API Strategy Through A Business Development Lens
Thoughtful API strategy can boost business development.
API Strategy: The Current Landscape
Evolution of APIs in use today:
Many people fail to realize how closely aligned API strategy is to business development strategy. APIs provide the ability to sell in new places, which makes launching one a powerful assertion of aggressive growth targets. Reinforcing that assertion with state-of-the-art, flexible, secure, and scalable solutions that your partners can work with is key to reaching these goals.
As we see a continued shift towards business-driven IT organizations with CRO’s, CGO’s and COO’s taking the reins of IT strategy, APIs are no longer single-use utilities; they are portals to an infinite number of known and unknown opportunities which align more with the “if you build it they will come” mantra.
Familiarity and comfort with APIs and their intrinsic value has also grown significantly over the last decade. One of the biggest drivers for this has been the explosive growth of SaaS products in MarTech, CRM, FinTech, Travel, Healthcare, and e-commerce. As the considerations of buy vs. build are weighed, a significant factor for buyers (after security) is the ability to access or share information quickly, securely, and with the highest level of trust in the accuracy of the data. When access to their data is preserved, decision makers seem to be more comfortable relinquishing ownership of proprietary systems. After all, in 2022 data is its own currency.
As adoption of SaaS has exploded, a new category of products has emerged with the sole purpose of providing connectivity across SaaS and legacy applications alike. Products such as Zapier now offer easy to configure integrations that can be set up quickly with minimal technical expertise. Gartner recently published a top 10 list of Zapier alternatives including solutions offered by Oracle, IBM, Microsoft and SAP. API technology is no longer a complex concept that few understand.
Customers now expect integration solutions to be part of product offerings in some shape or fashion. Products like AirTable, Monday.com, MailChimp, HubSpot, JIRA and countless others all come with out-of-the box connections offering business process automation limited only by one’s imagination. The result is an ecosystem of SaaS products that weaves together a fabric of function that ensures very little redundancy.
Industry agnostic trends:
Challenges across industries may be unique but industry agnostic trends remain. Choosing between internal efficiency and growth through useful and intuitive digital experience is no longer an either/or, it is both. APIs offer practical solutions for evolving product experience in countless ways while supporting a lean organization. From straight-forward time-saving business automations to the aggregation of disjointed distribution networks; the use cases are endless. When API technology is deployed well, we don’t give it a second thought – it feels seamless and intuitive.
APIs enhance user experience:
APIs drive experience and function to the next level by leveraging that which already exists. Accessing off-platform data allows product owners to continuously enhance their products and compete in new and innovative ways. Consider some of the familiar examples below:
- The travel industry has normalized across all segment types allowing for countless sites to share and sell and synchronize inventory across platforms.
- Heath data continues to be integrated which allows providers to check insurance coverage, order prescriptions, share test results and even share electronic health records with other providers, resulting in improved health outcomes for patients.
- Investment banks have integrated to provide up to the second snapshots of an individual’s net worth.
- Small business apps like QuickBooks offer APIs to connect to banks and credit card accounts, which provide real-time balances and real-time bookkeeping.
- CRMs like HubSpot integrate seamlessly with CMS products like WordPress or Wix to help us better understand engagement and campaign effectiveness.
- …and the list goes on.
In each of these examples, one theme is constant: If done well – both parties benefit.
Determining value of API Strategy:
Connecting to the bigger picture:
Attributing value to API investments can be challenging early on. API strategy should be a purposefully designed component of an overarching digital strategy. Determining how to productize or whether to monetize will evolve over time. Designing APIs and the framework they run on will look different if you are thinking for the next quarter vs. the next 24 or 48 months. If done well, the reason for its existence today will be one of many reasons tomorrow.
Thinking about an API as a product can be challenging for business teams when the product lacks a user interface. This can be mitigated by documenting API calls like user flows and stories. The least technical among us seem to possess at least a rudimentary appreciation of user interface and good design and so, it can be helpful to diagram process flows to help with visualization, even though no UI will ever actually be built.
Remember, every user interface is powered by something. Modern applications and the experiences they provide, are directly impacted by an API’s design, architecture, and underlying infrastructure. Helping decision makers connect the dots between API design and visual design is key. Understanding and prioritizing this early on, can save hundreds of thousands of dollars in re-work, re-design, and re-engineering as your partnership or B2B programs take off.
To monetize or not monetize:
Deciding whether or not to monetize your API requires careful consideration. Most API management platforms offer automation for this and can bill for usage based on transactional volumes on a client-by-client basis. Charging for these services can be a nice new revenue stream, but can also backfire. For APIs to truly support business development, consider the role they will play in the sales process, the manner in which they can add to the total value of your brand and the way in which your clients may consume them. There is no simple answer here, this requires careful thought and strategic planning and some creativity. I caution against becoming overly enamored with API revenue at the cost of the larger and more profitable opportunities it can generate.
