API Strategy for Midsize Enterprises
Most midsize enterprise CEOs name growth among their top three priorities. To help their organizations achieve that growth and create “business moments,” midsize enterprise CIOs must help their organizations exploit new digital business models. An API strategy is a prerequisite.
Overview
Key Findings
Integration of SaaS systems (such as ERP, CRM or HCM) will require API integration instead of using native adapters such as direct database access.
Midsize enterprises that fail to understand digital ecosystems are unable to create an effective API strategy.
Implementing APIs without API management creates risks including service interruption, inconsistent security policy enforcement and silent failures.
Recommendations
Midsize enterprise (MSE) CIOs should work in close collaboration with business executives to:
Renovate their integration approach by implementing an API-first integration strategy.
Support their business model transformation by aligning their API strategy with their ecosystem strategy.
Plan and implement their API strategy by using API management solutions.
Introduction
APIs are foundational because they link together the individual systems that contain data about people, businesses and things to derive value from that data. Connections to e-commerce marketplaces, suppliers and sellers, and SaaS services mainly involve the use of APIs. Midsize organizations typically start using APIs when integrating other software solutions with their ERP systems.
CIOs lack a consistent understanding of digital ecosystems, which is the foundation of an API strategy. About 56% of respondents consider these ecosystems to be transactional (for example, digital channels), while 44% believe they have strategic value.
An effective API strategy covers both aspects: application integration and integration to digital ecosystems to support new digital business models. APIs are an important building block of MSE CIOs’ application strategy, including integration of dashboards, low-code application development and mobile apps development. MSE CIOs must realize APIs are at the heart of digital business and consequently at the center of the digitalization process.
The challenge for MSEs is that 53% of them are not yet delivering digital initiatives. They risk their competitiveness by failing to intercept or create digital “business moments” and to develop the new business models that digital business enables.
An API strategy will only work if you scale it. MSE CIOs can help their company scale to meet the demands of digital business by creating an API-first strategy that ensures data and functionality are not held captive in their applications.
As APIs also help open up new channels, they enable MSEs to differentiate and create advantages despite their smaller scale. APIs help MSEs connect more effectively with customers, partners and their own workers by enhancing experiences and enabling execution on a much larger scale than their internal capabilities alone would allow.
This research will help you focus on an API-first integration, align your API strategy with your digital ecosystem and plan and implement your API strategy.
Analysis
Implement an API-First Integration
“API first” means using APIs as the preferred method of accessing applications and platforms, and adopting a contract-first approach to access services. Using API-led integration is a major improvement over other methods of integration (such as using native adapters), as they are easier to implement, more robust and less prone to errors.
An API-first integration strategy should prioritize the use of published APIs for integration. It should not focus on trying to create APIs. Instead, create a separate API strategy alongside your integration strategy to help you determine where APIs are required and to ensure quality and consistent API design.
APIs enable integration by providing well-defined and documented application and data-entry points. An API-first approach means using APIs when they are available as service interfaces or, as the default, creating APIs when you modify or create an application.
An API-first approach to integration works best when the APIs are consistent and of high quality. If your APIs are all different in design, then this impacts uptake because of the learning curve for each API. This is where you can make use of an API style guide overseen by an API platform team.
Align Your API Strategy With Your Ecosystem Strategy
An MSE’s first step in any digital business initiative should be to define it in light of its business objectives, along with measures of success.
This task should be undertaken as part of any business model transformation — the organization should strive to do new things in new ways to create new value for employees, customers, citizens and business partners in the ecosystem.
If you are among the 53% of MSE CIOs not delivering digital initiatives, leapfrog to digitalization by creating an ecosystem platform built on a solid API strategy that is linked to your business model and objectives.
Using APIs to participate in an ecosystem will help your organization quickly transform digitally and enable it to intercept or create business moments and develop new business models. Digital business transformation is an opportunity for midsize organizations to reorient in times of disruption. However, such transformation can be pursued to enable new digitally enabled products and services, and new business models. They are made technically possible and financially viable by digital technologies and, among other things, platform businesses.
As an MSE CIO you should look at existing ecosystems first (such as e-commerce marketplaces or big-box retailers who provide APIs for reordering inventory, tax-calculation and shipping). Building your own ecosystem or platform is typically not feasible for MSEs with limited resources. Using APIs in the context of an ecosystem will allow you to become familiar with the ecosystem and its capabilities. This will enable you to determine whether participating in existing ecosystems is beneficial to you.
Plan and Implement Your API Strategy
MSE CIOs must clearly differentiate between two use cases for external APIs: providing APIs and consuming them.
To provide APIs, investigate integration platform as a service (iPaaS) to ease the building of APIs.
When consuming APIs, leverage existing ecosystems and use the APIs provided. Using established API management solutions saves time, reduces complexity and frees resources to run an API program that supports your business goals.
We recommend you start small, gain experience and only expand API use as your knowledge and experience grow.
Implement API Management to Protect and Govern APIs
API management solutions are used to publish, secure and monitor APIs. They do so using API gateways (for security and traffic management) and API developer portals (for API publication), with centralized policy management and analytics.
Full life cycle API management adds design-time capabilities and life cycle management (versioning and retirement). These products support the planning and initial design, implementation and testing, deploy and run (basic), and versioning and retirement of APIs. They include an API portal to help developers who use APIs to build solutions, as well as runtime management, typically provided by an API gateway that governs access to APIs and gathers analytics for use by API providers. They also provide administrative tools for defining policies and managing API life cycles, and business-related tools to support monetization and customer support.
Basic API management typically focuses on the “deploy” and “run” aspects, and on initiatives that benefit from simplicity, agility and lower cost. If you choose this option, consider using a developer portal to enable APIs to be easily consumed by developers. However, maximum benefits can only be achieved with full life cycle API management, which you may want to consider over the basic type.
Be Clear Whether to Use Cloud, On-Premises or Hybrid
Cloud-based full life cycle API management services are useful for organizations that are exposing APIs to channels (including mobile ones), while taking advantage of scalability (seasonal businesses with spikes in API traffic, for example). Do not get confused by the name — cloud-based API management services can in most cases be used in a hybrid scenario.
On-premises API management is often used by organizations that cannot deploy APIs to the cloud — for privacy reasons, for example. For midsize organizations, this is generally an exception, as running and maintaining these systems can be challenging. It should only be considered where necessary, for instance for ground-to-ground API connections where requests leave and enter the data center twice, incurring latency, adding hops and risking exposure of sensitive data.
A hybrid cloud APIM platform is nonetheless complex to implement. Such projects often encounter various challenges at all stages, from planning to architecture, deployment and operation. As an MSE, you should create an overall high-level plan and then implement it iteratively, adjusting as needed to reflect what you learn from implementation and adapting to changing circumstances. Start with the native API management services offered by your preferred cloud provider to take advantage of cloud scalability and elasticity and turnkey operation.
