API Economy growth predictions are looking great.    A search on “API Economy Growth” finds an endless supply of reports and articles showing excellent growth projections – and we are still in the initial stages.  Industry standards are starting to form which will drive further use.  With this, it seems odd to think that there is something impeding growth, but I think there is – the three-letter acronym: API.

Most companies that have API initiatives are driving the initiative from IT, often with little involvement from the business.  The subset of companies that do involve the business obtain higher value.  So, why is the business often uninvolved if this would drive higher value?



Terminology Reuse

We all know that API stands for Application Programming Interface.  But, you knew this before the
recent API Economy excitement – and that is the problem.  API as a term has been around for decades.  Any program calls another program through its API.  The problem is we are not talking about all these APIs.  If I tell you I want to talk to you about an elephant, you already have a picture in your mind as to what this is.  Even if I tell you I want to talk about a new and different elephant, you are going to point me to the people in your organization that deal with elephants to discuss this topic.


That is the problem with the term “API”.  We already have a definition for this term which everyone knows and now we are reusing it for a different meaning.  We should be saying “Business API” or “Web API” to distinguish it, but nobody does that.  When talking about API Economy APIs, we are talking about business recognizable assets that are simple and easy to consume.  This is not the traditional technical API interfaces we have been using.


Lesson 1 – be careful of terminology.  Do not assume the people you are talking to about APIs understand the differentiated definition of a Business API.


Lesson 2 – do not say “API” to the business people.  They will send you back to IT.  Use terms such as “digital business assets”.


Having versus Using

“I already have APIs”.  I cannot count how many times I have heard this phrase.  Yes, everyone has APIs.  And, with the growth in popularity of the API Economy, more back-end systems and middleware are supplying APIs for their functions.  The API Economy facilitated by API Management software is not about having APIs, it is about driving consumption of your APIs.  Yes, part of this is to enable the creation of an API, but beyond this it is about, governance, management, security, socialization and simplified consumption of the APIs (see my prior blog on this topic).


Lesson – acknowledge that APIs already exist but explain what is new and different.


Cost Savings versus Revenue Generation

The term “API” having a technical heritage has landed API initiatives in the domain of IT.  Historically similar solutions (i.e. middleware) have been put in place to drive cost savings for IT.  And, APIs do drive IT cost savings.  However, this is like measuring an iceberg by counting only the part you can see above the water.


By far the larger value from API initiatives is revenue generation.  Several of the API business drivers (blog) – speed to market, reaching new customers and new markets, and innovation – are about driving business revenue.  The challenge is that IT has difficulty predicting revenue which is outside their domain and falls back to measuring only the cost savings.  A second and more critical issue is that by not involving the business early, the revenue generating projects are delayed – giving competitors a chance to jump ahead.


Lesson – recognize that API initiatives are about revenue and involve the business early.


Technology versus Value

When you boil it down to what the “Business API” technically is, it is an Application Programming Interface.  But, describing what it is doing does not communicate the value it is providing.


“Becoming a Digital business”, “Cloud computing”, “Artificial Intelligence” are all extremely popular topics of discussion both for the business and IT.  There are no scary TLAs* in these names that have the business people telling you to talk to IT.  Unfortunately, I am not going to be able to drive the industry to rename API Economy.


Lesson – Understand your audience and how they will react if you discuss “API Economy”.  If necessary, avoid the term and talk about the value to the business – speed to market, reaching new customers and markets, and innovation.  You will find much greater acceptance in creating a partnership with the business to drive a successful initiative if you discuss values delivered.


A few years ago I was co-author of the API Economy Journey Map, which in simple terms is a view of the maturity of the API Economy as it moves from IT led, to IT/Business partnership, to Business led, to Ecosystem, and then beyond.  I continue to believe this will be the progression, but we are still in the early phases.  In my opinion the term “API” is holding this discussion in the IT domain and impeding the progress.  Your business can break down this barrier inside your company by using the appropriate terminology for each audience and communicating value.  As more companies recognize the value, the growth rates for the API Economy shown today will look small.


To understand more about IBM’s thoughts on the API Economy visit the IBM API Economy website.  IBM API Connect is IBM’s complete foundation to Create, Run, Manage, and Secure APIs.  You can find more information about IBM API Connect at the API Connect website.  And you can also experience a trial version of API Connect.


If you have questions, please let me know.  Connect with me through comments here or via twitter @Arglick to continue the discussion.


* TLA = Three Letter Acronym

1 comment on"The Biggest Impediment to API Economy Growth is…?"

  1. Sundeep Allenki January 04, 2019

    I am excited to read the “Terminology Reuse” section of this article. I always had this question in mind, don’t we know APIs even before 10 years and what’s new? You answered it well. Thank you !!!

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