The Evolution of the API Economy

15 years after front-runners Amazon and eBay pushed for APIs, and 10 years after the proliferation of API management layers such as Apigee (acq. by Google), Mashery (acq. by Tipco), Layer 7 (acq. by CA Technologies), and 3Scale (acq. by Redhat), the API economy is at the beginning of a new wave. Platforms like programmeableweb.com (acq. by Mulesoft) reached peak popularity around 2010-2012, but has been replaced by Product Hunt, Mashape, Github, Stackoverflow, and Google searches for API information.

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The first wave of the API Economy was focused on opening company endpoints to enable API services. This phase was crucial to allow the supply side of data and services to grow and focus on solutions that give API providers the necessary tools to open and manage their services towards a growing number of partners.

The provider-centric approach came along with a couple of implications that still shape the API Economy today:

  1. Companies attract developers with their APIs. Companies aim to draw developers in with their API Portals – and realize that developers have a hard time discovering and understanding the layout of each individual portal as they can vary so widely.

  2. Legacy structures are exposed to developers – since integration decisions are traditionally driven by the business-side, there was initially little focus on streamlining APIs or improving their quality.

  3. 1:1 interactions mean more work for API consumers. We have created a world of 1:1 interactions. Even though certain companies have achieved self-service portals (fewer even self-service platforms), every change of an API provider today forces a change in every single API consumer.

  4. Backup plans are costly The cost and complexity of creating backups in case an API fails to perform or revokes access has led to a high dependency structure between API consumers and providers. (remember, APIs are also a trust game – developers are essentially making bets on 3rd party services).

The result of these three negative drivers is that developers waste time discovering APIs, understanding their quality and reliability, and spending hours each week maintaining them.

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A new set of players have been evolving over the past five years, focusing on improving individual chunks of the API economy. Mashape evolved to fuel the marketplace concept, Apiary (acq. by Oracle) helps with API development, Runscope supports analytics, and Readme.io helps clean up the API Documentation mess. Similarly, thought leaders like Tony Tham (Swagger, now OpenAPI) and Uri Sarid (RAML) have built strong communities around themselves to align standards, visibility, and transparency in the API space promoting higher quality across the ecosystem. In the meantime, the shiny solutions from ten years ago are being tackled by open source alternatives such as API Umbrella and Kong.

A couple of loopholes still remain:

  1. The API space remains scattered

  2. Patchwork comes with an additional layer of complexity for developers to link the various solution

  3. Key challenges in the integration space remain unaddressed, causing developers to tackle challenges around data transformation, caching, and alignment of API services in their backend – one by one.

As we are leaving wave two, we must be honest to ourselves: The API Economy still sucks when it comes to resolving key integration challenges. This is the opportunity space which companies of the next wave are tackling.

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This wave was really kicked off by a company that didn’t establish themselves as traditional players in the API Economy, but tackled a much more B2C-type of approach: IFTTT. Their easy integrations across different services has allowed hundreds of thousands of users to play around with automatic links between dozens of apps. Zapier has taken this approach to a much more expanded set of services, Cloud Elements and Segment.io have introduced this approach successfully for the consumer and marketing space allowing developers to link Salesforce services directly to other critical functions in their backend around mail or storage.

A full focus on the flexibility and time-to-market as KPIs for consumption require us to rethink solutions across four dimensions:

Speed to set up connections: Taking IFTTT & Zapier’s approach to the granular workings of backend integrations allows developers and less technically versed employees to build new products faster

Ability to hide complexity: The normalization of data across different services increases comparability and combinability of services - especially given the internal complexity of established enterprises that needs to be shielded from external partners

Security, above all: Full control over who accesses what data at what time, where certain data is going, and the ability to easily anonymize data streams is key when it comes to being compliant with regional personal data regulations – and ensuring customer and employee data privacy.

Transparency in the value chain: True management of API integrations requires transparency on the performance and usage around all integrations, backup solutions, and efficient management of usage and keys for teams.

Those four pillars are what excites us at Xapix about the API world. It’s time to make it suck less by turning great individual approaches into a strong end-to-end offering to integrate APIs. The mobility space is a prime example of where smarter integrations are enabling new services. As cars get smarter, they will enable new services and industries and make everyone’s lives a little easier.

Give it a shot at xapix.io and let us know what you think!