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How Open APIs Can Help With SOA ROI, Create Business Value

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Over the past four or five months, I've been on a bit of an open application programming interface (API) kick.

 

And, of course, I've written about it as I've went along, including posts on the integration potential of open APIs, the problems APIs can cause, and where open APIs fall short when it comes to integration.

 

So, the moral of the story is that the integration story with APIs is complex. Fine. But there's one area that I couldn't quite bring into focus until recently-and that's how APIs can help you make money.

 

IT Business Edge's Dennis Byron touched on this topic in October with his post, "Where's the Business in Enterprise Software APIs?" It's a good read, but ultimately, I left it feeling as if APIs were mostly for high-tech companies like Twitter, Microsoft or SAP.

 

In fact, it wasn't until I read this ebizQ piece by enterprise architect and consultant Dion Hinchcliffe that I really began to see how APIs could be used to help companies-you know, normal companies, not high-tech companies-make money.

 

Hinchcliffe explains that many companies are sitting on a lot of valuable business data that, as he puts it, is "lying fallow." Open APIs, he notes, offer a way to "unleash the business value of strategic sets of business data and directly turn them into rapidly proliferating new product partnerships and innovations."

 

What's more, as Hinchcliffe explains, open APIs could be the missing link in squeezing value from your investments in service-oriented architecture:

And given that open APIs are essentially a public SOA with a business model embedded in it, many organizations are often closer than they realize when it comes to making APIs a reality, at least technically. In fact, it's one of the few ways that SOA approaches can go from being an overhead cost to being a direct creator of new business value and is also part of the closely related discussion about Web-Oriented Architecture (WOA).

Like I said much earlier this year-if vendors can make money via the cloud, why not you? At the time, I was talking about WOA, but it seems to me APIs help fill in the blank about how to move from producing services to using services for business value.

 

By the way, Hinchcliffe addresses how APIs can provide business value. Essentially, they create another business channel, helping your business by:

  1. Building partnerships, through what he calls "asymmetric partnership scale," which is to say, you do the work to support a partnership once, and "then partners onboard themselves going forward using their own resources as often as they like for marginal additional cost to the provider"; and
  2. Creating direct growth in revenue and market shares, thanks to the reuse of APIs, not just by partners, but through third-party products and services.

 

Now for the really good news: Before this year, it was a hassle, both economically and technologically, to build an API infrastructure, but in the past year, a number of solutions have emerged to make this much easier. Hinchcliffe has spent the past year compiling a list of vendors offering tools to help you create an open API infrastructure.

 

I realize you may not be ready - or able - to invest in new solutions now, but it's definitely worth exploring, particularly since it could help you open up new revenue streams and bolster ROI in other investments, including SOA.

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