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Consumer Tech APIs Allow Enterprises to Achieve Digital Transformation

The most important driver for the quick successes behind companies such as WhatsApp, Pinterest, Slack and Uber was their decision to use APIs to “compose” applications rather than writing the code from scratch.

Industry Perspectives

September 13, 2017

5 Min Read
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Simon Peel is Chief Strategy Officer for Jitterbit.

It’s amazing to me how quickly some companies get to the magic $1 billion valuation milestone, while it takes others forever to get there. In the not-so-distant past, developing a company worth a billion dollars took decades, with some industries like finance and energy dominated by businesses that have roots stretching back more than a century. But today, there are plenty of examples of companies like Uber, Pinterest, Slack, and WhatsApp that valuated that quickly in a handful of years.

The speed of this disruptive creativity is well documented, but less noted is how few individuals built these companies to their billion-dollar scale. Perhaps the most famous example is WhatsApp, which was just a four-year-old company with 55 employees (and 420 million monthly active users) when it was sold to Facebook for $19 billion. It took about 35  people at Pinterest to achieve a $1.5 billion valuation, and with just 100 employees, Slack Technologies reached a $1.5 billion valuation less than two years after its public launch. And then there’s Uber, made up of just 23 people when their service went live in 24 cities across the US, launching a product that went on to be valued at about $65 billion dollars.

What made it possible for these companies to grow so quickly, and more importantly, to do so without an army of employees to build and manage the infrastructure that handles the daily activities of millions of users? APIs (application programming interfaces) give developers a quick and easy way to weave existing  technology and information into a disruptive new product or service. For example, before Uber could offer its first ride, it needed to set up systems to handle payments, location tracking, real-time communications, user authentication, and a host of other digital processes. Coding all these from scratch would have required hundreds of thousands of developer hours (and costly infrastructure), but instead Uber focused their developers on composing an application that called on existing APIs for each of these different processes, and stitched them together to create a radically different transportation experience that delighted users.

APIs to Drive Enterprise Digital Transformation Don’t Exist Yet

The rapid innovation and scaling through APIs that defined these billion-dollar startups provides an obvious lesson about the value of application composition for large enterprises now engaged in digital transformation. However, these enterprises must answer a crucial question: Who is going to create all of these enterprise APIs and microservices that will expose the valuable information that is currently trapped in their existing systems? Enterprises have an innate advantage against new competitors in the form of their experience, domain knowledge, and data stores built up over years of operation. But they can’t use this to assemble new solutions the way that the new breed of rapid-growth consumer tech companies have done without first breaking down their assets into reusable components called microservices and APIs. 

According to Forrester, companies spend a total of $65 billion each year creating new custom applications to fit their unique requirements. It’s not surprising, therefore, that most enterprises have built hundreds, and in some cases thousands of custom applications over time to help their businesses run smoothly. These run the gamut from pricing and quoting engines, to risk analysis apps, to custom mobile apps, to simple apps to track employee annual appraisal results, and the list goes on.

However, these enterprises often don’t have a quick and efficient way to break down and expose these assets so they can be reused to build innovative new experiences. The consumer tech world by contrast is already doing this by creating a huge network of open APIs. This inability to reuse assets and data will only create more obstacles for enterprises as more custom applications are created. Exposing all this information and making it usable across the enterprise will be the defining challenge for enterprises undergoing digital transformation.

Leveraging an Integration Foundation

We’ve seen in the consumer tech world how APIs work amazingly well to make data and technology available for people to compose new and transformative applications, so the obvious next question is how to get the enterprise to a similar place—where all the information trapped in legacy systems can be exposed through APIs. The common answer has been that an army of developers will eventually code an array of APIs and microservices for each enterprise application that companies rely on for their business. However, the enormous amount of time and resources that manually coding APIs from scratch would require makes this approach too slow and costly to keep up with the demands of the real-time economy.

Fortunately, much of the foundation for building these APIs has already been completed by companies that work to deliver integration to a wide range of systems. These integration providers have already done the heavy lifting of collecting and transforming the data from thousands of enterprise systems to feed into other applications. From there, it’s a relatively straightforward task to expose these integrations as microservices that can be accessed by internal and external users. Some of these integration platforms not only support the creation of APIs, but now also offer API management so that these APIs can be accessed, secured, managed, and governed appropriately . 

Thanks to the advent of API integration platforms, it turns out that we’re much closer to a world where applications and information from across the enterprise can be made easily accessible for programmers to quickly compose new applications and processes that drive digital transformation. Rather than tie up valuable development resources reinventing the wheel, it’s time to let a platform take care of the plumbing, freeing up developers to focus their creativity on limitless innovation.

Opinions expressed in the article above do not necessarily reflect the opinions of Data Center Knowledge and Informa.

Industry Perspectives is a content channel at Data Center Knowledge highlighting thought leadership in the data center arena. See our guidelines and submission process for information on participating. View previously published Industry Perspectives in our Knowledge Library.

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