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Making Sense of APIs and the API Economy

API economy

The microservices architectural style and the API program are not exactly the same mechanism, but they’re close enough in usage to share a name. However, when discussing microservices it’s important to provide context.

Introduction to the API Economy

According to Gartner the API economy can turn a business or organization into a platform. How is this possible? As reported by Gartner, the API economy is a set of business models and channels based on secure access of functionality and exchange of data. These new models and channels turn a business into a platform.

According the Harvard Business Review, “Today, a firm without application program interfaces (APIs) that allow software programs to interact with each other is like the internet without the World Wide Web.” When describing the API economy, IT consulting companies reference M-type APIs rather than old or new type APIs. The meaning of API has been appropriated by the small data programs created with API management software tools.

Unlocking Business Capabilities

You can group the motivation behind creating new microservice applications into four categories:

  1. Generating revenue. Early technology companies got off to a fast start with financial transactions but now other companies are using APIs to monetize their applications.
  2. Lowering costs. Insurance companies are lowering their underwriting costs by providing support for mobile applications that add a self-service character to filing a claim. Manufacturing companies are using API programs to bring retailers on board, making functions available within their current in-house systems.
  3. Improving efficiency. Government agencies are making data available to be used by commercial applications. An example of this would be live airport status.
  4. Responding to competition. Financial services companies are using APIs to unbundle functions within their legacy applications to compete with Fintech start ups, which support low-cost money transfers without using a traditional bank.

The Story Continues

It’s interesting and useful that APIs have been reinvented and brought forth in a completely new way. Old APIs, with access methods like QSAM and VSAM, are still indispensable. New APIs have found their use in the data-sharing setting to save costs and improve efficiency.

Microservice APIs are supplementing applications in many businesses to do what existing applications and systems can’t. Microservice APIs are also making their impact by providing powerful levels of integration in an application context without the need for changes to existing systems of record.

Microservice API programs are not without their challenges. Just like conventional application assets, once you design and build an API program, it gets deployed, managed, made highly available as necessary, backed up and eventually retired. These disciplines must be given the proper level of attention in order for APIs to carry out their purpose.

Joseph Gulla is the general manager and IT leader of Alazar Press, a publisher of award-winning children’s books. Joe is a frequent contributor to IBM Destination z (the community where all things mainframe converge) and writes weekly for the IT Trendz blog where he explores a wide range of topics that interconnect with IBM Z.

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