What is an API & Why is it Vital?​

Is there an actual hidden secret to running a successful digital business?

At Spark Equation, many of our clients have expressed that they've spent valuable time searching through numerous articles and books in hopes of finding the answers. Although there’s tons of great information, you might not have given any thought to how your digital business actually runs - from the developers' side. Of course, you might not be a technical person, but why does your business technology need to be on your priority list?

Successful digital businesses run on user experience. Company names and reputations as a whole can be diminished just from the speed that your users are experiencing. It’s even more important today that we emphasize the significance of creating new business designs at a faster pace. So what can you do? Successful companies at one point or another have all invested in how their users experience their products and services. They created infrastructures to manage API services and in turn established industrial strength and unlocked a gold mine of innovation making them leaders in digital business.

What is an API?

You’ve heard the acronym “API” mainly talked about in your tech departments, and that’s because in today’s software-defined economy almost everything is built using API strategies. The acronym itself expands into - application programming interface (API) and its primary purpose is to enable companies to create value from the outside in with ecosystems. These structures enable businesses to connect and unlock new revenue opportunities from existing information. This existing information is available through APIs. They make it easier to develop a program by providing the building blocks that a developer needs to put it together. The way you manage your APIs can bring significant effects in transforming your company and company reputation. The quest is to strengthen the implementation of APIs by measuring and optimizing digital interactions.


Let’s break it down even further, consider this example:

Imagine you’re a professor and you send your students to a private conference. To attend this conference each student needs to RSVP with a ticket. Depending on the year of each of your students, they each need different levels of access. Each ticket holds a level, silver, platinum and gold that allows them to have different types of access to lectures, presentations, and networking. The higher the level, the more access they have to these activities.

They arrive at the conference with their ticket. The event is protected, organized and well documented. To enter the conference, students need to show their ticket by which the organizer directs them to an activity room. If you have a gold level ticket, you have access to all the activities happening in that protected private conference. On the other hand, if you have a silver level ticket, it only allows you restricted access to the activities and materials at the conference.

Your students leave the conference now with the information that they needed and go home. This process of interaction is an example of an API.

  • The professor is the developer.
  • The college students are the client application.
  • The conference is the application.
  • The process through which they interact with the information and conference is the API.
  • The conference lecture and activities schedule is the interface.

There are multiple types of APIs-

Public – An open API often referred to as a public API is publicly available and gives universal access to consumers. They are more restricted in the information they share, but that data is only shared with developers. Examples entail – Google maps and Facebook.

  • Customer-Facing Public APIs – As an open API, its structure allows customers to access company information. Think shopping apps. Every time you want to buy something online you access company information to find what you’re looking for.
  •  Partner Facing Public APIs – Similar to customer-facing APIs, partner APIs are used to facilitate communication and integration of software between a company and its business partners, not customers. Examples include consumer goods companies providing retailers with up to date inventory levels in an application.

Private – A private API is used internally by an organization. The developers within the organization can connect multiple service products for interaction creating a company ecosystem.  Private APIs can significantly reduce development time in building internal systems, maximize productivity and increase the speed of development cycles for public applications. They also improve market reach and add value to existing offerings.

  • Enterprise-Run Ecosystem- Enterprises can build their own ecosystems that can be commercial, or community-based. These APIs allow enterprises to create a buyer/seller/third-party marketplace for products and or services or an external ecosystem for non-commercial use. Examples of these types of ecosystems are Amazon, Uber, recommendation engines, traffic updates.
  •  Industry-and-Vendor-Run Ecosystems- Industry consortium, third party or vendors/suppliers and customers run these ecosystem APIs. They bring together the entire ecosystem and allow for interaction and commerce to occur.  Examples of this type of ecosystem include credit card networks, payment networks, B2B marketplaces, and JDlink- run by John Deer to connect partners and agricultural equipment.

Why are APIs important to your business?

Business executives are now taking a more active role in building and enhancing customer relationships using API enabled strategies. Here’s why:

  • Good API performance reduces costs and allows to build components with the best building blocks, leading to increases in delivery frequency eliminating constraints and shortening development cycles allowing higher turnover rates.
  •  The better the integration, the faster the innovation process, outputting better, faster and more efficient products and services.
  • While taking ownership of business data, APIs allow companies to move into markets they may have never considered unlocking undiscovered revenue potential and increasing the competitive market advantage.
  • Many successful companies understand that barriers to change are reduced allowing them to indulge in the excellent benefits of efficient and robust API enablement strategy.
  • Application programming interfaces’ have endless business opportunities because they function like a universal plug that lets you access numerous amounts of data and create rich user experiences in apps.
  • Because APIs give access to assets, it is vital to carefully construct and control the design process to protect your data and server from malicious traffic.

The Time is Now

How a business wins or loses is increasingly dependent on how well their API enablement strategies work. In many situations, companies are pursuing more than one of these types of application programming interfaces in multiple areas of their business to improve digital experiences.

Whether you choose to deal with APIs through your in-house tech team or choose to hire external firms to handle your integrations for you, it’s crucial that you have a high-level understanding of what an API is and how its enablement benefits your company.

When looking for a solution to help you build better integration strategies be sure to find one that fits your company, business model and the best practices of implementing them.