APIs promise the ability to experiment and monetize quickly with a company's unique, niche, or core capabilities. Teams that build APIs should understand the needs of their customers and internal users, and make the product compelling to them through design, prototyping, testing, and feedback.
APIs, like products, should be actively maintained, supported, and easy to use. They should have an owner who advocates for the customer and strives for continual improvement. Product mindset is the missing ingredient that makes the difference between ordinary enterprise integration and an agile business built on a platform of APIs.
What does API-as-a-Product Mean?
APIs allow your application to interact with an external service using a simple set of commands. APIs are a simple, straightforward tool for companies to expose their unique services and offerings to the world.
Learn more about the basics and answer the question "What is an API?" here.
API-as-a-Product is an established and increasingly popular software development concept. But what is API-as-a-Product? What are some ways an organization can monetize an API?
Like Software-as-a-Service, an API-as-a-Product exposes and monetizes an organization’s unique functionality or services. These services are typically delivered over HTTP. In this model, the API is at the core of the business’s value. For API-as-a-Products, the API is not only the method of delivery; it is what is being delivered.
API-as-a-Product can be compared to an API-driven Software-as-a-Service (SaaS) offering, where the API powers the software and its surrounding business logic.
Source - Nordic APIs
Operating your API as a product allows you the freedom and flexibility of an API, allows you to release features more quickly, increases your business value’s reach to new customers and audiences, and expands your revenue opportunities.
Examples of API Products
Some organizations are already doing it right with high-quality, easy-to-use, well-documented APIs. Here are some examples of successful API products.
- Stripe: At its core, Stripe is a payment processing platform that enables eCommerce transactions through an API. However, the API is not a store or a place to make a purchase. Stripe enables commerce through easy-to-integrate payment options for all kinds of digital storefronts to decrease costs and speed up time-to-market.
- Twilio: Twilio is a communications facilitation platform that allows agents and customers to communicate across a large variety of platforms, Twilio is a communication platform but is instead a platform that creates communication connections, bringing benefits to companies who don’t have the resources or don’t want to create in-house communication channels, but need integrate channels into their existing infrastructure.
- eBay: eBay considers their APIs to be products, and they are first-class products at that. They have a large and powerful ecosystem of third-party developers and applications that add value to both eBay and their customers, the buyers and sellers; this means they truly rely heavily on the developer model. APIs as building blocks that developers put together in a unique way to do a variety of things, including being managers, sellers, business owners, scaling to provide logistic services, providing bookkeeping services, handling marketing, etc.
- Netflix can stream to over 200 different device types thanks to its API.
- 60% of eBay’s listings are done through their API.
- 50% of Salesforce transactions are done through their API.
- Twitter receives over 13 billion API calls daily.
How to Create an API Product Strategy
The need for effective API creation has never been stronger. As more organizations and leaders learn about APIs and how to use them to dominate their market, often there’s a rush to get an API out and running without following the necessary steps to ensure a successful product.
First, it’s critical to understand the big picture; why does an API matter for your business model? Why will an API be the right delivery system for your business value? And how will it delight your customers?
Fundamentally, APIs are software that exposes certain data and enables users to do something useful with it. In general, organizations create APIs to compound the value they offer to their customers.
But before a business can build upon its value proposition, the leadership team must be able to clearly articulate how the proposed APIs will deliver that value. While this seems obvious, it's frequently a challenge for companies to pin down exactly how an API will maximize their value proposition.
Here are three lenses through which to view the API program under consideration:
- What will the API do for people?
- Who, specifically, will be using the API? What are their needs?
- What other companies are working in this space? How will your API compare?
Once you can answer these questions, you have determined the value proposition for your API and should have a sense of the competitive landscape and potential return on investment (ROI). Successful API makers have good answers for all of these questions and then make the APIs as simple and easy as possible to adopt.
Follow product management principles.
Satisfied customers, more revenue, and accelerated growth all sound great. But before you dive into standing up an API, consider the following traditional Product needs.
According to If You Build It, Will They Come?, a book by Dr. Rob Adams: companies need to allocate similar budgets for Sales/Marketing and Engineering. Your API requires a product-style support system for its best chance of success. Consider:
- Business justification
- User personas
- Clear use cases
- Positioning and Competitive Intelligence
- Revenue model
- Pre- and post-launch plan
- Marketing and sales plans
- Support and documentation
The Role of an API Product Manager
As the business leader for an API, an API product manager helps the organization develop a vision and strategy for its API products. This includes defining which APIs are required via research on the business needs, and the needs of developers and internal and external consumers.
A major responsibility of an API product manager is the ability to clearly articulate the product’s value and benefits to internal stakeholders and end users. They have to champion their API product throughout development and implementation, manage the launch, and get feedback from business leaders and end users to continue to improve the product. These traditional product practices will ensure an API product manager will create, deliver, manage, and iterate on a solid product.
One of the biggest challenges API product managers face is that they need to make sure APIs deliver the value that’s expected from a wide range of stakeholder groups:
- Developers who create and maintain APIs, including adding new features and fixing issues.
- Internal developers who consume private APIs to integrate business systems.
- Partner developers who consume APIs restricted to use within strategic business relationships
- Third-party developers with access to public APIs.
- Internal end-users who rely on APIs to enable business processes spanning multiple applications to run smoothly.
- Customers who rely on APIs to conduct online business efficiently.
- The business unit leaders that own the APIs
Source - 3Pillar
One of the top skills an API product manager needs is a business mindset. They have to be able to juggle multiple relationships and needs between the business and the output. They have to be collaborative and willing to go to bat for their product and their end users.
Designing API Products
The first step in any successful product is the Design stage. API design includes the planning and architectural decisions you make when building an API product. Just like product design, API design informs the user experience, and good API design principles meet initial expectations and continue to behave consistently and predictably.
Learn more about API Design for your API Product in this guide.
How to get started with API Products
Treating your API as a product requires discipline and culture change.
Adding an API to your product can bring a significant competitive advantage and increased revenue. In our connected world and the era of the Internet of Things, not having an API could be the difference between rapid adoption or being left behind by the competition.
But, as alluring as it might be, you need to consider all the challenges ahead and ensure that your company is ready to support this initiative with not only engineering but with everything it entails across all departments.
Subscribe to the API Intersection podcast for more information about how to get started with your API product and how to set up a successful program.
Appendix - Sources & Reference
- Is Your Organization Ready to Build APIs? Answer These 3 Questions First.
- How APIs Become API Products
- Understanding the API Product Manager Role
- APIs as a product
- What Is an API-as-a-Product?
- The API Product Mindset
- The Complete Guide to API Products