Welcome to 'the API economy'

What’s one of the greatest enablers of digital business today? APIs clearly have a critical role to play, as Google recently illustrated with its decision to acquire Apigee for $625 million.

“APIs — the mechanism developers use to interface and integrate with outside apps and services — are vital for how business gets done today in the fast-growing digital and mobile marketplace,” Google Cloud senior vice president Diane Greene said in a blog post about the Apigee deal. “They’re the hubs through which companies, partners and customers interact, whether it’s a small business applying online for a loan or a point of sale system sending your warranty information to the manufacturer.”

In its analysis, CIO.com noted that the Google-Apigee deal validates the “API economy,” which Forrester Research last year predicted would reach a value of $660 million by 2020, more than four times the $140 million the market was worth in 2014.

Apigee, the article continued, is at the forefront of that market, with more than 300 enterprise customers that include AT&T, Walgreens and Staples.

“A pharmaceutical retailer, a telecommunications goliath and an office supplies chain appear to have little in common, but their business roadmaps share a theme in using APIs as the cornerstones of platform strategies to attract digitally savvy consumers,” Clint Boulton writes in CIO.com. “However, giant Pitney Bowes is using Apigee to build mailing and logistics applications to help companies sell and ship their products and services online, a critical piece of a multi-year digital transformation that began in 2013…”

Another example of an API-based business, Gartner notes, is Uber, which “leverages Google Maps through an API to enable its entire business model of matching drivers who have a vehicle with passengers who need a ride.”

According to Gartner, enterprises looking to tap into the API economy need a vision for digital business that embraces new capabilities such as bimodal IT and turns existing data and systems into new technology assets.

“The API economy is an enabler for turning a business or organization into a platform,” said Kristin R. Moyer, Gartner vice president and analyst. “Platforms multiply value creation because they enable business ecosystems inside and outside of the enterprise to consummate matches among users and facilitate the creation and/or exchange of goods, services and social currency so that all participants are able to capture value.”