Retooling Businesses for the API Economy

Share this post:

If you doubt that a 200-year-old institution can reinvent itself using modern, disruptive technology, think again.

Last year, a major American bank launched a series of hackathons to give software developers around the globe a shot at cash prizes for creating mobile apps accessing its core banking services via Application Programming Interfaces, or APIs. The result: an explosion of innovation that helped the company to rapidly expand its mobile banking services.

The bank’s move demonstrates the immense potential of the API Economy.

This fast-emerging phenomenon could bring a sea change in the way companies operate–and how commerce is conducted. Established companies and startups alike are producing APIs that enable them to expose their business assets and services for use by others–like digital building blocks. A finance company, for instance, might allow real estate sales outfits to embed its mortgage qualification calculator on their Web sites in exchange for access to their customers.

APIs can also serve as points of integration within a single company’s operations and between companies that do business with one another. For instance, a manufacturing company might offer APIs for accessing its ordering and fulfillment systems to all of the companies in its supply chain–enabling seamless interactions.

APIs accelerate innovation and enable companies to capitalize on their assets in new ways, to create new sources of revenue, and to collaborate with business partners with a minimum of friction.

IBM Fellow Jerry Cuomo predicts that there will be more than 1 million public APIs available to developers by the end of the decade–up from about 20,000 now. This field is exploding.

At IBM, we’re backing the API Economy. We’re breaking into pieces our own software products and services. We’re publishing APIs so business partners can use those pieces in their apps and cloud services. And we now offer an extensive toolkit that enables developers to build new applications rapidly using APIs.

But we see even more potential for APIs. The world is entering a new era of computing, the cognitive era, where machines are able to ingest vast amounts of information, reason over data, learn from their interactions with humans and data, and interact with people in ways that are more natural to us. APIs provide the means to rapidly embed cognitive capabilities in countless applications–transforming industries and professions.

We’ve already made a fast start at this with our Watson Developer Cloud. There, developers and business partners can tap into more than 25 cognitive APIs for their products and services. Hundreds of companies have already produced Watson-powered products and services–everything from toy dinosaurs that teach children geography lessons to online wellness communities for employers and insurance companies. Some business partners have been able to produce Watson-based apps in a matter of weeks. Dozens more APIs and hundreds of products are in the works.

To deliver the full potential of APIs and cognitive technologies, we must make it incredibly easy for developers to build applications and Web services. That’s why IBM has assembled a toolkit to help developers to create, find, secure and manage APIs. Here are some of the essential pieces:

Bluemix Our platform for building cloud services makes it easy for developers to build rich applications by leveraging hundreds of APIs from IBM and third parties. It includes extensive Watson and Internet of Things catalogues.

API Harmony A specialized search engine enables developers using Bluemix to find the best APIs for their needs and to discover the best combinations of APIs. Watson helps with the matchmaking.

StrongLoop An environment within Bluemix for creating APIs using Javascript, the most popular programming language for APIs. StrongLoop also provides hooks for connecting to multiple data sources.

API Starter Pack A collection of technologies that contains everything needed to create, secure, and manage API’s, as well as connect them to back-end systems.

APIs and cognitive technologies have the potential to rewire entire industries. But, to maximize the impact, industry leaders will have to agree on open standards to assure compatibility and interoperability between their APIs and applications.

That’s why IBM is working with a number of industry groups to set standards and convening a cross-industry API standards body under the auspices of the Linux Foundation.

The future beckons, yet many companies are holding back. That’s a mistake. Organizations that quickly identify their key assets and services, and capitalize on them via APIs, have the opportunity to dominate their industries for decades to come.