What is an API Economy (Application Programming Interface Economy)
APIs are customer facing, customizable software interfaces that enable once separate software components to effectively communicate by overcoming the inherent incompatibilities created by differing software platforms. APIs bring a new level of connectivity and data sharing to multiple applications, regardless of their platforms, data structures, and underlying technologies. The innovative power of APIs has led to the realization that APIs can be a critical component of enterprise solutions that impact the operational bottom line, contributing to efficiencies, growth, and innovation. That, in turn, has created the API economy, which is loosely defined as the way APIs can positively affect an organization's profitability.
In the past, APIs were mostly relegated to software professionals seeking to resolve interface and data sharing problems associated with incompatible software solutions. Eventually, the rising value of APIs became evident, exemplifying the possibilities behind emerging technologies. Those technologies, such as social networking, web-based applications, mobile solutions, and countless other endeavors fully demonstrated the emerging financial effects of APIs on businesses, and the ability to garner additional revenue.
According to research firm Gartner, APIs make it easier to integrate and connect people, places, systems, data and algorithms, create new user experiences, share data and information, authenticate people and things, enable transactions and algorithms, leverage third-party algorithms, and create new product/services and business models.
Kristin R. Moyer, vice president and distinguished analyst at Gartner, said “The API economy is an enabler for turning a business or organization into a platform. Platforms multiply value creation because they enable business ecosystems inside and outside of the enterprise to consummate matches among users and facilitate the creation and/or exchange of goods, services and social currency so that all participants are able to capture value.”
MuleSoft's Connectivity Benchmark Report lends credibility to the importance of the API economy and indicates that the explosive growth of the API economy isn’t due to any one factor, but rather a perfect storm of sectors emerging that all rely on APIs to some degree.
For most, if not all organizations, the API economy proves to be a viable avenue to creating new services and capabilities, which will ultimately lead to new avenues of revenue. With the mainstreaming of APIs and the popular services that make use of them, organizations will make APIs a serious factor in their business model. What’s more, the accelerating progress of mobile technology and the Internet of Things, creates little doubt that the API economy will continue to grow and flourish at a rapid pace.