Why do API economies matter for businesses?
Application programming interface (API) is such a huge part of our daily lives, yet often an afterthought in business. As a software-to-software interface, APIs crack on in the background when we make requests, without us even realising it. Simply put, API refers to the code, routines, functions, or commands that allow interaction between one app and another.
Let's say you are, for example, looking to book a hotel on a hotel comparison website. The website will interact with the APIs of the hotels to get information from the different hotels with their different offerings, such as WiFi options or distance from city centre. It then takes the hotel's response to your request and delivers it back to the comparison site. The comparison site then shows you the results, and you have the information you need to make your booking. In fact, the transaction itself will also use an API to verify that your credit card information is correct.
At its most basic, APIs are like your food arriving at a restaurant, and you wanting a bit more gravy on your roast. The waiter (API) will take your plate to the kitchen, check if the chef has gravy to spare, and bring back your dish with the extra gravy on top if doing so is possible. Something like that, anyway.
Making the most of the API economy
APIs clearly underpin much of our online activity and are a huge driver in business services and products. Many companies can and do appreciate that APIs allow them to provide products and services without the hassle of building it all from scratch.
As per Gartner's definition, the API economy is "a set of business models and channels based on secure access of functionality and exchange of data." In turn, it's a lot easier to integrate different components (such as systems and algorithms) to deliver a new product, service, or business models. By leveraging third-party algorithms and enabling seamless data sharing, organisations can create new innovations and adaptations to transform their offering into something new. Better still, they can do so at speed, in an age when time to market is everything.
API economies open the door for businesses of any shape and size to deliver something new. What's more, APIs serve great purpose within the age of digital transformation. In particular, businesses can use them to revamp customer experiences and services to meet the more digital demands of today.
Also, you know how they say two heads are better than one? It's kind of the same with APIs. In using them, you can leverage innovations from others to patchwork together your own products better than a solo effort might.
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