Application programming interfaces, or APIs, offer a wide variety of benefits for digital businesses. But is an API right for your business?
What is an API?
API stands for application programming interface. Let’s break down what each of those words means in this context:
Application: a software program. This could be anything from a desktop computer program to website software - Microsoft Word to Google Maps.
Programming: the coding that makes up the blueprint of a software program. If you don’t know much about coding, it is what looks like a jumble of letters, numbers, and symbols that creates computer language.
Interface: the way two software programs speak to each other
Putting these three words together, an API is simply the code that allows two software programs to speak to each other. In other words, as Greg Sleter writes for GovTech, an API “at its most basic acts as a door or window into a software program, allowing other programs to interact with it without the need for a developer to share its entire code.”
What does an API do?
As with many things in computer science, it’s not necessary to know the nitty-gritty detail of how APIs work unless you’re a software engineer. To delve a bit deeper and explain how APIs function, let’s use the analogy of a universal electric plug adapter.
Say you’re in a foreign country and you need to plug in an appliance, yet the plug you have doesn’t match the socket of the country you’re in. You use a universal adapter to get electricity flowing from the socket to the appliance and the appliance works as expected. Even though the plug you have doesn’t fit into the socket, the universal adapter facilitates the flow of electricity between the two.
Using this analogy, the universal adapter is the API and the electricity is data. Again, this is an oversimplified version of how APIs actually work, but it suffices for a top-level explanation. An API receives a request for data from a computer, then returns the data to that computer in a format that it can understand.
APIs are all over the place in the computer world and they facilitate all kinds of operations that we take for granted. Windows uses APIs in numerous ways – for example, when you copy and paste from one application to another, an API makes that happen. When it comes to using a B2B API, there are some excellent advantages.
Benefits of having an API
When the pros and cons of having an API are looked at, the good elements far outweigh the bad. Here are a few of the benefits, both for companies offering an API for outside use and companies using another company’s API:
Possibly the best reason to get an API is that it can form a strong partnership between two businesses. When a business integrates with another software, it aligns itself with the values and reputation of that brand. An API facilitates valuable business alliances, as well as allows businesses to piggyback on the positive consumer perception of another company. This is true for both the company that offers the API and the company that uses the API, though typically the company that offers the API has a more established reputation.
Of course, this can have the opposite effect as well. We’ll cover that a bit later.
Added value to your product
Another way APIs can benefit a business is by providing additional benefits to your customers. When a business offers data from another company via an API, they provide a higher-value product for their users and increase the value proposition. This also opens the possibility of increasing the price of a service, as the wider range of information or features offered in their software using the API justify a higher rate. This will have the positive effect of making your customers happier and producing a higher income for your product.
Enhanced visibility and increased reach
If your company offers an API, it can also increase market visibility and, as a result, enhance consumer perception and drive your company reach into additional audiences that it may not have been previously. Consider the API for Google Maps. Many companies use this API in a variety of ways, the most common perhaps being quite simple: to show the location of the business on a map. Google Maps increase their brand’s visibility by appearing in a large number of software and websites, and is thus viewed as a high-value, sought-after product. As Chris Ward writes for SitePoint, APIs can scale your market reach and thus “broaden your potential reach with little work and investment, perhaps only requiring better infrastructure.”
Another advantage of using another company’s API is that it will be less work for your software to perform. It’s a bit like outsourcing your work: if you’re not a carpenter, you wouldn’t undertake adding an extension onto your home, as it could take much longer, be more expensive, and produce poor results. In the same way, an API offers a valuable resource without having to hire a team of subject-matter experts and software engineers. Instead, you offload the work to a company that will be able to produce a high-quality product, and then you’re able to offer this as a part of your company’s services. The other company does the heavy lifting via their own software, and you reap the benefits, as well as allocate the capital you would’ve used to grow your business in other ways.
Many people don’t realize that by utilizing an API they are building a bridge to the cloud, which has been a huge aim for IT decision makers lately. If you have an aging software system, building an API can be just the ticket to catch up to modern companies and software systems without having to entirely rebuild your digital infrastructure. When part of your software’s functionality takes place in the cloud, you’ll be able to be more agile with your innovation and produce more efficient, up-to-date results for your users.
Working in real time
Data has never moved faster than it does today, and accessing an outside API gives you the competitive advantage of accessing data in real time to be a step ahead. Previously, documents were sent by email or, even slower, snail mail; after that, the data had to be entered into a system before it could be used. With the help of an API, data is updated in real time and waiting time is eliminated completely. With AI and machine learning becoming more prevalent, analytics from this data can be automatically put into action, transforming your business into a constantly improving, optimizing, and ideally positioned machine.
Making it easier for customers to access your company
When a new client starts their relationship with your company, typically the first step is to create an account. This can take multiple forms, from adding them to a CRM to creating a username and password. Whatever steps might be involved - no matter how small - they are steps that might cause a prospective client to choose not to interact with your business. On the other hand, if that customer can access your data via another company with the use of your API, they develop a relationship with your company and with no sign-up required. They become somewhat of a back-end customer through another company, yet nonetheless they utilize your service.
Disadvantages of an API
Having an API isn’t always the right choice for a business. Here are a few potential disadvantages to keep in mind.
If you’re considering building an API, be aware that this comes with a significant price tag. You will need to devote a considerable amount of development time as well as time to maintain the API once it’s up and running. If the financial cost is more than the potential gain, an API may not be right for your business.
Although hacking a company via an API is difficult, it is possible. Being on either side of an API, either accessing or offering one, increases your vulnerability to a cyber attack. It’s unlikely, but hackers have become more innovative than ever, and it would not be surprising if this were an area of great interest for digital ne’er-do-wells.
Bad integration partners
We wrote earlier that aligning yourself with a given company by exchange of API can be very beneficial for your brand perception. However, it can also spell bad news for your company if the other brand is not a reputable one. Therefore, ensure that in either case - if you provide your API to a given business or if you use another company’s API - you’ve done thorough research into their history, even looking at their current corporate citizenship initiatives. Pay special attention to any bad press they’ve received, and consider how it could reflect upon your company. Piggybacking on another brand’s reputation can be great for your brand, but it can also spell trouble.
--All things considered, APIs are a great way to create value for your clients, increase your brand outreach, and generally improve the quality of your software. However, they’re not for everyone. Consider all the options to determine if developing an application programming interface is an AP-aye or an AP-nay.