Unless you’re Google, Netflix, or Twitter, you may have found it difficult to build or articulate compelling business cases for your API projects.

While conversations around this subject have long been dominated by how the big public APIs have forged new business models by opening up products and services to the world at large, the harsh reality for most companies is that copying this strategy is not necessarily the right thing to do.

Understanding the real value of APIs

In my previous post on becoming a disruptive digital seller, I mentioned that having the right kind of commerce API is one of the keys to thriving in the new subscription economy. Given the hype around public or open APIs such as those created by Amazon or Facebook, it’s a common mistake to assume that this is what all API strategies need to look like.

But the truth for most businesses, as Brian Walker of Forrester Research points out, is that the internal benefit of owning and operating a commerce API usually far exceeds the value of trying to monetize some sort of public API. He goes on to define this value on three dimensions:

  • Fostering and propelling internal innovation. Right now, the most compelling reason to have a commerce API is to unlock the potential of developers working for your business, by allowing them to easily embed transactional functionality into every customer touchpoint, from mobile apps to social networks and digital marketing campaigns.
  • Enabling new and innovative business relationships. Partnerships, business development, agency relationships, and other mashups take on a whole new dimension when your company’s products and services are easily, consistently, and securely available to trusted partners.
  • Activating commerce opportunities across the long tail. Of course, having a great commerce API is a must for businesses where the rewards of opening up their functionality to third-party developers outweigh the risks.

These are simple enough value propositions – but there is a catch. In order for these things to happen, the API must be easier to use, scale, and manage than traditional methods of integrating directly with back-end systems. Unfortunately, when it comes to commerce and other transactional APIs, this is often far from the truth.

The problem with conventional commerce APIs

To oversimplify a bit, commerce APIs are supposed to be the magic bullets that enable your business processes to easily be embedded into other digital products and services, without having to mess around in any way with your enterprise software.

They’re meant to empower developers who are not necessarily familiar with all the gory details of your systems and processes. Imagine this:

Your social media agency wants to add one-click purchasing functionality to the refresh of your Facebook page? No problem! The Sydney office wants to make a quick iPhone app with localized functionality for their tiny market, next month, on a skunkworks budget? Here’s a URL and key for our API – go wild!

So why haven’t we seen this level of agility, even in organizations that have already deployed APIs?

The dirty little secret that plagues most conventional, first-generation enterprise APIs is that they aren’t much cheaper or faster than the old-fashioned methods of low-level integration or hacking away at the platform code.

Although they technically fulfill their mandate by providing a path for client developers to “get at” functionality, these APIs merely expose underlying services, which means that you’re still working indirectly with the nuts and bolts of the enterprise software.

The most obvious symptoms of this problem? API integration guides that run into the hundreds or thousands of pages, and projects that last months instead of days or weeks.

Those manuals and timelines are needed because developers still need to understand and manipulate the stuff beneath the API.

In many cases, they string together service calls with complex business logic of their own in order to make the desired customer experience happen.

The resulting implementations are often complex, fragile, and costly to maintain, which makes it tough to justify a strategy that relies on these APIs to be catalysts for innovation and agility.

Next-generation commerce APIs

Schooled by these failures, the most innovative companies are just starting to develop a new breed of smart and agile API, in an effort to maximize the all-important internal benefits.

More robust and easier for developers to work with than the first- or second-generation SOAP and REST programming interfaces that came before, they closely resemble intelligent middleware layers that make it simple for internal teams, digital marketing agencies, contractors, or anyone else to “plug in” and embed core commerce functionality into anything and everything.

Without getting too technical, these next-generation commerce APIs take this simplification seriously, to the point where outside developers (say, Bob, the IT intern at your ad agency) can plug bits and pieces of your online store into a campaign without ever understanding a thing about your ecommerce platform.

Everything he needs to know and do is contained within the API itself. For the more technically inclined, this corresponds to Level 3 REST in the Richardson Maturity Model, which is sort of like reaching the holy grail of API programming.

Noted API Evangelist Kin Lane puts it succinctly for the rest of us:

“The latest trend of web APIs is allowing the enterprise to individually define business assets and resources, securely exposing these resources as RESTful APIs, allowing 3rd party developers to access these resources, enabling all parts of the enterprise to be more agile and nimble in meeting the demands of the ever increasing global and mobile economy.”

How APIs impact your business plans

To date, many business plans and strategies that call for multi-touchpoint, disruptive selling have been stymied by the poor track record and ROI of the commerce APIs that were supposed to enable them. This next generation of APIs, based on Level 3 REST, will finally allow technology vendors and developers to deliver on their original promise of making commerce data and processes available everywhere in a secure, consistent, and cost-effective way.

In turn, marketers will be able to develop and justify real, compelling business plans that take advantage of these APIs to reach new markets, platforms, devices, and customer experiences – faster and cheaper than ever before. As you plan out the future of your online business, make sure that you ask tough questions of your technology providers, and learn how to recognize the APIs that will have a positive impact on your costs, scalability, and time to market.