Harvard Business Review': APIs Aren’t Just for Tech Companies  

Category: API , OmniConnect , Data Connectivity
Author: Madison Schneider

 According to an article by Harvard Business Review, you don't have to be a tech company to reap the benefits of APIs. APIs strongly benefit SMBs that are struggling to reach digital audiences. 

More specifically, "the opportunity exists in every industry. Some sectors are being compelled to offer APIs due to regulation (like healthcare and banking), whereas others are prompted by industry interoperability (like telecommunications) or disruption (like retail, media, and entertainment)."

A mental model can be one of the hardest things to change, but it doesn’t have to be the most expensive. If business leaders can think strategically and use the right APIs, it can be extremely cost effective for the organization.

More from the article:

Companies that have been most successful with APIs display common thinking patterns and practices, called the “ways of the API.” Here are three of the most impactful of these patterns:

Unbundling: Dismantling & Rebuilding Business Capabilities Through APIs

Unbundling software functionality into API-accessible business capabilities is a hallmark of leading digital companies. They then re-bundle these capabilities to extend their reach or open up new customer segments. APIs helped Netflix achieve screen ubiquity and accelerated Uber’s move into food delivery. But non-tech companies wanting to move at the pace of digital business also need to follow the “unbundling way of the API.” For example, when the pandemic hit Australia, New South Wales Health Pathology was able to stand up testing infrastructure within two weeks to support hundreds of thousands of tests and communicate their results thanks in large part to their already unbundled, API-enabled software services.
Outside-In: Designing and Developing with the API Consumers in Mind

A non-tech company that applied this approach is Pilot Flying J, a North American truck stop chain. By digitizing capabilities such as shower reservations, parking availability, and prepaid fueling through APIs, they allowed mobile app developers to quickly and conveniently package these services for their customers — truck drivers. To build loyalty with the developers who will build the applications that provide the digital touchpoints for their customers, companies must follow this “outside-in way of the API.”

The Ecosystem Way: Cultivating a Digital Ecosystem with APIs

Digital innovators use ecosystem thinking to chart strategies for sustainable growth and use APIs as conduits for value exchange within the value network. Companies that want to stay adaptable enough to survive and thrive in the digital economy should embrace this “ecosystem way of the API.” For example, Airbus recognized an issue in the aviation industry where critical flight and operational data was locked away in siloes. Being a supplier to most airlines and thus having strong relationships across the ecosystem, Airbus launched an API-enabled data platform called Skywise to help the airlines reduce maintenance issues and prevent technical delays.

In conclusion:

  • IDC projects that organizations will spend $6.8 trillion on digital transformation between 2020 and 2023.
  • Companies in industries where API-related regulations and standards are being implemented (PSD2 in financial services, FHIR in healthcare, TM Forum Open APIs in telecommunications) can use their compliance initiatives to strategic advantage. Smaller companies, whose customer and product focus is more specialized, could have an agility advantage in unbundling their capabilities, designing for their consumers, and exploiting opportunities in their respective ecosystems. The beauty of working with digital building blocks is that you don’t have to demolish the old factory and build a new one.
  • APIs are building blocks for digital transformation, but determining which APIs to develop and what products and solutions they’ll enable requires a digital mindset. Digital pioneers have created a template for success. Adherent organizations must pay attention to the how and why in addition to the what.

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April 6, 2022
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