APIs and the Road to the Software Enabled Enterprise
There is this famous quote from Francisco Gonzalez, the chairman of the Spanish bank BBVA who said in 2015: "BBVA will be a software company in the future." (Article on Finextra). Nowadays, companies from very different industries refocus their energies on enabling their enterprises with the help of software for a variety of reasons: to bind their customers and partners closer to them, to drive revenue, fuel innovation and to compete efficiently with "born in the cloud" companies that threaten to disrupt their industries.
APIs are a critical component of the software enabled enterprise and drive digital transformation every step of the way. Most companies have been utilising APIs as part of their internal functions and processes for years, but only now do they realise the value that lays in opening them up to the outside world.
This applies to various industries: news syndicates focus on building APIs to update their readers in real time; online shops utilise APIs for customers to access store, product and price information; and new players like Airbnb and Uber have built their businesses on the API Economy. As an example, Expedia generates 90% of its revenue directly from their APIs. (Article on HBR)
But before companies jump on the API bandwagon, they will have to ask themselves two questions that will determine how effective their API strategy will be:
- Where are the APIs running ?
- Where are the APIs managed ?
This differentiation is critical.
The first question is concerned with the physical location where APIs are actually running. Modern applications offer out-of-the-box APIs for core capabilities, but do companies really want to expose them directly to their customers ? There are a variety of security related and financial reasons that speak against it. Other APIs will run on Cloud Platforms, but these will likely not constitute all of the critical services needed to run an enterprise. Most of these critical services will still run on premise, for example hidden inside a legacy mainframe.
One solution would be to expose APIs as microservices through a Digital Services Platform. This would provide the necessary level of governance, as well as integration into the critical endpoint system through a middleware layer. Thinking a step further: the more distributed a company's data, processes and functions are, and the more fine grained and agile a company's APIs need to be, the more critical it will be to establish an API layer on a Container Platform that allows companies to flexibly scale out depending on expected workload from their customers.
The second question is concerned with the challenge how an ever increasing number of APIs is managed. Imagine a company having exposed hundreds or thousands of coarse and fine grained functions either directly in the applications, or indirectly in a Container Platform or a Digital Services Platform. The next step would be to establish safe access to the APIs and to define policies and thresholds for accessing them.
That API Management Platform needs to be able to efficiently handle a large number of API calls through a robust infrastructure providing caching, fault tolerance, traffic routing and load balancing between API consumers, the Digital Services Platform and the API endpoints. To learn from consumer interactions with a company's core functions, the API Management Platform needs to provide a comprehensive analytics and reporting framework. If APIs are exposed externally, a Developer Portal with robust security mechanisms needs to be in place that documents the details of accessing API methods, giving external users and developers a framework to embed the APIs in their mobile applications. And from a governance perspective, the API Management Platform needs to be able to host application plans and policies with the option of monetising access to the APIs.
To sum up, the development of an effective API strategy that takes into account where APIs are located and how they are managed is one of the necessary first steps on the road to digital transformation and to becoming a software enabled enterprise. Customers will only gain value from their business interactions with a company if those interactions are based on a sound technical foundation.
Feel free to talk to me about how Red Hat can assist you on that journey with our Red Hat 3scale API Management solution and our Red Hat OpenShift Container Platform.
Daniel Soffner
Senior Solution Architect, Cloud and Emerging Technologies
Red Hat Australia, Melbourne