Without effective management and reuse, APIs will not deliver their digital transformation potential.
There is an urgent need to make application programming interfaces (APIs) efficient and utilised more effectively. This need is being driven by the rapidly increased rate of digitisation that customers and business lines are demanding from CIOs and CTOs. APIs are a powerful tool that can be employed to deliver competitive advantage and market differentiation, the two biggest demands being placed on the technology team.
The Covid-19 pandemic has accelerated the digitisation of society and, therefore, vertical markets. In order to remain competitive, organisations have increased the pace at which they are digitising their business processes, which had begun prior to 2020 but sped up significantly in response to the pandemic. Management consultancy McKinsey reports that businesses with high-performance technology teams have achieved market differentiation. Technology in these organisations creates revenue and allows the business to adapt to market changes. Three-quarters of organisations with high-performance technology teams told McKinsey that digital transformation projects had achieved cost reduction and improvements in the employee experience and two-thirds of surveyed businesses had increased revenue from existing channels; half had created new revenue streams - typically digital channels.
These trends are set to continue; 50% of CIOs responding to the recent Harvey Nash Digital Leadership study their market will change markedly over the next three years. "Creating new products and services has become a top-three board priority," the report states. As a result, 61% of the CIOs in the Digital Leadership study planned to increase the technology headcount of their teams, but eight in 10 said recruitment and retention was one of their greatest challenges. Developers, data specialists and cyber-security skills are in the shortest supply. API developers required for cloud-native technology projects are in the highest demand.
That shortage exacerbates productivity challenges for CIOs, with a lack of skills within their teams and recruitment challenges preventing organisations from adopting new technologies. Research by analyst house GigaOm finds that API development processes are suffering, putting a brake on productivity and innovation.
The pace of technology-led business change is driving up demand for API solutions. APIs provide organisations with the basic building blocks for new digital channels to customers, employees and partners, which improve productivity and time to market of new products and services. Effectively deployed, APIs enable change without sacrificing the security posture and governance of the business.
Despite the board-level demand for digital transformation, studies repeatedly show that many organisations are unable to achieve the levels of API utilisation that enable innovation. Worryingly, many businesses are not achieving a return on investment (RoI) from the API development that has taken place. An inability to organise APIs is leading to this utilisation failure. APIs need to be easily searched, discovered, consumed, and collaborated with in order to deliver on their promise.
Without the effective organisation of the API estate, complexity creeps in, which further slows down the development and innovation processes of the organisation. Paradoxically, APIs were developed to enable developers to become far more productive.
CIOs and CTOs, therefore, face the challenge of growing the number of APIs and API usage but creating governance and security that ensures the organisation's digital transformation is sustainable.
Those organisations with high-performance technology teams that McKinsey identified are likely to have in place an effective API development, governance, integration and management platform and strategy. Organisations that successfully implemented a combination of an API-first approach with API-led integration have been able to achieve fast digital innovation such as Quantas. Whether organisations choose a containerised approach using Docker or Kubernetes or other cloud-native platforms, API management technologies ensure scalability and management of the API estate.
GigaOm's study also revealed savings per API reused of €30,000 in one business; the organisation has an inventory of 450 APIs and achieved a total saving of €600,000 across the entire API estate.
APIs' differentiation role
APIs provide developers with the tools to assemble those new products and services that digital transformation demands. Existing APIs, applications and integrations can be quickly combined to meet the expectations of the executive board, as well as customers. In effect, APIs open up parts of the business for anyone to reuse, whether they be a business line, partner or customer.
The adoption of open banking in Europe and increased use of interoperable APIs in digital healthcare are leading the way APIs are used to create differentiated, customer-centric services.
Open banking is an example of how APIs have enabled a vertical market to overcome the challenge of transforming its market without having to rip and replace legacy systems. Those legacy systems are expensive to re-platform and operate important business processes, therefore posing a significant risk to the organisation. API-led transformations can be delivered in weeks, whilst a good legacy technology transformation will take six months, but often longer. The headline-grabbing transformation failures have often involved legacy replacement programmes, whilst APIs deliver incremental, scalable and reliable changes at low risk.
API best practice
APIs deliver business transformation when designed and deployed with rigorous adherence to best practices. All APIs need to be designed for simplicity and reuse, which is best achieved through supporting multiple data formats and protocols. Reusable integrations and services also improve reuse and the RoI of an API.
The demand for fast-paced digital transformation cannot compromise the security posture of the organisation. API best practices provide authentication and authorisation; managing keys, tokens, and secrets; token mediation; or overall identity and access management (IAM).
Once deployed, APIs have a lifecycle which requires full visibility over the API for all users and versions of the API. Without lifecycle management, organisations will find that their APIs become a costly drag on innovation.
Utilised effectively and managed with best practices and compliance in mind, APIs provide CIOs and CTOs with a powerful tool to deliver the digital transformation their businesses and customers demand. A survey of 1000 business technology leaders found that 97% believe APIs have become mission-critical, and they are planning on increasing the strategic use of APIs in their organisations. If CIOs and CTOs are to deliver on the innovation agenda and if technology is to be a key differentiator for organisations, then API optimisation and utilisation are key to digital transformation.
APIs power proper digital transformation for business organisations.
Done properly, API-led innovation can save a significant amount of time and money while accelerating the go-to-market time. Organisations can accelerate their digital strategy by tactically deploying API-first services to take advantage of new opportunities without leaving their legacy code behind. This means they can harness the full potential of the business and empower their teams to spend more time designing and building revenue-generating digital solutions instead of focusing on time-consuming tasks such as coding and fixing errors.