The API & Product Connection:
Back to basics: What is an API?
An API or Application Program Interface is by itself a stand-alone application. For those less familiar, think of it as the code that runs behind the scenes of any system you use. An API works across many systems, performing the same set of processes over and over in a consistent and predictable way. By design, the API’s purpose is provide a one-to-many service to clients (both in the business and technical sense of the word).
API technology is superior to static interfaces for several reasons, with the most significant advantage being the ability to network broadly with an infinite number of suppliers, customers, and ancillary partners in a hyper-scalable way. As industries evolve, data structures become more and more standardized and the opportunities to transact off-platform grow exponentially. When this happens, sales in the traditional sense becomes only one dimension of growth strategy. The new dimension includes integrations and strategic partnerships on other products, platforms, and marketplaces as well as the ability to offer clients real-time access to their data to solve ad-hoc problems that your competition can’t.
How APIs enhance products:
The API not only provides data access, but also business logic for processing that data. Why is this important? Business logic enables the extension of curated brand experiences beyond brick and mortar operations. This allows your brand to both exist and compete in the digital marketplace. All things being equal (price, the product & the platform) extensibility of your internal business processes will allow you to deliver a superior experience.
From the initial point of consumer engagement through customer feedback, repeat business or referrals. The business logic programmed into your API is your brand’s DNA – in code.
APIs have the capability to provide business teams real-time insights about user behavior, consumer buying patterns, preferences, and abandoned transactions. This enables dynamic processing that renders the most immersive and intuitive experiences. This technology enables us to deliver omni-channel content, delivered via email, mobile, social, e-commerce or SMS at the right time, to the right person in a low-effort and highly personalized way. When someone asks, “How did they do that?” or “How did they know that?”, an API with dynamic logic was probably involved.
Why APIs matter in digital strategy:
Data consumption in e-commerce requires real-time inventory updates, product descriptions, status updates and pricing adjustments without kludgy data transformation processes. The healthcare space for example, requires real-time access to lab results, diagnostic test results, physician notes, appointment updates and electronic medical records to meet required standards of care. Amazon provides us with another great example. Millions of Amazon’s resellers connect with the platform to provide instant updates as items are purchased or prices change.
From automation of business processes to providing enhanced security monitoring, developing a strategy that aligns with your business goals is critical. Manual processes will not be enough to deliver rich user experience. If you want to sell your goods and services on an e-commerce channel you will need services that can handle the job. Using ad-hoc interfaces or single-use routines will leave you vulnerable to bad data and low conversion rates. Having a modern API in place will give you the flexibility and reusability you need in a very scalable way.
Benefits of a digital-first API Strategy:
It should go without saying that BEING digital and DOING digital are two entirely different things. In BEING digital, you design in a way that allows data to drive decision making. Every application can and should provide you with more insight than you can analyze which, in turn, drives ongoing improvement. A robust API with the right logging, analytics and reporting will be your finance, marketing, operations, and business development team’s best friend.
APIs can attract national or global customers:
- Analysts can manage compliance by providing trends and patterns around usage.
- APIs allows for aggregation of data, especially when you are not the sole provider.
- Clients can increase utilization through integration into internal purchasing systems, intranet sites or apps.
- Allows for ancillary revenue streams through resale opportunities.
- The API infrastructure (if implemented properly) will satisfy both technical and risk management requirements of the global enterprise.
APIs extends brand reach via partnerships:
- Supports preferred supplier status due to the ability to do business at a lower cost.
- Allows for commission-driven revenue streams through resale or upsell opportunities.
- Higher quality data enables partners to deliver higher quality services, which increases trust in your brand.
- APIs provides for full automation which allows for flexible pricing without eroding margin.
Suppliers benefit from early inclusion in API strategy development:
- Inclusion creates potential for a superior experience for contractors, vendors, and upstream or downstream suppliers.
- Sharing data provides visibility into transactional processing, pricing, billing, and payment which reduces strain on shared services teams.
- Suppliers can use data to better predict demand which results in better management of the entire supply chain.
- Open discussion opens doors for standardizing data models, flushes out variability in processes and results in better experiences for all.
Biz-dev teams maintain a competitive edge:
- Business development teams learn to speak the language of security and stand out from the competition early.
- Analytics provides real-time visibility into usage or buying patterns (good and bad).
- Account Managers can have helpful, real-time discussions about usage and up-sell opportunities.
