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How the API economy is changing business

API cloud economy
Photography by John Lund / Getty Images

To gain insight on perfume trends, the retailer tests the market for its product by running a handful of commercials that focus on the perfume with no price tag attached. Once the commercials air, the retailer mines social media for feedback. The merchant also will want to know if customers are alerting their followers to the product.

Now the retailer has a set of data that can be analyzed for trends and insights. The analytics likely will be run in the cloud near the source of the social-sentiment data being collected, Brech says. This is where APIs to services come into play. The retailer will use a set of APIs, enabling it to run analytics on the data in the cloud. The insights gleaned from the data may reveal that reaction to the product is good enough to justify launching a marketing campaign.

Conceivably, the retailer could use several sets of APIs and services during this campaign. One set of APIs would be used to derive market insight. Another may be used to bring that insight into the data center, linking it to inventory information. A third set of APIs might be employed to discover how the marketing effort would affect inventory, price elasticity and supply chain refill times.

Based on the results, the retailer can design and launch its marketing campaign. The campaign may leverage mobile, which would require another set of APIs to enable sending a blast message to the mobile phone numbers of loyalty program customers. The message may contain a coupon that customers could use and may set a time frame in which to use it. The next step is to await customers’ reactions to the offer. Finally, the retailer will analyze sales to see how the campaign fared.

By using APIs and services in the cloud, the retailer can quickly construct a composite application in support of the business and doesn’t need to wait for IT capacity in its own shop to be requisitioned. From start to finish of the campaign, the operation is done in a timely, economical manner. APIs also allow the retailer to link the insights from the social data with its internal business data to make the best decisions quickly.

New Way to Look at Deliverables

The API economy changes how IT approaches deliverables. Rather than worrying about capacity to run everything, IT will manage a set of APIs and the services they perform. IT will simply go to services located on Bluemix or another provider, choose which APIs are needed and pay for the services for a specific amount of time. Essentially, you are renting the infrastructure to run the services you access via the APIs to extend your internal infrastructure. This helps IT teams maximize their effectiveness for the business in shorter periods of time.

This rent model can help companies budget for resources when they are needed rather than investing in a service used a few times a year. It contains costs and gives the customer a range of choices to meet business needs. “Nobody buys a car to leave it sitting in a garage,” Brech explains, “but that is what can happen with resources when they aren’t used all the time.”

That said, some businesses may prefer to keep the services in-house due to regulatory, security or regional network reliability issues. Accounting preferences can also come into play. Some businesses use a depreciation model, so having the service in-house is preferable. In either case, leveraging APIs and application services allows speed of execution with flexible cost models.

Shirley S. Savage is a Maine-based freelance writer. Shirley can be reached at



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How the API economy is changing business

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