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API Ecosystem Strategy, Benefits and Orchestration

Updated: Jan 20


API approach. What is it? Who uses API?

APIs, which stands for Application Programming Interfaces, are becoming ubiquitous in modern-day business because they enable companies to innovate and adapt quickly to rapidly evolving customer needs and desires.

The concept of plugging applications into other software programmes has long been around in computing, but over the past decade, the number and sophistication of APIs have exploded. There’s no doubt that businesses that ignore their many benefits and don’t move with the times will stand to lose substantial competitive ground and potential revenues during the years ahead.


Few customers would know just how many APIs are serving their needs in even the simplest of digital contractions, such as hailing an uber, making a peer-to-peer payment and communicating with a company via WhatsApp, chat and SMS. APIs also drive streaming services like Netflix.


In each of these, the customer-facing company satisfies a specialist need for a particular product or service, but they are drawing on other companies’ areas of expertise and sharing software services to simplify and enrich the customers’ experiences.


A State of APIs survey found that almost 60% of the 2 200 respondents considered participating in the API economy a top priority; of these, 67.1% worked in the financial services industry.


Companies already maximizing the advantages of APIs show that the sky is really the limit for savvy companies that successfully build and manage what can become complex but lucrative API ecosystems. Recent Deloitte Research found that more than a third (35%) of leading technology organizations were generating at least a quarter of their revenue through APIs.


Some of the success stories include:


Paypal – an early adopter, the fintech disruptor has changed the global payment landscape since it was founded in 1998 by technology entrepreneurs Peter Thiel and Max Levchin. Paypal now has close to 400 million active users, and its payment APIs are now embedded in countless websites, including eBay and Airbnb, to facilitate payment and other financial transactions between individuals and businesses.


Slack used APIs to create its ground-breaking Midas Touch, which enables sales and customer service teams to customize presentations using their customer data and share these across their teams. It created an API ecosystem by integrating Salesforce, its customer relationship management programme, Looker, its business intelligence tool, and Google Slides.


Twilio is a customer engagement platform that uses APIs to enable seamless and compelling customer experiences using a variety of digital communications mediums, including phone, chat, SMS, 2-factor authentication and VOIP through a user’s app or the company’s website. Hundreds of thousands of businesses and more than 10 million developers are using the company’s platform-as-a-service APIs, which power the unique and personalized customer experiences offered by Twilio.


Mambu has used APIs to facilitate a broad range of banking services flexibly and seamlessly. These are built on composable architecture. That means the banking components it offers, including Know Your Client onboarding, payment processing and regulatory reporting, are modularized and enable customers to choose the services they need to incorporate into the core banking system. Banks using Mambu’s APIs, banks can also create loan and savings accounts, manage system configurations, set up branches and configure interest rates quickly and easily.



Why Do APIs Matter? How a thriving API ecosystem sets companies up for success?

APIs have all the digital characteristics and capabilities needed to transform any business from the bottom up.


Critically in an ever-evolving world, they allow companies to innovate faster than at any time in the past. Instead of operating off centralized information technology architecture that has taken years to build and requires significant support and maintenance, APIs are modular microservices that can be created and adapted much faster than legacy systems.

Thus, companies can stay one step ahead of their competitors by continuously innovating without incurring huge costs and taking too long to get to market. APIs also facilitate and encourage collaboration between different services-providers.

With APIs, companies can focus on their areas of specialization while drawing on other companies’ areas of specialization, for instance, in payments, mapping, or financial services.


The relative ease with which a company can incorporate a complementary API is a huge benefit to companies seeking to broaden their offering or provide a one-stop shop to their customers.


With companies able to expand their range of products and services by either bringing in third parties or creating new products that would not have been feasible previously, APIs offer vastly increase revenue-generating potential, while reducing costs and the resources needed to expand their offering.

While APIs offer companies unlimited opportunities to grow, they must have a longer-term ecosystem strategy that enables them to manage and grow their digital offering if they want to be successful. This forward-thinking relies on having an API management system that maps all the APIs that make up the ecosystem.



API orchestration - what is it?

APIs may offer businesses blue sky potential, but they also need to be intelligently coordinated to provide that seamless, error-free customer experience that will ensure ongoing success.


To achieve this, a company needs to add a dedicated orchestration layer that ensures all APIs in the ecosystem communicate with each other in the same language simultaneously. This layer creates and designs the workflows by coordinating the activities in the data pipeline between data sources and their destinations and automating them where possible.


APIs are written in different languages and reside on different platforms, and thus the orchestration layer is responsible for transforming data into a standard format that allows for the API system to communicate effectively across all its components.


Whether simple or complex, data exchanges rely on logical workflows to ensure the correct commands are executed where and when they are needed in the API ecosystem. An orchestration platform coordinates these data exchanges and ensures they are being effectively processed and are error-free.


Every system will have its fair share of errors or breakdowns, but the impact of these on the end client can be minimized through ongoing monitoring and error notifications, which give the company the tools to troubleshoot these before they adversely affect the user experience timeously.


The bedrock of every API system is the authentication of its users so that the flow of personal information is completely secure. The orchestration layer handles differences in authentication across multiple APIs and ensures the network is always secure and, thus, sufficiently protected from attacks and data breaches.


The orchestration layer also handles the flow of data through the system to ensure it isn’t subject to overload. Data requests that are regularly made are cached instead of repeatedly processed by going back to the source API and thereby controlling the payload.



Conclusion

As the leaders in the API economy show, digitalizing services and products by harnessing the full power of APIs will open a whole new world of opportunities for companies willing to collaborate with other best-of-breed service providers.


But some challenges need to be managed if you want to create an enhanced and seamless customer experience. Fortunately, sophisticated management systems and orchestration offerings can help you continually manage, maintain, grow and adapt your entire API ecosystem.

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