- Better data help with prioritization of new enhancements for product teams.
- API offerings evolves biz-dev teams into solution-selling teams!
- Connectivity provides a critical foundation for B2B relationships and new revenue streams.
- Brand awareness is increased through creative product marketing campaigns.
Product Management considerations when developing any API strategy:
In a recent article on product management, I detail the importance of having this discipline in place as your digital strategy matures. As you lay out your product roadmap it’s important remember: APIs are product too! Ensuring your APIs have an experienced product manager will ensure the API will continue to improve and generate value for your business. Other considerations are included below.
The impact of “demand landscape” on API Strategy:
Understanding the current and future demand helps to flush out details that can increase value of an API over time. Demand can include demographic information, number of clients, estimated volumes, transaction types and variability. These details will result in a more complete list of the business logic required for automation.
Anything that influences the timing of the deliverable falls into demand landscape as well. Specific revenue opportunities such as a high value customer or efforts to reduce operating costs in one area of the business are good examples.
Notify your team if the product is needed for an upcoming event. When revenue is at risk because a customer needs a new feature by a specific date, the risk should be communicated. When an API will deprecate a less secure version and mitigate a security gap, it is critical that the team understand a vulnerability is being fixed. Everyone should have a clear understanding of what is at stake if a new business segment is planned with the API, or if outside investment is being considered based on the launch of a product. All the nuance matters.
Understanding API Personas & Use Cases:
Yes, even with APIs – personas matter. APIs can be difficult to design due to their fluid nature. Personas are even more important when third parties broker the user experience by serving up content on their own platforms. This is why it is important to ask probing questions. Are you seeking corporate buyers, B2B partners, aggregators, suppliers or contractors? What is the priority for each and why? Will your clients require specific SLAs? The answers to these questions will help you to define value, estimate ROI and prioritize each feature, not to mention help sales and marketing set and reach the right goals in future campaigns.
When listing your use cases, there are two schools of thought. You can either identify a handful of them and launch quickly or try to identify every possibility before moving forward. I recommend a hybrid approach: Identify as much as possible quickly, but move forward with development in an Agile manner with enough to bring a viable, useful product to market. A few questions to ask include:
- What are the KNOWN use cases for each of your targets?
- Can you define some POTENTIAL use cases that may be attractive?
- What is the value?
Go-To-Market strategy for the API:
A go-to-market plan should begin to form early in product development. Unfortunately it is often one of the last. Engagement from marketing during product development will improve business results post launch.
- What are the channels you will be using to conduct communicate with customers?
- Will your customers access the API through your website or a web portal?
- Are you launching a developer portal and will you include it in your SEO Strategy?
- What will sales or business development team members need to be effective selling?
- Have you identified the possible challenges involved with customers using the API?
Technical considerations as part of API Strategy:
It’s common for the IT team members to look at the requirements they are the most familiar with first. There are some people who have a good sense of best practices, while others appreciate ideas. API management platforms can handle the security and monitoring; however, it’s important to look at areas where APIs connect to the internal systems to identify business logic vulnerabilities that could impact performance. Simply adding an outside management layer will not do this. For a quick reference on API security protocols and options, RedHat has some great documentation. Start by considering some of the questions below:
- What will be the testing process for the API?
- Can you estimate the volume for day one and beyond?
- What other services, clients or microservices will the API communicate with?
- Do authentication services meet your security needs?
- What types of data will be processed and what are the regulatory/audit requirements? (PII, PCI, PHI, HIPAA, FINRA, GDPR, etc.)
- Is there a routine schedule for updates?
- Do guidelines for version control exist?
- Will internal applications, including enterprise systems, web applications, and mobile apps use the API?
- Do release management protocols support up-time SLAs?
- Do you have a list of SLAs?
Business considerations as part of API Strategy:
Digital transformation requires a significant amount of change in the areas of process and technology. Engaging with the business to get their thoughts early reduces risk and creates an open minded environment. Expanding the project team and answering questions may require more time and energy upfront, but you will flush out critical details that can derail projects. Some examples of things to consider include the following:
- Does the adoption of the API rely on following an industry schema or data standard?
- When bringing on a new clients or partners, what will the process look like?
- How will your business manage each customer’s use of the API to ensure each one is a success?
- What are the internal metrics and the KPIs needed in order to measure performance?
- Who in the business supports the initiative and who will be the product owner?
- What support will be provided to developers and testers?
- What is your plan for bringing in more talent? Is your industry experiencing challenges with finding resources?
Want to learn more?
If you are looking for support with your digital strategy through API development or any other form of product development, I can help. Contact me to learn more today!