Innovating in the API economy: instant and on-demand expertise

In recent years, we’ve witnessed the inception of the so-called ‘API economy’. While the use of third-party APIs is not new, they are now playing a key part in the development of mobile and web applications. This shift is a result of a number of interrelated factors such as the need to get applications to market at a rapid pace, the increase in C-Suite digital transformation projects and the drive to recruit more specialist developer talent. At the same time, more organisations are recognising that it’s pointless to pour valuable resource into creating new functionality in-house when tried and tested services already exist.

For this reason, API-first companies now deliver on-demand functionality to companies. This can be low-risk, in the case of forms or maps for example, or in more innovative ways. Stripe, for instance, is a software platform that has transformed how developers integrate the payment process into apps. And we also have Twilio, a company that has revolutionised communication connectivity, simplifying it to just a few lines of code.

Put simply, APIs support the democratisation of highly specialised functionality. Yet all businesses, from large organisations to start-ups, need to be aware of the three elements crucial to customer applications: communication, payment and identity.

“Plugged in” knowledge

In areas that are heavily standards-driven, it can take years and a range of different skills for a developer to gain the necessary experience to achieve success. But by using APIs, expertise can be “plugged in” immediately, saving a great deal of time and investment.

Third-party APIs are therefore designed to fulfil extremely specific purposes. Because of this, API-first companies play an important role in providing domain expertise to their customers. To do so, they pay close attention to – and even take part in – driving standards and regulation. They also ensure that they have their finger on the pulse of market trends, all to build solutions that are more effective and specialised than those created in-house.

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Developing the “special sauce”: freeing up time for innovation

APIs have been described as “the raw ingredients of innovation” by the CEO of Twilio. This is precisely because they allow developers to “rapidly build new ideas”. Really, the main benefit of APIs is that they free up time for companies to work on their “special sauce” – in other words, what differentiates them from their competitors.

Many organisations have fallen victim to underestimating the sheer amount of resource needed to develop core functionality in-house. What’s more, if developers’ time and skill are put into this, it’s most likely that they are not focused on creating the company’s “special sauce”. Airbnb is an example of a company that uses APIs to rank apartments and place advertising based on image quality. Ultimately, collecting data, identifying images and picking out consumer behaviour patterns would be incredibly time-consuming without APIs.

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Many other apps, such as Uber, are only available because they have outsourced key functionality through a rich library of APIs. In these cases, developer time has been spent defining the company’s value proposition to great levels of success.

APIs and effective identity management

Managing identity effectively is a core way to protect the ID data of customers as they engage with an application. But if identity management isn’t done properly, it can lead to regulatory fines, data breaches and damaged reputations.

When we consider the expertise that is required for developers to create a reliable identity management solution, there are a few key elements to think about. Teams need to have an in-depth knowledge of social identities, identity standards such as OpenID connect, step up, multi-factor authentication and the list goes on. Moreover, they would need to understand infosec policies around password management and delegation of authority. A lack of experience and skills in these areas could lead to trouble for companies that attempt to develop identity functionality in-house.

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It’s clear that building in-house comes with risk – no matter how big the developer team some companies have. Luckily APIs provide these companies with a solution, a way for knowledge to be instantaneously “plugged in”. And as more organisations begin to use these, developers can put their energy into the company’s “special sauce”.

Within the API community, there is a real buzz around what the future holds. And as more organisations turn to APIs, nothing is more satisfying for API companies than seeing their customers innovate successfully.

Written by Simon Wood, CEO, Ubisecure

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