The 5 reasons why open APIs are the key to digital transformation and future growth

“Platform business models” control a large part of the world’s economic activity. Using online matchmakers or technology frameworks for buying, selling and sharing is disrupting traditional business.

A large part of the revenue of platform companies is not generated through the sale of products, but increasingly through Application Programming Interfaces (APIs) which nurture and drive the platform economy. Having an API strategy is therefore essential for every company as part of any digital transformation strategy – and the differentiation needed to remain relevant in the market.

APIs automate online connections 

APIs are the glue that holds the Web together. They enable different pieces of software to interact and provide controlled access to backend data. Companies use APIs to enhance their own application or have them enhanced by others on the Web with open APIs.

Examples of open APIs are interfaces to public weather data that make it possible for weather apps to tailor the forecast to the user’s location, and authentication interfaces that allow users to log into other sites with their social media profiles.

So, what are the five key things people need to know?

1. APIs add value for customers

Customer expectations have changed dramatically from just a few years ago. For instance, today customers expect easy connectivity for products and services. Products are expected to be smart and integrate automatically across domains, e. g. in homes, cars and workplaces.

APIs are enabling these integrations and have become the key to market relevance for many companies.

2. APIs add value for companies 

The creation of a digital ecosystem is by far the greatest benefit for a company. APIs increase a company’s reach. Linking into third-party apps and platforms increases exposure and lays the groundwork for significant growth in customer acquisition and sales.

APIs can also generate revenue by charging a fee for the use of the API itself, or by helping create new products that deliver valuable data for B2B customers. From an investor perspective, APIs are a sign that a company has the infrastructure to build an ecosystem around their customers and products.

3. APIs make development faster

There are also countless internal uses for private APIs inside development teams of companies. By providing standardized, well-documented and independent functionality that others can use, APIs make the work of internal developers easier, simplifying cooperation between old and new systems. APIs also make complex systems simpler to implement, test and increase the security of systems.

4. APIs make innovation agile 

For some time, organizations have addressed connectivity with middleware and enterprise applications that give them complete control of the environment. The advantage of open APIs from an innovation perspective is that they leverage the data and processing power of others.

Opening APIs also gives more freedom for partners, communities and end users to create new solutions with new perspectives. Capturing their feedback can accelerate continuous improvement in products and the development of new features. It is sometimes only when partners start working with the API that the true commercial potential becomes apparent.

5.  APIs provide access to the platform economy 

The growth of the platform economy shows no signs of slowing down. Only platforms can make the complexity of the digital world manageable and usable, and only APIs enable the machine-to-machine communication required to interact with a platform. Regardless of whether a company becomes a provider itself or participates in platforms, suitable APIs are the only way in.

Companies should be aware that building an API strategy takes time. It starts with recognizing that APIs are a holistic product in their own right. Companies must define the market requirements and manage the API throughout the complete lifecycle. With feedback and ideas from partners, communities and end users, APIs can evolve business models and expand the ecosystem to pursue new kinds of commercial opportunities.

At ABB, our open API Platform is accelerating the development of smart home automation. The API has helped us forge partnerships with other companies, which have integrated ABB’s Smart Home offering with their services and solutions.

We encourage developers to use the API and create new and fascinating applications for themselves or the wider community of Smart Home users. For advice or simply to discuss how ABB’s smart building APIs can help your company reach new opportunities in your market, get in touch.

Categories and Tags
About the author

Jan P. Schäfer

I am part of the Global Product Management team of the division Smart Buildings. I am collaborating with lots of great people inside ABB but furthermore with great and professional partners around the globe to transform our offering into overall tailormade solutions. Therefore establishing a digital mindset, driving open interfaces to our products and developing and launching on-top services and application are one of the major key factors. I am really proud to be part of such an innovative Division and market, as Smart Homes and Smart Buildings are one of the most rapidly growing markets and technologies today. I also like to follow the latest technical trends in private life and to try them out. In my free time I like to enjoy nature on extensive hikes and going kayaking or having some fun time with family and friends.
Comment on this article