API Business Models

Building a Partnership Ecosystem based on APIs

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As per the definition in API Friends [1] “APIs are a set of functions and procedures that allow for the creation of applications that access data and features of other applications, services or operating systems. In fact, the definition of an API, nowadays, goes beyond the technical aspects as APIs became enablers of new business models and are allowing companies to build entire partner ecosystems around APIs.

The role of a well-defined API Strategy

When getting onboard to the API journey, there is an attempt to think of solving the technical issues so products and/or services can be exposed and enable new integrations but, more important than solving the technical part, it is recommended to step back and figure out what business problems can be solved whilst exposing APIs. That’s where an API Strategy comes into the picture as its main goal is to understand the business behind the API. It is crucial to map business capabilities the company has and then define the model we want to operate: exposing products, services or simply data. Moving ahead, we need to find out the right model to expose APIs, internal in case APIs will aim for reuse and integration among internal applications, restricted targeting supply chain or customer things (IoT), or public to enable third-party developers and partners to consume your APIs, promote open innovation or new digital experiences.

Understanding all the above points help in defining a solid and structured API Strategy that will become the basis of your API Program.

How to find out if you need a Partner?

During the definition of the strategy, many questions will be raised and among them: Is there any other offer out there that, when aggregated to my products, could add even more value to my products and create a better user experience? For example, insurance companies can perform credit checks of an individual to decide whether they’ll provide you a service or not. But should an insurance company build their own credit check or connect to a partner to do so? Another example, a credit company specialized in personal loans that would like to expand their offer to provide business loans could change their business model and start offering a new product or partner up with other companies that have this product in their portfolio and increase their range of offered products. Although this may look unusual, having a “competitor” offering products on my website, it is actually becoming more common. 

Uber is a classic example of how partners can enhance the user experience. In their developers showcase webpage [2] it is possible to have an idea of how APIs enable the creation of a Partner Ecosystem and can be a game-changer and elevate a business. Just to mention one of their cases, the partnership with Foursquare (a site specialized in recommendations) enables customers to find a nice place to eat or have a pint and order an Uber to go to the desired location from within the Foursquare App. That’s only possible thanks to the API used to integrate both Apps.

If you want to offer your customers a more complete service and there are other companies that offer products/services that complement yours, or if you want to expand your portfolio to reach new customers and perhaps leveraging other companies’ products/services within your own portfolio could be an option, it means you could consider Partners in your API strategy.

What is your next move?

Have you worked on the API strategy of your company and concluded that partners are an important part of it? It’s time to map what partners you could work with and jump into discussions to define the right product/services strategy with each of them. Then define a partner governance model to manage all your partners and also identify the tools that will enable your APIs to be exposed in a managed and governed way.

References
[1] API Friends – What is an API?
[2] Uber Developer – Showcase
Gibson Pasquini Nascimento
Gibson Pasquini Nascimento is Head of Solutions for EMEA at Sensedia and is based in Dublin. With over 14 years of experience in Software Development, Agile Methodologies and Architecture. He is an expert in APIs and has worked in multiple industries (Retail, Pharma, Health Insurance, Banking and some others) to support them changing their integration approach and API strategy. Sensedia is one of the main API pure players in the world, focused only on its API Management Platform and Strategy & Professional Services around the full lifecycle of API Management. Sensedia is recognized by Gartner in its Magic Quadrant as Visionary and by Forrester on its Wave as Strong Performer.

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