API Economy a ‘Second Digital Revolution’
The shift is being driven by an increase in the use of application programming interfaces (API) which creates a new economy of information where disparate groups – both public and private sector – can exchange data and access services with minimal friction.
Ross Mason, founder and vice president of MuleSoft, suggests the ‘API economy’ can be considered to be a “second digital revolution.”
Large organisations, including Fortune 1000 companies as well as the US and UK governments, are immediately well-placed to use these services but the valence of the API economy is rooted in its appeal to small- and medium-sized businesses as well.
“In this API economy, anyone can do it,” Mason said in a webcast. “Once someone exposes an API, your competitive advantage is how you can stitch all these APIs together to create new advantages.”
Global brands have already started using API services as part of their business as usual. Nike, Coca-Cola, Target, and even the National Basketball Association are leveraging APIs to open up new markets and advance product innovation.
“If you think about it, none of these companies need to be innovative — they’ve got very sturdy brands on their own,” Mason said. “Coca Cola really doesn’t need to innovate; why are they even investing in this area? It’s simple. The old business models are starting to erode. People are moving to newer channels of engaging with their suppliers.”
The United States and United Kingdom governments will also make data and transactions available via open APIs. APIs are key to unlocking legacy applications and data that may have been locked away for years, Mason said.
“Everyone is under pressure to move quickly,” he said, highlighting how APIs are being employed by businesses of all sizes because they are so accessible and provide enterprise-class functionality without the correspondingly large investment in infrastructure or personnel. “Everyone in the API economy can start springing up and start creating new businesses.”
Practical examples of this are already here. Square — a credit-card transaction service for extremely small businesses — is only possible thanks to APIs which have opened up a world of payment services previously dominated by global providers like MasterCard and Visa.
An Increase in Participation
APIs will continue to change the marketplace by increasing the overall participants, bringing together business, governments and citizens. Everyone will participate, both as consumers and as publishers of APIs, Mason said, and creating APIs will not be the sole domain of large enterprise.
“The key thing about the API economy is you can’t just consume APIs,” Mason said. “It’s not just about consuming data, connecting to Amazon or Salesforce. You publish your own APIs as well. This is a key part of the economy — you’re not just a passive consumer.”
Innovation “starts with an API strategy,” says Mason. “That’s really the place you can open up opportunities, and trade with customers and partners. As you open up to your partners and to your consumers and developers, they’ll also help drive innovations for you.”