem. While technology is the enabler and can be the basis for transformation, you need much more than a platform to succeed. It is the intersection of people, process and technology that can pave the way to success.
- Alignment: Leaders need to create cross-functional, preferably co-located, teams for agile development and effective collaboration of business and technology resources. The alignment of business and IT teams reduces dependencies between teams and departments and helps teams to iterate much faster than teams that use the old practises thereby resulting in faster time to market.
- Priorities: Create a panel of business users and IT application experts who can analyse the characteristics of each application and the business process it supports. They need to identify and restrict the IT applications/retire them that way focusing on the ones for a continued investment and reduce the IT portfolio bloat. Once the applications have been identified, using the pace layering approach they can be categorised under the different pace layers as shown in the table below.
- Processes: IT functions need to leverage agile methods, such as scrum, to speed up application development. Siloes in IT must give way to a two-speed approach that maximises agility, flattens hierarchies and bridges the gap between strategy and execution. Approaches such as DevOps and continuous delivery should be fostered to facilitate the rapid implementation of digital innovations and promote quick reactions to changing customer requirements.
- Technology: Invest in a common digital platform where an ecosystem of users can repeatedly create and exchange value. Enterprise IT needs to become the custodian of this platform, which itself must become the ‘digital factory’ for the entire business. The goal should be to reuse digital capabilities to rollout innovations rapidly – creating, testing and developing new solutions and business models in no time.
IT leaders have both the opportunity to seize today’s business and technology opportunities, and the burden of preparing for increasing competition and discontinuous change that comes in the age APIs. How they respond will decide the success of the Enterprise IT in the world of APIs.