Business models are constantly changing, they say. APIs, Application Programming Interfaces influence the business models, they also say. But how APIs are related to that change? Or what APIs even is and what is the difference between API and, app, and platform economy? Why and how can my company be part of the change? Is it a task of the IT department?
We will give you seven warnings about how API Economy 101 -book, written by four API Economy professionals, make you think your business model in a new light and from a different perspective. Take a deep breath and dive to the world of API Economy.
⚠️WARNING: YOU MAY FIND NEW WAYS TO CREATE A VALUE TO DEVELOPERS AND CUSTOMERS⚠️
When creating an API, the most important question is to what added value and to whom should the API produce.
In the shoes of the customer, the value includes a wide variety of benefits and sacrifices. Customers’ perceptions of value are personal and formed as a sum of various things. An API can be a product itself or an enabling factor as part of the customer’s value creation.
"The API is an interface for capturing the value proposition, not just an interface for the application"
⚠️ATTENTION: BROKEN COMMUNICATION WITH CUSTOMERS MAY MAKE YOU DELIVER THE VALUE CUSTOMERS DON’T REALLY NEED⚠️
When planning or building an API, it is important to make sure providers’ and customers’ needs (and expectations about the needs) meet. Common mistakes are that provider build value that customer doesn’t want or that some features are not provided at all. The value service provider intends is not the value the customer perceives.
⚠️WARNING: YOU MAY UNDERSTAND THE BEAUTY OF THE ECOSYSTEMS⚠️
“An ecosystem is made up of a multilayered group of partners, all of whom and their interactions are needed to materialize a key ecosystem value proposition.”
This is Ron Adnerd (2017) definition for business ecosystems. The API economy ecosystem differs from the traditional platform ecosystem in terms of governance. In the API economy ecosystem, new services are constantly being created by different companies and as mashups of APIs and the focus is on APIs instead of the platform. This enables a new kind of value
creation with external partners, competitors, and various network communities and customers.
⚠️WARNING: WE TELL YOU IS API A PRODUCT, SERVICE OR SOMETHING ELSE⚠️
In API Economy 101 book, one of the authors Marjukka Niinioja, answers the question on everyone’s lips: what API is and what is its optimal role as part of a company’s business model and IT architecture.
API in itself can be a product, a service, a technology, or a resource. In a broader view, a change is moving from product orientated logic to service-dominant logic. When a company moves into API era, it must make an inventory of its resources in an API perspective.
But what resources really are? Marko Seppänen and Marjukka Niinioja developed a new model that describes the resources available to the company specifically in the API economy. More about the model on the book.
“The most important resources of the platform economy company are knowledge and APIs related to the resources of other companies and organizations.”
⚠️WARNING: WE PUT YOU THINK FOLLOWING QUESTIONS: WHO IS YOUR CUSTOMER, WHAT IS YOUR VALUE PROPOSITION, AND HOW CAN YOU PRODUCE VALUE TO THE CUSTOMER AT THE RIGHT COST?⚠️
There is a reason why the teaching of business models is mainly done by canvas. Canvases force people to think their customers as a part of their business model. This customer-focused point of view is essential to the success of the API economy, not designing solutions based on the API provider, as well as focusing on the relationship between the provider and the market. Good tools for this are the API value proposition and API business model canvases.
“In the API economy, developer experience is a key part of
customer experience and business model success.”
⚠️ATTENTION: INTERNAL API, PUBLIC API, PARTNER API,..?? WE RESCUE YOU FROM CONFUSION⚠️
After defining the role of APIs to your company, the next step is to figure out what kind of API serves you best. Questions to help API definition can be is API available anyone to register, is paid support available to adopting API or is there an open license for data?
The book goes reviews the features of different APIs, strategies to use it and impacts and benefits for your business.
⚠️WARNING: WE HELP YOU TO SEE DEVELOPER COMMUNITY AS A CUSTOMER⚠️
As a target segment, API consumers are different from end- customers, who use the outputs of the API consumers. API consumers, that is, application developers, require their own direct and sales-jargon-free practices to deal with an API offering.
To overcome the chasm, the API developer and customer experience must be optimal. That’s why we focus on developer relationships.
Your head must be full of the new thoughts now. Like you, we may not have a completely exhaustive answer, but a good start is within your reach. Get your own API Economy 101 book and dive even deeper. One last warning, once you dive there may not be a way back.