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How to Win in the New API Economy How to grow your business by sharing enterprise data and services via application programming interfaces (APIs)

Open APIs, once used only by leading technology companies such as Amazon and Facebook, have become much more prevalent. Enterprises are beginning to reap the benefits from the API economy. Open APIs are projected to reach 30,000 by 2016, compared to less than 600 in 2007, 2,500 in 2010, and 11,000 in 2013.1

1 Craig Burton. More on the Open API Revolution. KuppingerCole Analysts.

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A well thought-out API strategy can help you compete and grow in new ways by:•  Plugging into a digital value chain for extended market reach• Growing and managing your partner network more cost e"ectively •  Inspiring a developer community to create the next great set of apps for you•  Driving customer satisfaction with shared services•  Increasing brand awareness through data sharing• Accelerating growth with internal data sharing and inter-company APIs

This ebook explains: •  How the API took o" •  How APIs can be used to drive business value• The three API business models• The open API ecosystem• The power of APIs

…and o"ers some advice on: •  Determining your API business strategy•  Managing the digital value chain•  Establishing an API business model and keeping it running • Choosing an API management platform

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How the open API trend startedBy 2010, three trends started to converge, leading to an upsurge in connectivity and a more client-centric approach to application development using RESTful APIs:

Rapid growth of mobile devicesThe rapid growth of mobile phones and smartphones coupled with a"ordable connectivity allows users to be always connected to their information, and constantly be receiving updates.

Rapid enterprise adoption of mobilitySpurred by BYOD policies, companies began mobilizing web assets, workforce policies, marketing/sales channels and business processes (HR, ERP, CRM, and messaging platforms). Employee demand for connectivity and heightened productivity drove the creation of APIs that exposed these apps outside the IT boundaries of the corporation. As a side note, today, not only is the business mobile app market growing at approximately the same rate as the consumer app market, it is less congested and o"ers better revenue potential for developers because the primary route to market is via direct sales (B2B) rather than app stores.

Continuous growth in Internet business modelsDuring the last decade, as companies continued to experiment with new commerce models, merchants, supply chains, and marketplaces, the model changed to “always connected and available.” Social media has also accelerated the connectivity and generated personalized connections between businesses and consumers. Emerging trends such as the Internet of Things will be generating more demand for APIs.And today…

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“Mobile app projects will outnumber PC projects by a factor of four by 2015.”

— SaaS Industry Report, Summer 2013, Siemer & Associates

“Today’s $67 billion mobile app market (2013) will exceed $140 billion by 2016.”

—Vision Mobile

“Tablet adoption in enterprises is estimated to rise by 50% annually over the next few years.”

—TrueWireless Inc.

“More than $28 billion was spent on apps by business and professional users in 2013, and this will reach $58 billion by 2016.”

—Vision Mobile

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Today, the open API is one of the most powerful sources of competitive advantage. It comes down to the potential of your data and services. APIs can be used as connectors to get your business plugged into the always-on digital value chain. As a result, you can reach into new markets for additional revenue streams. You can use APIs to grow and manage your partner network more quickly and e#ciently, which lowers the cost of onboarding business partners and lets you cost-e"ectively take your business into new channels.

APIs can also facilitate customer satisfaction. You can address and resolve customer experience issues, build better relationships, and increase the touchpoints you have with customers because you can, for example, see them browsing, evaluating, and using social networks before they purchase. You can inspire a developer community to create the next great application while gaining a competitive advantage through innovation. You can also monetize your APIs.

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Open API is a term that describes a business model where APIs are published on the Internet to be shared with business partners and/or third-party application developers with the intent to deliver a successful open initiative. The model fosters collaborative services environments between API providers and application developers who consume APIs.

Theoretically, this creates a three-way win because enterprises, developers, and application users can share the innovation and cost benefits created.

Three API business models and how they workPublic APIs are consumed by external partners and developers. Developers unknown to you can use your APIs to build innovative, highly practical applications. Sometimes the term

“open API” specifically refers to this model.

Partner/B2BAPIs are consumed by business partners, including suppliers, providers, resellers, and others. This model tries to achieve extended market reach and cost reduction through tighter partner integration.

InternalAPIs are consumed by internal developers within your organization. This model may include external contract developers, but the targeted projects still remain inside and aim at cost reduction and operational e#ciency.

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The open API ecosystemAPIs are of great advantage to the enterprise, with success supported by the nurturing of an ecosystem that includes application end-users and application developers.

Application end-users can gain tremendous convenience and productivity with API-enabled apps that transform the way they work and play.

ISVs and application developers who consume APIs to create applications drive innovation for their products and services. They can shorten time to market while reducing costs by leveraging someone else’s services (like yours). For this part of the ecosystem, APIs can also act like a bridge to the user bases of API providers.

