Claire Barrett is the Director of APIsFirst and the co-founder of API Collective. She has more than 50,000 hours of consulting and being consulted under her belt. In this article, she discusses API product management.
API product management is a discipline that’s still less than 15 years old. However, it is a discipline that’s powering embedded business models across all sectors and industries.
Let us consider the business of a heavy equipment manufacturer. One of its product categories is tractors. The organization and the people who look after the tractor product know what’s needed for different terrains, mountains, and fields. They know the different uses for agriculture and lifting and moving. They understand the different types of businesses, whether commercial large-scale, farming needs, or smallholding. They know what materials to construct their products with to meet different environmental requirements and how to ensure they are energy efficient. They know all about the customer, the drivers of their tractors, and what they need. If we look more firmly at the product team for this organization, they also know how they get their tractor products to market. They know about the distribution channels, dealerships, maintenance companies, and exporters. They know about the ERP systems, the export shipping processes, and the safety and regulatory environments for those products in the markets that they sell them to.
But now, of course, the world has changed. That same manufacturer now offers digital products as one or more APIs based on its data; APIs are available for others to use and embed in their systems. These could be existing partnerships using APIs to streamline the integration method. They might be offered to banks, for example, who are looking at financing around that vehicle. Maybe they are offering an option for banks to be able to lend based on the use of the tractor. Maybe there’s a third scenario of a partner organization. This agri-tech business is consuming tractor usage data to monitor energy efficiencies across environments and use that for building their digital products or business models. So, embedded businesses are not just about embedding data and digital API products into partners and new distribution channels but also about embedding APIs from other players.
So, how do businesses want to participate in the API economy? Are they seeking to embed it or to be embedded? In API product management, we see three types of shifts across customer, delivery, and capabilities.
If we go back to our imaginary company, imagine what needs to be known about these partner organizations that were not known earlier. Suppose they’re looking to improve existing partnerships. In that case, that might mean getting very deep into ERP system providers whose platforms may be consuming these APIs to use in new and different ways rather than going direct to the supplier themselves. Suppose they’re looking to offer embedded capability to partners like financial institutions. In that case, they must understand the data, language, regulatory, and security environment for providing APIs that those organizations could consume and use. If you’re looking at an agri-tech, new player in the industry, they are likely to have very fast-moving technical development delivery cycles. They’re most likely agile and cloud-enabled. They’ll be happy to try something out and to pivot if something doesn’t work. But they will expect a very fast turnaround on experiments, data access, etc. The shifts we’re seeing around customers can be summarized as going from a place where traditional organizations understand products, customers, businesses, and those customers’ processes. In the New World, they’re looking to understand partners and those partners’ customers and their systems and data, effectively going from a customer base that is quite familiar to a braver new world, new types of customers who operate and think differently. Effectively, they’re going from reimagining a customer experience to a developer experience.
Regardless of sector, organizations are looking to absorb and get good at the types of delivery processes and ways of working that have made the tech industry successful. That comes to life in the world of APIs. We are seeing a shift from organizations focusing on APIs to integrate systems as part of a project construct to APIs with a long-running product lifecycle and clear lifecycle ownership. We’re seeing their funding shift from cyclical funding to long-running funding. The delivery process is shifting from one-way traffic from business requirements to technology to a collaborative three-way conversation between technologists, business specialists, business experts, and digital teams to collaborate and find the best way of servicing and coming up with these API products.
A shift in capabilities is in the people who are undertaking API product management. The management’s struggles could be addressed with successful API product management or one or more API product managers. In 2019, Gartner defined an API product manager as “Governs the evolution of connections in the ecosystem and determines how they are designed and monetized.”
This ecosystem that they refer to could be in a large organization or an internal ecosystem. The role is moving from being a technologist with good business understanding to increasingly a more commercially minded person who’s digitally savvy. There’s a move from buying in or renting this to growing capability in-house that deeply understands the business, the data, and the use of opportunities for partnering within and beyond the organization. However, this has many kinds of flavors and subsets depending on the industry. We see that for many people in large organizations, having existing relationships and connections is often how easy it is to get stuff done. Because many API and digital products require operating beyond existing products, organizational structures, and boundaries, these are the things that we believe reflect a company’s culture and values, the things that are hard to replace, the things that an organization would want to hold on to in its teams.
So, in summary, embedded business models are brought to life by understanding other ecosystems. We see that many organizations are moving from a project-to-product mindset and thinking and functional and funding models. The impacts of this cut deep, but they certainly are hugely relevant for supporting embedded business models through API products. When it comes to capability, the demand for the role remains high.