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The API Distribution Market Is Due for Disruption

APIs are the coding interfaces that enable developers to create third-party apps, plug-ins, and add-ons

Speaking after the API Strategy and Practice Conference in New York last February, Bruno Pedro - CTO for app integration platform CloudWork - declared: "The API distribution market is due for disruption." According to this chief app integration architect, how businesses will release APIs in the future is heading for a complete overhaul.

APIs are the coding interfaces that enable developers to create third-party apps, plug-ins, and add-ons that extend the functionality and potential of existing Software-as-a-Service products. Pedro's comments reframe the entire API industry and, if pursued, would fundamentally alter the existing dynamics between developers and third-party app businesses.

API Distribution market model

"We're now in a phase of market maturity and people are starting to realize that they need to be careful about what the API is exposing and what the end user will see around the SaaS product," said Pedro after presenting at the API Strategy and Practice Conference, hosted by 3Scale and API Evangelist, and held in New York in late February, 2013.

According to Pedro, the conference was predominantly attended by business representatives ("about 70% of participants, with the rest being developers and technicians").

"One of the main conversations amongst businesses who had their own API was the worry around branding guidelines: how does a third-party app that is built on a business' API give credit and acknowledge the business as the data source and creator?" shared Pedro.

The current distribution model sees SaaS apps release an API and some ("perhaps minimal") documentation, which developers then use to create their own app, add-on or plug-in. SaaS businesses are hoping new customer gains will scale exponentially if developers are able to create and evangelize a useful third-party app quickly, but the downside is that the source app has no control over the look and feel of the experience for the end user. Knowing who will manage support if the API stops working is also confusing and can leave end users disgruntled with a SaaS business even if the third-party app is in no way related to them.

Laura Merling, AT&T Vice-President of Ecosystems and Solutions, sees one part of the disruption solution is to throw away the term "API" altogether. "Don't say API, say capability," was a key takehome from her API Strategy and Practice conference presentation. At US telco giant AT&T, Merling's team is already implementing a disruption to the standard API distribution model. Access to AT&T's capabilities is made available, along with development standards, to a community of integrators who then create the products that will reach end users. With this model, AT&T hopes to better control and optimize the experience for end users who access their data sources via third-party apps.

"CloudWork is also a disruptive model aimed at breaking down the entrenched API distribution model," Pedro explains. "CloudWork supports SaaS businesses to create end user integrations that can then be shared via a self-service catalog. Instead of releasing APIs, we work with the SaaS business to understand the business case where a source app's capabilities can be applied to meet an end user need. As a result, an end user is able to get the full value from their SaaS apps and not have to manually move half-completed tasks from one data process link to the next."

This is an emerging architectural model that has been applauded by Steve Bell, Lean IT expert and author of Run, Grow, Transform: Integrating Business and Lean IT. "This is about adding real value to the SaaS customer in ways that weren't possible before now," Bell states.

"When the idea of an application ‘ecosystem' was first termed by Gartner, it was a very Copernican view of the world, with third-party apps gravitating around a central ERP product offering," Bell explains. "But with an integrated SaaS model, there is an opportunity to assemble a more decentralized, adaptive clustering of applications that creates a different dynamic. The challenge, because the application logic and data is so decentralized and loosely coupled, is to ensure information flow.

"The inherent challenge with the API model is that it can lead to fragmentation rather than flow. You can couple all of these apps together but who has visibility from the ‘line of sight' to the overall value stream?" Bell cautions.

"To be lean, you don't stop at the API or application logic layer, you must look to understand the business' value stream and how it serves the downstream customer. If not properly designed, handoffs and touchpoints can cause delays and defects, which the customer ultimately pays for, one way or another. So it's important to design the process workflow so that value flows horizontally to the end customer in a smooth and interrupted way, with full transparency among the integrated applications."

"CloudWork is essentially a market disruption model that removes all the intermediaries from the process and makes it much easier for a SaaS business to address the needs of the end user customer," Pedro says. "End users think in terms of how an app can help them complete business tasks. The CloudWork approach helps end users keep that focus and ensures a SaaS business is recognized for making that value flow possible".

More Stories By Mark Boyd

Mark Boyd is a freelance writer based in Barcelona, specializing in Software-as-a-service, small business cloud computing, retail technologies, and smart cities.

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