WIRED magazine explains it like this: “Today’s software development does not require building everything from scratch. Instead, if you’ve created any piece of software, you are well likely to find tools and documentation that will help you fashion at least a small part of it thanks to APIs, open source code, and code-sharing services such as GitHub. In a nutshell, you can shape and reshape almost anything in this world as long as you know the code.”So you see, the world’s knowledge can be API-enabled. Some examples:

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The power of APIsBecause an API is essentially an instruction manual, it’s about organizing and packaging existing knowledge— what we know about any particular subject—to solve problems. Some examples of how APIs are used:

RetailNational brands can connect to customers wherever they are by exposing inventory and price information via APIs. Applications that third-party developers create can cost-e"ectively improve market reach and a brand’s stickiness.

HealthcareOne challenge for health caregivers is staying current with care routines for multiple patients. APIs supply this information to caregivers via mobile applications so that the right medication and the right care are provided to each patient at the right time

InsuranceAn insurance company improves broker responsiveness, information transparency, and operational e#ciency by o"-loading work now performed by brokers, such as providing certified car repair locations to claimants.

Financial ServicesBanks and credit card providers seek to strongly di"erentiate. Using APIs, customer information can be protected, yet shared with business partners to create applications for greater customer service, such as providing credit card holders with the option to use reward points for purchases.

Airline/TravelBy making product and customer data available to travel brokerage services, both customer service and profitability can be streamlined and improved, despite the industry’s multi-layered sales channels.

Telecom Mobile network operators wholesale their excess capacity to companies that tack on value-added services and sell to the same subscriber base. APIs could help determine and deliver the right service to the right place at the right time to help operators capitalize on this market.

Media/Market Research Using APIs, market and consumer behavior data enriches content for directories, reviews, ratings, recommendations, deals, and other social applications. Crowd-sourcing could be used to create innovative applications.

Logistics For traditional delivery and logistics providers, address and location information is a core competency. APIs can help these providers integrate with retail, e-commerce, and other businesses to o"er di"erentiated delivery services.

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The Internet of Things A company that produces sensors and switches for the smart-home or connected-car market can activate and deactivate AC and lighting systems based on data received through APIs, such as weather and sunrise/sunset times, in addition to the location and recorded information on the consumer’s lifestyle. The Internet of Things will provide tremendous opportunities for leveraging data and services for consumers and is estimated to be a multi-trillion dollar market by 2020.

The Enterprise Enterprise data, including payrolls, expenses, travel, training, operations, finance, sales, and marketing can springboard innovation both within a company and outside it via third-party developers. With the trend in mobile app development shifting from B2C to B2E, companies without APIs may be left behind.

Government Our personal data is secreted away across multiple government departments and agencies. What if healthcare, social security, veteran’s claims, or school loan information could be accessed from one central site with just a few clicks? APIs could help make this happen if siloed data were opened and privacy protection enforced.

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APIs and your business strategy There are many compelling reasons for incorporating open APIs into your business strategy. As you consider whether the time is right and what the benefits might be, ask yourself:

• What data or application functionality could we expose to existing business partners, channel partners, or suppliers that would make it easier to do business with us?

• Where can we take cost out of the supply chain by enabling more self-service and more flexibility in how suppliers interact with us?

• How can we use an open API to create competitive di"erentiation and deliver additional value to customers?

• Would it make sense to repackage our data or product subscriptions as a collection of fine-grained micro-subscriptions that can be monetized via APIs?

• What new routes to market or business partnerships can we potentially create by exposing data or application functionality?

• Does our strategy include an opportunity to leverage growth in mobility and potentially reach new markets?

• How can APIs used by external developers help drive product innovation and out-of-the-box thinking within the company?

• How can we leverage real-time data to enhance customer experience and drive more users and businesses?

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Where do you start? Let’s assume you’ve decided to explore open APIs. First, determine a strategy (based on who, what, and why). After that, you’ll need to decide how you’ll execute it. What are the objectives you are trying to achieve? Consider what problems you need to solve:

• Poor customer satisfaction?• Limited brand reach?• Costly partner management?• Revenue issues?

What would the ideal world look like after resolution? Can you see APIs helping to make that happen?Then, identify which assets you can expose and to whom. Would you make these assets available only to internal developers or to business partners outside the company? Or does it make sense for these assets to be public, or at least, have that planned for the future? Try uncovering these elements by drawing potential use cases or customer stories that use APIs as the catalyst. In some cases, APIs can be your products, which will require lifecycle management.

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Managing the digital value chainLet’s say you’ve done the homework and identified strategic value for an open API. You’re anxious to get some experience with this new business model.

