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Why You Need an API Strategy for Your Business

Why You Need an API Strategy for Your Business

We are now living in an “API economy” where APIs are becoming the norm. APIs and SDKs have the potential to dramatically shift your organization in today’s current dynamic and ever-changing business environment. Setting up an API strategy can promote innovation, collaboration, and improve customer service. Organizations that fail to integrate all their different IT systems together and leverage the power of APIs will watch themselves lose market share to those who do.

What is an API? An application programming interface (API) is the language for getting systems to communicate and share data with one another. As defined by TechTarget, the API provides instructions for developers on how to “write a program that requests services from an operating system (OS) or other application.” APIs are part of a software development kit (SDK), which is a series of tools, information, and examples on how to use the APIs and work with the data.

Why APIs and SDKs Are Essential for Business

APIs and SDKs are the building blocks to creating an open platform where systems communicate, transact and negotiate with each other. For that reason, they are becoming the new essential business tool for capturing more market share, increasing customer engagement, and keeping shareholders happy.

Read on to learn three reasons why they are must-have tools for businesses, and how failing to plan for expandability could compromise your competitiveness.

Reason 1: APIs Encourage Innovation

Increased competition through globalization, shorter product life-cycles, and faster product development are just a few struggles for businesses these days. The business environment is far more dynamic now than in the past. Yet, many organizations are operating with strategies that were designed for more stable times and in a closed environment. The old, closed system approach isn’t going to cut it anymore.

Why do businesses fail? According to “The Biology of Corporate Survival,” in the Harvard Business Review, one of the reasons is that they “misread the environment, select the wrong approach to strategy, or fail to support a viable approach with the right behaviors and capabilities.” The authors Martin Reeves, Simon Levin, and Daichi Ueda describe how a lack of flexibility, trust, or innovative spirit in the organization makes it impossible to pivot and adapt when market needs change.

business innovation with api strategy

Innovation also requires a strong feedback process. Steve Coast’s Golden Rules of Feedback state that only “1-in-10 people ask for feedback,” and of those, only 1 out of 10 people will even act on that feedback. Operating in a bubble and not asking what people think of your product or service — or asking, then not making any changes, is deadly for business.

Our fast-paced economy relies on continuous innovation and adaption, leaving no room for disjointed processes and stagnate technology. The only viable strategy for operating in this new environment is by building your IT architecture with APIs in mind and integrating them into your business culture.

Example: Google is continually innovating. They strengthened their offering to large, enterprise users with the release of their Cloud Machine Learning platform including APIs for image analysis, text analysis, job search, dynamic translation, and speech recognition.

With an API, your organization can tear down your data silos, reduce data entry costs, avoid vendor “lock-in” and gain the coveted customer 360-degree view, or a complete view of your customer by aggregating data from various touch points.

Reason 2: APIs Help Create a Better Customer Experience

Consumers want a personal and customized experience, and if you can’t deliver that, they will go somewhere else. For example, your ordering systems and customer service systems need to talk to each other. If a customer calls into support after ordering shoes online, the service rep needs to be able to instantly pull up their order. You need to be able to accurately assess demand from your CRM or ordering system so that you can properly set production levels. You need to be able to deliver the purple stuffed dinosaur to Timmy before he even realizes he wants a dinosaur.

Unfortunately, most organizations store their data in silos, or “data islands.” Business units often have conflicting and overlapping data. For cost reasons, their data is often static and limited. As a result, organizations struggle to deliver a contextual and relevant experience that customers are demanding.

Gartner research on information innovation shows that success relies upon how well a business can use and leverage big data, cloud computing, IoT, machine data, and “open, syndicated and other external data sources.” They call on CIOs and chief data officers to develop information strategies. Integration is key. To stay competitive, businesses need to start using APIs. The business that can effectively use APIs and integrate their data will have a competitive advantage.

Example: Geotab’s open API for telematics data allows fleet customers to add in extra functionality into their MyGeotab fleet management software. For example, users can integrate Marketplace solutions such as:

Adding in features to the telematics portal saves the time and hassle of going back and forth between different systems and also allows fleet managers to measure and manage performance through the MyGeotab rules feature.

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Example: Uber deepens the experience of their customers with Trip Experiences, which allows developers to tap into Uber rider trip context data (destination, current location, travel time) and then deliver riders relevant content on local food or shopping recommendations, quick news updates, or allow them to perform special functions such as turn off lights at home when leaving, or turn heat back on when approaching.

Reason 3: APIs Encourage Collaboration

A major advantage of an open platform approach with SDK and APIs is that businesses can promote external innovation. The solution to your organization’s biggest problem could be created by someone outside your organization, maybe even in another part of the world.

Amazon has fully embraced data-sharing to improve operations and customer service. They opened up the API Gateway service to help developers to build and run secure APIs.

Offering data externally allows vendors and developers to create products or platforms. Your organization can pick vendors or acquire innovative technologies rather than trying to build their own solutions internally.

Example: NASA has an API portal that makes NASA data and imagery available to application developers. They even invite developers to contribute to api.nasa.gov to further build and enrich the NASA community.

The announcement of Google’s agreement to acquire Apigee, an API management company, shows that digital transformation is here to stay. Waiting by the phone is no longer acceptable for customers. They want a more fluid online experience.

Unlike Google or Amazon, Twitter has taken the alternative approach. They have closed their firehose API and appear to be trying to create solutions themselves. As a result, they have continued to lose market share to Facebook. By all accounts, many believe that Twitter has failed. In the Huffington Post, business and technology thought leader David Giannetto asks if Twitter has reached the dreaded “digital eight year death sentence” while Google is thriving by continuously improving the user experience and facilitating “commerce via its platform.”


  • APIs and SDKs are quickly becoming the new norm and essential business tools to capturing more market share, meeting consumer demands, and keeping shareholders happy.
  • They are the building block to an open platform and allow your organization to take advantage of IoT and big data.
  • An API will allow your organization greater innovation and collaboration.

Learn more about the Geotab Data Feed API and Software Development Kit (SDK).

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