Is Software About To Eat Itself?

Over six years ago, Marc Andreesen wrote about how software is eating the world. In the next five years, I anticipate that software will begin cannibalizing on old software.

In the last half-decade, we have seen the advent of the API. There have been the successes of API-driven business models, such as Twilio and Stripe. These companies have replaced internal software development within the cores of larger companies, with their best-in-class software, and they are rented by the API call at a cheaper rate than it would cost to maintain an internal development team.

The average person probably hasn't heard of the API, Twilio, or Stripe: It stands for Application Programming Interface, and you've definitely used one of the above services before. If you've ever received an SMS code, or made an online payment, it was probably powered by Twilio or Stripe respectively. These services allow businesses to tap into their "microservice" so that businesses don't have to build it themselves.

In his article, Andreesen recognized that the Internet had already been around for decades, and computers for even longer. He believed that software thrived because of the maturity of a number of supporting platforms that enable permissionless innovation.

This is now happening in the API world: there is a booming industry of API management providers, who are developing the platforms to support more API-driven businesses. They make it easy to develop, market, publish, and consume APIs. Stripe and Twilio are just the beginning.

Like the “app” store revolution, there will soon be an “API for everything”. The new platforms will attract crowdsourced teams of developer-entrepreneurs to build their own specialized services to replace the internal software of each and every business, piece-by-piece.

For example, we might expect banks to dismantle their “core banking” monolith into a bundle of modules that it will rent from a number of APIs. Telecommunications companies could break down their network management capability into a series of API-driven services: data collection, monitoring, and control.

Unlike today’s internal software development departments, which are dominated by internal development teams, or large software and services vendors such as IBM, Oracle and SAP, the future IT department should expect to replace their old cores with the new skill of orchestrating the crowd of APIs that will support their business’s goals.

Collin is an MBA student at MIT Sloan. Over the last summer, he worked closely on the API vision and strategy for Rakuten, Japan's largest internet services company, operating e-commerce, fintech, and media businesses. (These views are his own and do not represent the company's)