Here is a recommended practice in managing the digital value chain enabled via APIs: You expose selected internal enterprise data or business functionality as web APIs and make this data or service available to external developers. Developers consume your APIs by embedding them in their applications. These applications are mainly delivered as mobile apps and/or B2B services and used by your business or end-users. Monetization opportunities are available, yet some companies o"er APIs for free if they are more interested in brand exposure and indirect returns. Twitter, for example, does not directly charge developers for the use of some Twitter APIs, yet 60% of all tweets come from third-party client apps. Other companies take a more conventional route by setting the pricing schedule using various models such as pay-as-you-go, tiered, unit-based, and freemium. Set metrics that will define success of your API business. Through an API management tool, such as end-to-end monitoring, you will track operational KPIs and SLA compliance. This will help you gauge your API performance and identify future capacity needs.Live monitoring of API usage patterns and specific user behaviors will give you deeper insights into your initiatives and allow you to look for opportunities to grow them.To deliver the best performing API-enabled applications, API analytics should be shared with application developers. They can then be proactive in auditing and debugging, as well as monitoring KPIs and SLA compliance from their end.

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Establishing an API business model and keeping it runningWhat are the key challenges to establishing and running a business using APIs? What are the major di"erences between the SOA and API management practices?The challenges, in a nutshell, have to do with opening up internal assets beyond the firewall and dealing with external businesses that will be using your assets. While SOA governance may help manage tens of partners and hundreds of services, API management addresses hundreds or even thousands of partners. This complexity requires di"erent approaches for service governance, security, performance, partner on-boarding, contract management, and product lifecycle management. Questions that may arise:

• How can we maintain control over growing partners and APIs? Can we provision partners and APIs using our own rules and policies?

• Can we protect our internal assets against potential threats at all times without additional investment?

• Can we ensure agility to bring new and improved services and APIs to market?

• How can we scale without compromising API performance? • Would it be possible to empower business users to manage API

lifecycles on their own?

This is where an API management platform can help.

Build vs. buyAn API management platform can help you manage partners and APIs with ease, security, and governance. But should you build your own or buy a commercial solution?You can certainly task your IT department with assembling the infrastructure for hosting and managing the environment. However, it is an expensive proposition and competes with many other IT priorities.

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API management platform considerationsWhen you shop for your API management platform, consider how its capabilities, technical support availability, and deployment options fit your overall API strategy. Complex API scenarios and enterprise environments require solutions that are more than just cloud proxies or plug-ins. If you are aiming at enterprise-class API management, here are the key features to consider:

• Controlled and regulated access to curated enterprise data and services makes it easier to manage and govern your APIs. With the right API gateway, centralized runtime management and governance of APIs can be applied to any service in the organization.

• A federated gateway architecture, which scales with caching, throttling, and load balancing, can ensure performance and availability.

• Rules and policy creation defines how specific events are handled throughout the processing pipeline of an API call. Customized policies and actions can extend anywhere, globally, or for specific services or partners.

• Native support for REST and SOAP APIs can conform to the demanding needs of mobile applications. Any SOAP service can be exposed as a REST API.

• Advanced security and threat protection shields APIs from attack, controls access, and secures API-transmitted data. Examples include API keys, OAuth, mutual SSL, WS-Security (SAML, User name, X.509, LDAP), HTTP Basic, and Kerberos. They should easily integrate with existing databases and identity management systems.

• A self-service developer portal allows you to package APIs quickly and manage partners cost-e"ectively. It’s also helpful if it allows you to host and manage the API community.

• Support for building an integrated marketplace supplies a place you and your developer partners can come together to host, manage, learn about, and use APIs.

• API analytics allow you and your developer partners to perform end-to-end monitoring of API usage and performance. Analytics allow you to easily gain insights on API revenue opportunities, future road maps (plans), and capacity needs.

• Wide deployment options allow you to include on premise, cloud, and hybrid models to meet unique and complex configuration requirements common to enterprises.

• Support for streaming APIs make it possible to use one request with query filters and respond with a stream of continuously changing responses.

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ConclusionA well thought-out open API strategy can drive innovation and help you compete in today’s business environment. However, open APIs may not be for everyone. We recommend considering carefully the use cases, services needed, and the nature of the problems you are solving. What does your ideal world look like when they are resolved? In that ideal world, are software applications powered by your enterprise data playing a part? If so, API is the answer for you.

Download the TIBCO API Exchange datasheet (PDF)

Download the API Exchange Gateway datasheet (PDF)

See how API Exchange Gateway supports a logistics use case (03:09 min)

©2014, TIBCO Software Inc. All rights reserved. TIBCO, the TIBCO logo, TIBCO Software, and TIBCO API Analytics, TIBCO API Exchange, TIBCO API Gateway, and TIBCO API Manager are trademarks or registered trademarks of TIBCO Software Inc. or its subsidiaries in the United States and/or other countries. All other product and company names and marks in this document are the property of their respective owners and mentioned for identification purposes only.

As a complete API Management Platform, TIBCO® API Exchange provides everything needed to expose, distribute, and monetize enterprise data and services. It empowers enterprises to increase agility and gain a competitive edge with three key components of API Management:

• API Manager. Management portal for enterprises and developers

• API Gateway. Runtime routing and security enforcement

• API Analytics. Interactive visualization of usage and behavior

TIBCO API Exchange easily integrates with other TIBCO solutions and covers any API scenario—internal, B2B, and/or public API.

Get more information at www.tibco.com/api