Now is a time of unprecedented innovation.
An entire constellation of technologies has entered the online sphere, and each promises to provide sweeping solutions and relieve systemic problems. As impressive as these pieces of technology might be in isolation, however, their potential depends on how seamlessly they work with other solutions. For technology to truly transform our lives, it must function seamlessly with other solutions instead of popping up at select times to perform distinct tasks. Given that need, application programming interfaces will be the driving force of innovation moving forward.
Currently, companies rely on APIs to connect their own internal systems — think accounting, logistics, marketing, and sales functions. In today’s data-driven economy, these firms understand that success depends largely on their ability to collect, integrate, and leverage data. Keeping it trapped inside silos and segregated in certain departments makes little sense.
All in all, the point is to broadly leverage data to improve everyone’s understanding. APIs break down these barriers by allowing proprietary systems to share information with one another. In other words, they allow systems to work in concert so that companies can become digital-first organisations.
This API economy has already transformed how companies approach their daily operations. In its next life phase, it will impact how companies think of their products and services. Increasingly, organisations will use APIs to link their own data with other datasets to create value for users — and in fact, this phase is already happening.
Uber provides a helpful example. Instead of trying to reinvent transportation, its founders leveraged information that was already available (namely data from Google Maps and preexisting payment gateways). APIs linked that geographic and financial data with Uber’s own back-end processes, which helped Uber create an app that makes hailing rides effortless. Its success is all thanks to APIs shared between various tech companies.
The most exciting part? This is only the start of a shift that will see APIs transform our relationship with the physical and digital worlds
Life under the service fabric
As APIs become more prevalent, tech-based services will also become much more seamless. They’ll easily coordinate to share information, automate tasks, and fulfill complex requests. Colloquially, this capability is known as the “service fabric” — a web of applications and services working together to improve efficiency and productivity.
To fully understand the service fabric concept, it helps to explore the solutions that preceded it. Previously, most companies — especially those in tech — wanted to become walled-off empires. They would invite users into their self-contained ecosystem and entice them to stay by using as many proprietary products as they could engineer.
Although this could depend on your perspective, the end goal was to “trap” the user by isolating him or her from the competition. A fair few companies made tremendous profits using this strategy, but it’s reaching an obvious inflection point.
In a tech-driven economy defined by convenience, simplicity, and accessibility, consumers expect everything to be as painless as possible. Eventually, this will mean that involvement in an ever collaborative service fabric will become a necessity for attracting users — and keeping them around.
Unity over competition
As far-flung as it might seem, data already backs up the idea that corporate success will be driven by cooperation instead of competition. A recent report showed that 35 per cent of the top tech companies generate more than a quarter of their revenue from APIs. Moving forward, there’s every reason to believe that this percentage will increase as companies realise why APIs are important.
Examining a hypothetical service fabric makes this concept easier to understand. Today, when a company needs to order materials, it has to deal with separate systems for accounting, vendor management, inventory, warehousing, and the like. As powerful as those systems might be, a routine business process (such as ordering materials) still requires multiple steps and lengthy data integration and reconciliation processes.
On the other hand, imagine that managers at a company could simply enter what they wanted when they needed it, walk away, and know for certain that the exact order would arrive without any hiccups. There are already indications of this behaviour with the emergence of robotic process automation for easing the execution of business processes.
From the user’s perspective, ordering materials becomes effortless — simply ask, and you shall receive. From the supplier’s perspective, it’s able to attract and retain loyal customers because its process is not an impediment to obtaining its products and services. Companies and their customers are directly linked, but the link depends entirely on the company’s willingness to embrace APIs, share data, and work outside its own ecosystem.
Moving into the future
Soon, this service fabric will play the role of connecting disparate services by providing a bridge between different ecosystems and industries. At its heart, the “service fabric of the future” represents the confluence of APIs, service fabric, cloud computing, and machine learning.
Organisations will be able to register their services with the service fabric, and the fabric will be able to interpret the service registration information and intelligently understand how the new API or service can participate in it
This will have a dramatic impact on the relationship between consumers and suppliers, and we can expect a profound transformation in how companies inside and outside the tech realm approach their business model. Instead of marketing themselves to individual customers, they’ll market themselves to the service fabric and will broadcast their ability to integrate broadly and completely — similar to the emphasis placed on search-engine marketing and optimisation in the age of internet search results.
When someone uses a router (think Amazon’s Alexa, Apple’s Siri, or a Google search) to access the service fabric and asks for a specific product or service, only the companies included in the fabric will be called on to provide it. Success won’t depend on brand recognition or marketing budgets. It will depend on being in the fabric itself.
The service fabric clearly caters to individuals and enterprises alike. In order for it to grow, however, the API economy must also continue to evolve. Whether that happens depends on companies’ willingness to abandon stale, unsustainable strategies in favour of an entirely new road map.
Avoid falling behind in the API economy
Above, I’ve focused on the service fabric in a mature and future-state form — as if the API economy had evolved without any obstacles. Realistically, however, many companies still need to develop their own internal APIs before they can ever think about opening their datasets up to others. Until this happens, the grand vision of the service fabric is out of reach.
Today, companies should focus on telling their own “data story.” That starts by breaking down data silos and integrating data as widely as possible, but this is often easier said than done. Competition between departments, concerns about cybersecurity, and executive hubris all clash with the idea that data should be democratised. Many companies still keep it locked away.
This changes when companies realise the true value their data products can provide for internal and external users. Although it can be hard to accept, data typically has more value when it’s shared — not when it’s hoarded. When companies adopt this philosophy wholeheartedly and recognise the importance of APIs, they start to view their data holistically and understand its overarching value. After that, it’s fairly obvious that their data provides even more value when combined with other datasets and incorporated into a service fabric.
You don’t need to be a tech savant to understand this. The world has embraced technology so quickly and completely because it makes things easy, fast, and accessible, and the service fabric is a natural progression. At the same time, few people enjoy juggling dozens of different apps, platforms, portals, and products to access the capabilities they depend on. In this way, the service fabric is the best of both worlds — a way to integrate more tech into our lives without becoming a burdensome balancing act.
Any company that wants to be included in the service fabric should get serious about sharing its data and excited about APIs. If anything, it should remember this maxim: The ability to thrive depends on a willingness to share. Organisations that embrace this motto wholeheartedly will find that success comes much more easily.