Why every CIO needs to know that some APIs don’t matter

“How many APIs do we have?”

If this email from your CEO or a board member hasn’t hit your inbox yet, it’s coming.

6 out of ten corporate board members are now saying they want more focus on digital disruption, and two-thirds of Global 2000 CEOs are predicted to put digital transformation at the center of corporate strategy by 2017. Digital transformation has become a hot topic well beyond the boundaries of IT.

By the same token, so have APIs. Your stakeholders may be learning what APIs are from The Economist or reading about using APIs to gain competitive advantage in the Harvard Business Review blog.

CIOs beware: when this question is inevitably put to you, resist the temptation to pass it along to a virtual team that goes off to beat the bushes to find every piece of integration code across the enterprise in order to report back that “we have 47 APIs.” Or 923. Or 3,117.

The number they diligently tally up in a spreadsheet only matters insofar as the bigger it is, the greater the risk it will lead you will tell the CEO and board that your company is ready for digital competition when it’s not.

Instead seize your spot as a digital transformation leader by providing the answer to the question they’re really after, which is: “how many APIs do we have that matter?”

In the past three years I’ve racked up enough miles travelling to talk to companies about APIs to circle the earth three times. (My employer, Apigee, is a software company that handles more than a billion API calls per day through its cloud-based API management platform.) Based on my experience, there are specific characteristics that distinguish APIs that have the potential to move the needle on digital competitiveness from legacy APIs that don’t.

Stage 0: Service

Every functional API provides a programmatic way to interact with an application or data. That’s necessary but not sufficient to becoming a business asset that moves the needle. The first step on the path to high digital impact is changing the definition of success from exposure to consumption.

Stage 1: Product

APIs that make a difference embrace the fact that in today’s digital market context, treating developers both inside and outside your organization as consumers you want to attract, delight, and retain is a competitive advantage. They spark more, richer digital experiences being built faster not through command and control but rather the power of pull.

If you can’t imagine your API earning a great net promoter score, it’s not a product.

I’ve found “Time to First Hello World (TTFHW)” to be a simple but powerful test. How long does it take an authorized developer — without human assistance — to go from discovery to their first successful test call? Five minutes or less is the target I recommend.

Stage 2: Channel

APIs that succeed as products have the potential to become channels. This is almost entirely a question of the organization’s level of commitment to maximizing their potential value.  

Very simply, an API or set of APIs becomes a channel when they have a Go-to-Market (GTM) plan. GTMs for APIs may be new to an organization, but are almost certainly common elsewhere in the business. Every MBA likely built one in a course; there are guides with more than a decade of history (such as the book of the same name).

Once again there’s a five-minute gut check. If you can’t point to a defined value proposition and target customer, along with metrics for adoption, customer success and its economic value — as well the person accountable for driving those numbers — an API isn’t being managed as a serious channel play.

For a great example of what a API channel play looks like to customers, look to MapQuest.

Stage 3: Ecosystem

Many APIs will have happy lives as products or channels within a high impact digital business portfolio. You’ll know you’ve unlocked the power of ecosystem dynamics when the relationship between what you invest in driving adoption and the adoption curve shifts from linear to geometric or exponential.

This often involves orchestrating partnerships, differentiated assets or unique market access. In a nutshell: you raise your game to an ecosystem play by marrying your API channel with complementary assets in ways that make the opportunity too good to pass up.

Walgreen’s photo printing API is a great real-world example. They took it external with five individually negotiated partnerships. Now they are up to over 275 partners using this and other Walgreen’s APIs. Here’s an example of adoption driven by ecosystem assets (as opposed to massively expanding their team’s headcount) in the words of partner company’s CEO:

“After evaluating every iOS print SDK I could find, I chose Walgreens due to its clean API, its helpful developer support team, and the sheer number of Walgreens stores across the US that my users would be able to print to and pick up in a hour…Also, Walgreens early support of Apple Pay in all its stores made them the perfect partner for an iOS print app!”

If you want to see this playing out in real time, keep an eye on Uber. They launched APIs in 2014 with 11 partners. My money’s on Uber integrations everywhere soon.

And that’s the bottom line for why your fate as CIO depends on an accurate understanding of APIs that matter. That SOAP integration deployed in 2003 may be doing a fine job getting data from system A to system B, but it wasn’t built to go up against Uber — or any other competitor adopting digital native API best practices today.

(Disclosures: MapQuest and Walgreens are customers of my employer, Apigee.)